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41–234 PDF 2008

DOING BUSINESS WITH THE GOVERNMENT: THE RECORD AND GOALS 

FOR SMALL, MINORITY, AND DISADVANTAGED BUSINESSES 

(110–105) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND 

EMERGENCY MANAGEMENT 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

MARCH 6, 2008 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JAMES L. OBERSTAR, Minnesota, Chairman 

NICK J. RAHALL, II, West Virginia, Vice 

Chair 

PETER A. DEFAZIO, Oregon 

JERRY F. COSTELLO, Illinois 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

BOB FILNER, California 

EDDIE BERNICE JOHNSON, Texas 

GENE TAYLOR, Mississippi 

ELIJAH E. CUMMINGS, Maryland 

ELLEN O. TAUSCHER, California 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

BRIAN BAIRD, Washington 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

BRIAN HIGGINS, New York 

RUSS CARNAHAN, Missouri 

JOHN T. SALAZAR, Colorado 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

DORIS O. MATSUI, California 

NICK LAMPSON, Texas 

ZACHARY T. SPACE, Ohio 

MAZIE K. HIRONO, Hawaii 

BRUCE L. BRALEY, Iowa 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

MICHAEL A. ARCURI, New York 

HARRY E. MITCHELL, Arizona 

CHRISTOPHER P. CARNEY, Pennsylvania 

JOHN J. HALL, New York 

STEVE KAGEN, Wisconsin 

STEVE COHEN, Tennessee 

JERRY MCNERNEY, California 

LAURA A. RICHARDSON, California 

VACANCY 

JOHN L. MICA, Florida 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

WAYNE T. GILCHREST, Maryland 

VERNON J. EHLERS, Michigan 

STEVEN C. LATOURETTE, Ohio 

FRANK A. LOBIONDO, New Jersey 

JERRY MORAN, Kansas 

GARY G. MILLER, California 

ROBIN HAYES, North Carolina 

HENRY E. BROWN, JR., South Carolina 

TIMOTHY V. JOHNSON, Illinois 

TODD RUSSELL PLATTS, Pennsylvania 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

JOHN BOOZMAN, Arkansas 

SHELLEY MOORE CAPITO, West Virginia 

JIM GERLACH, Pennsylvania 

MARIO DIAZ-BALART, Florida 

CHARLES W. DENT, Pennsylvania 

TED POE, Texas 

DAVID G. REICHERT, Washington 

CONNIE MACK, Florida 

JOHN R. ‘RANDY’ KUHL, JR., New York 

LYNN A WESTMORELAND, Georgia 

CHARLES W. BOUSTANY, JR., Louisiana 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

THELMA D. DRAKE, Virginia 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

ROBERT E. LATTA, Ohio 

(II) 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY

MANAGEMENT

ELEANOR HOLMES NORTON, District of Columbia, Chairwoman 

MICHAEL H. MICHAUD, Maine 

JASON ALTMIRE, Pennsylvania 

MICHAEL A. ARCURI, New York 

CHRISTOPHER P. CARNEY, Pennsylvania, 

Vice Chair 

TIMOTHY J. WALZ, Minnesota 

STEVE COHEN, Tennessee 

JAMES L. OBERSTAR, Minnesota 

(Ex Officio) 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

SHELLEY MOORE CAPITO, West Virginia 

CHARLES W. DENT, Pennsylvania 

JOHN R. ‘RANDY’ KUHL, JR., New York 

JOHN L. MICA, Florida 

(Ex Officio) 

(III) 

(V) 

CONTENTS Page 

Summary of Subject Matter .................................................................................... vi 

TESTIMONY 

Ayers, Stephen, Acting Architect of the Capitol ................................................... 3 

Giordano, Catherine, President/CEO, Knowledge Information Solutions, Inc. .. 3 

Marshall, Era, Director, Office of Equal Employment and Minority Affairs, 

Smithsonian Institution ....................................................................................... 3 

Mosier, Roger, Vice President, John F. Kennedy Center for the Performing 

Arts ........................................................................................................................ 3 

Rigas, Michael J., Deputy Associate Administrator, Office of Small Business 

Utilization, General Services Administration .................................................... 3 

Rouse, Terrie, Chief Executive Officer for Visitor Services, Capitol Visitor 

Center .................................................................................................................... 3 

Sligh, Albert, Director, Office of Management, Federal Emergency Management Agency ......................................................................................................... 3 

Smith, Dennis C., Small Business Coordinator, Capitol City Associates, Inc. ... 3 

Stephenwoof, Rosalind Styles, President, National Association of Minority 

Contractors, Washington, D.C. Metro Chapter ................................................. 3 

Zingeser, Joel, Associated General Contractors of America ................................. 3 

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS 

Altmire, Hon. Jason, of Pennsylvania .................................................................... 42 

Oberstar, Hon. James L., of Minnesota ................................................................. 43 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Ayers, Stephen T. .................................................................................................... 44 

Giordano, Catherine ................................................................................................ 48 

Kaiser, Michael ........................................................................................................ 54 

Marshall, Era ........................................................................................................... 57 

Rigas, Michael J. ...................................................................................................... 62 

Rouse, Terrie S. ....................................................................................................... 67 

Sligh, Al .................................................................................................................... 69 

Smith, Dennis C. ...................................................................................................... 86 

Stephenwoof, Rosalind Styles ................................................................................. 90 

Zingeser, Joel P. ....................................................................................................... 93 

SUBMISSIONS FOR THE RECORD 

Sligh, Albert, Director, Office of Management, Federal Emergency Management Agency, responses to questions from the Subcommittee ......................... 83 

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(1) 

HEARING ON DOING BUSINESS WITH THE 

GOVERNMENT: THE RECORD AND GOALS 

FOR SMALL, MINORITY, AND DISADVANTAGED BUSINESSES 

Thursday, March 6, 2008 

HOUSE OF REPRESENTATIVES

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC

BUILDINGS, AND EMERGENCY MANAGEMENT, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 11:06 a.m., in Room 

2253, Rayburn House Office Building, the Honorable Eleanor 

Holmes Norton [Chairwoman of the Subcommittee] presiding. 

Ms. NORTON. We were waiting for the Ranking Member, but he 

graciously indicated that we should go ahead. We will be pleased 

to hear his opening statement when he comes. 

The Subcommittee is very pleased to welcome our witnesses 

today. We look forward to learning from the testimony about small 

business participants concerning their experience in contracting 

with the Federal Government and equally from the testimony of 

agencies within the jurisdiction of this Subcommittee about their 

goals and accomplishments for small business and for minority, 

women-owned, and disadvantaged businesses. 

Small businesses are central to today’s economy. The Federal 

Government is the largest small business contractor and, therefore, 

has a special obligation to this indispensable economic sector. The 

roughly 25 million small businesses in the United States account 

for fully 50 percent of the Nation’s private non-farm national product; however, they receive only 20 percent of Federal contracts. 

Women make up 30 percent of the small business owners nationally, but receive only 3.4 percent of Federal contracts. Minorities 

are 18 percent of small business owners nationally, but receive only 

6.8 percent of Federal contracts. Service-impaired veterans face the 

worst odds of all, with only .87 percent of Federal dollars going to 

their firms. 

I do not suggest that all of these small businesses should, would 

even desire, or would be qualified to do business with the Federal 

Government, or that rigid statistical parity is the goal. However, 

the Government fell $12 billion short of meeting its own modest 

contracting goals for small businesses. Yet, small businesses are responsible for the lion’s share of new jobs. Because most of the jobs 

created by small businesses remain in this Country, their formidable job creation power has premium value for our economy and 

2 

the American people. Moreover, considering increasing predictions 

for recession today, Federal procurement and contracting become 

even more important for small businesses. 

For almost 50 years, it has been the policy of the Federal Government to encourage the participation of small businesses in Federal procurement and contracting. The Small Business Act requires 

an affirmative Federal policy of doing business with small businesses—and I am quoting—‘‘in order to preserve free competitive 

enterprise, ensure that a fair portion of the total purchases and 

contracts for supplies and services for the Government is placed 

with small businesses, and maintain and strengthen the overall 

economy of the Nation.’’ 

For minority-and women-owned businesses, there is an additional 14th Amendment constitutional obligation carried out in 

Federal law by Title VI of the 1964 Civil Rights Act. In Fullilove 

v. Klutz, the Supreme Court found that Congress had the authority 

to remediate historic discrimination in contracting through—and I 

am quoting from the decision by Justice Berger—‘‘prospective 

elimination of ... barriers ... to public contracting opportunities.’’ 

These statutes have been carried out in several ways, including 

targeting Federal procurement contracts and subcontracts for small 

businesses, management and technical grants, educational and 

training support, and surety bond assistance. 

It may be that insufficient agency-by-agency oversight contributes to the deficiencies in Federal small business contracting and 

procurement. The Small Business Administration does do oversight, but there has been little Congressional oversight to hold individual agencies accountable in implementing the small business 

practices of the Federal Government. 

At this hearing, we are trying to do our due diligence and help 

provide that accountability as a Subcommittee. The agencies before 

us today have submitted information to our Subcommittee that indicates that they have endeavored to meet the mandate required 

by Federal law. Three of the agencies—the Architect of the Capitol, 

the Smithsonian Institution, and the John F. Kennedy Performing 

Arts Center—technically are not covered by the Small Business Act 

but have voluntarily chosen to abide by the law. 

We look forward to hearing from all the Federal agencies for 

which we perform oversight: the General Services Administration, 

the Federal Emergency Management Agency, the Architect of the 

Capitol, the Capitol Visitors Center, the Smithsonian, and the John 

F. Kennedy Performing Arts Center. We thank our small business 

representatives as well: the National Association of Minority Contractors; Capital City Associates; the Associated General Contractors of America; and Catherine Giordano, CEO of Knowledge Information Solutions. 

We are prepared to hear from the first witness. I suppose we 

should go from left to right. It doesn’t matter. But I will remind 

everyone to please turn off your phones and BlackBerries during a 

hearing in the House of Representatives. 

Ms. Stephenwoof, would you like to begin? 

3 

TESTIMONY OF ROSALIND STYLES STEPHENWOOF, PRESIDENT, NATIONAL ASSOCIATION OF MINORITY CONTRACTORS, WASHINGTON, D.C. METRO CHAPTER; DENNIS C. 

SMITH, SMALL BUSINESS COORDINATOR, CAPITOL CITY ASSOCIATES, INC.; JOEL ZINGESER, ASSOCIATED GENERAL 

CONTRACTORS OF AMERICA; CATHERINE GIORDANO, PRESIDENT/CEO, KNOWLEDGE INFORMATION SOLUTIONS, INC.; 

ALBERT SLIGH, DIRECTOR, OFFICE OF MANAGEMENT, FEDERAL EMERGENCY MANAGEMENT AGENCY; MICHAEL J. 

RIGAS, DEPUTY ASSOCIATE ADMINISTRATOR, OFFICE OF 

SMALL BUSINESS UTILIZATION, GENERAL SERVICES ADMINISTRATION; ERA MARSHALL, DIRECTOR, OFFICE OF EQUAL 

EMPLOYMENT AND MINORITY AFFAIRS, SMITHSONIAN INSTITUTION; ROGER MOSIER, VICE PRESIDENT, JOHN F. KENNEDY CENTER FOR THE PERFORMING ARTS; STEPHEN 

AYERS, ACTING ARCHITECT OF THE CAPITOL; AND TERRIE 

ROUSE, CHIEF EXECUTIVE OFFICER FOR VISITOR SERVICES, 

CAPITOL VISITOR CENTER 

Ms. STEPHENWOOF. Congresswoman Norton and esteemed Members of the Subcommittee on Economic Development, Public Buildings, and Emergency Management—— 

Ms. NORTON. Could I just indicate to you that your entire—to all 

of you who are testifying, your entire statement will be received in 

the record, so you should try to keep that in mind when giving your 

testimony so we will have time for everyone. We do our have our 

very important witnesses, as well, from the agencies. 

Ms. Stephenwoof? 

Ms. STEPHENWOOF. I wish to express my sincere appreciation for 

the opportunity to appear before you today to discuss Doing Business with the Government: The Record and Goals for Small, Minority and Disadvantaged Businesses. I currently serve as the President of the Washington, D.C. Chapter and member of the National 

Board of Directors of the National Association of Minority Contractors. 

NAMC was established in 1959 to address the needs and concerns of minority contractors and to create parity in the construction industry. We have aggressively pursued equity and contracting 

for small, minority, and disadvantaged businesses, and attempted 

to create venues to review the procedures in place with the Federal 

Government, local governments, and private sector. One of our primary objectives is to continuously seek legislative action of minority business issues to advocate for change in laws that hinder minority businesses access to, or prevent minority business growth in 

the Nation’s $400+ billion a year construction industry. 

In March 2006, the Washington, D.C. chapter hosted the Base 

Realignment and Closure Tri-Service Industry Outreach Forum to 

provide information to small and minority businesses for bidding 

on the 5-year $7 billion military construction workload contracts for 

the United States Army Corps of Engineers, the Navy, and the Air 

Force. The forum created a venue for small businesses, minority 

businesses, 8(a), HubZone, women-owned, and veteran-owned businesses to identify opportunities for joint ventures, partnerships, 

contracting and subcontracting prior to bidding period. These 

venues have created opportunities for non-traditional dialogue beVerDate Aug 31 2005 12:17 Jun 09, 2009 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 P:\DOCS\41234 JASON
4 

tween the Federal Government, prime contractors and subcontractors exclusively for recruiting small and minority businesses for inclusion on teams for bidding. We propose and recommend similar 

forums to be conducted throughout the Federal Government to increase the level of small and minority business participation. 

NAMC has also met with the U.S. Department of commerce’s Minority Business Development Agency, whose mission statement includes that it was designed to empower minority business enterprises for the purpose of wealth creation; to achieve entrepreneurial parity for MBEs by actively promoting their ability to grow 

and compete in the global economy and challenges faced by MBEs 

for developing programs that provide the keys to entrepreneurial 

success. 

However, the measurable success of its programs and services 

are not available. The State of Minority Business Enterprises Report issued in 2006, an overview of the 2002 survey of business 

owners, indicated a great disparity of the average gross receipts of 

minority firms, which was $162,000, considerably lower than the 

$448,000 average gross receipts of non-minority firms. It also indicated that during the reporting period gross receipts of MBEs decreased by 16 percent, and over the same period of time the average gross receipts of non-minority firms remained level. Again, it 

is imperative that a recent measure of the success of MBE programs should be tantamount to the Federal Government agencies 

dedicated to servicing MBEs and should include economic indicators of MBE business success with the Federal Government itself. 

NAMC is also working in partnership with the Associated General Contractors of America and with the U.S. Department of 

Transportation to create a Disadvantaged Business Enterprise 

Contractors’ Tool Kit, which is meant to be a practical guide in establishing a contractor’s DBE compliance program as implemented 

by the State and local governments where they work. The Tool Kit 

provides information ranging from getting started to assessing 

one’s performance in meeting its own program. NAMC recommends 

this Committee review the model and consideration for expansion 

to its oversight agencies. 

NAMC sits on the MBE Advisory Committee established by the 

Washington Area Sanitation Commission to review proposed legislation by the State of Maryland for the establishment of a minority 

business utilization program. The Committee prepared and submitted comments on the proposed legislation and Commission’s 

proposed Standard Operating Procedures for the MBE Program. 

Again, NAMC suggests the establishment of an SBE/MBE Advisory 

Committee which can assist in the assessment of existing programs 

and recommendations for improvement or implementation of an 

MBE program within your agency. 

In conclusion, NAMC recommends the Subcommittee on Economic Development, Public Buildings, and Emergency Management 

consider the following: establishment of an MBE Advisory Committee to review the existing MBE program, its effectiveness and 

measure of its success; two, conduct a study of the existing MBE 

programs by each Federal agencies and its effectiveness; three, 

host targeted forums created by Federal agencies to reach the 

small and minority community, and follow up with reports of their 

5 

success; and, lastly, conduct extensive monitoring and reporting of 

small and minority business participation and publish its findings 

which include recommendations for penalties for non-compliance. 

NAMC stands ready to assist with the further pursuit of your desire to increase the level of participation of small and minority 

businesses with the Federal Government. And that ends my presentation. 

Ms. NORTON. Ms. Stephenwoof, we will reserve questions until 

the end of all four of the panelists. 

We go to the next person to your right, Mr. Dennis Smith, Small 

Business Coordinator, Capitol City Associates, Inc. 

Mr. SMITH. Thank you, Madam Chair. It is indeed a pleasure for 

me to be here this morning. 

In Capitol City I am a small business outreach coordinator. 

There, I work with the BRAC project in finding small businesses. 

I make this introduction to say to that as a result of being out in 

the community, working with many of the different businesses, 

they oftentimes call me with respect to small business issues. So 

what I am conveying to you today is oftentimes some of the comments that I receive from businesses; and conveying some of the 

advice that I oftentimes give to businesses with respect to some of 

the issues that they find. 

Ms. NORTON. And that is where our interest lies. 

Mr. SMITH. That is right, yes. So I would like to move directly, 

then, to, once again, my background. I just recently left the Missile 

Defense Agency, program manager at their small business office. 

They moved to Huntsville, Alabama as a result of BRAC, and I decided to stay here in the Washington, D.C. area. 

There, at the Missile Defense Agency, there is about a $4.2 billion procurement budget. Of that procurement budget, 85 to 90 percent of that went to five companies; and I find that that rate there 

is in fact a trend that you kind of see in Federal Government procurement today. And I want to move from there right to my points 

that I am making. 

Let’s take, for instance, a current solicitation that is on the street 

now with AOC, the Architect of the Capitol. It is currently advertising in solicitation notice RFP060085 facility support services. 

AOC is soliciting for housekeeping, landscaping, snow removal, 

pest control, elevator, lift maintenance, and other services as necessary. The solicitation says the resulting firm fixed price contract 

will be awarded to one contractor. 

In FAR 2.101, bundling is described as the consolidation of two 

or more requirement previously provided or performed under separate small contracts into a solicitation of offers for a single contract 

that is unlikely to be suitable for award to a small business concern. There is a need here to challenge the acquisition plan. I 

would be very curious to see the acquisition plan prepared by the 

contracting officer. Each contracting officer should prepare an acquisition plan in accordance with FAR 7.105. 

This is just one example of what we, as small businesses, are up 

against. Were there alternative strategies that would reduce or 

minimize the scope of bundling here, or what was the rationale for 

not choosing alternatives? This right here, this question is asked 

6 

during the acquisition plan and FAR 7.107, the contracting officer 

should have asked himself or herself this question. 

As a business person, should I complain as I look at this particular solicitation out on the street? Should I complain as a landscaping company to say, I cannot get a part of this solicitation? 

Well, the complaint really should be at the PCR, the Procurement 

Center Representative. I heard you say something about SBA doing 

its job. 

Ms. NORTON. I said they did some oversight, unlike the rest of 

the committees. 

Mr. SMITH. Section 125 of 13 C.F.R. states that the duties of the 

PCR, the PCR should be coordinating with the small business specialists on anticipated bundled contracts. Are they performing their 

duties? The PCR should ensure that they are necessary and unjustified bundling of contracts is avoided; assess impediments to 

small business primes. 

AOC’s current acquisition is not an isolated bundled solicitation. 

I would compliment AOC in sending out their forecasts and sending out their notices, because everyone knows the Fed Bus Op is 

a farce. So AOC does a good job in sending out their notices to 

businesses if you subscribe there. But this is just one of many bundled contracts that I have seen come out of AOC this year or over 

the past year, say, fiscal year. 

Another small business impediment is subcontracting. One of the 

procurement vehicles that the government personnel recommends 

to small businesses, they say, oh, you should go and subcontract. 

Go talk to Boeing, go talk to Northrop Grumman. That is a nightmare by itself. But without going there, being a subcontractor to 

one of the large contractors is a very challenging task, but in the 

construction arena it is even that more difficult. And I want to talk 

about the construction arena because I am working on a BRAC 

project and I want to be specific to that. 

In accordance with FAR 19.7, a solicitation offer that is expected 

to exceed, in the case of construction, $1 million—in the case of 

non-construction it is $550,000—must present a subcontracting 

plan. In construction, the plan is too often a generic reiteration of 

a good faith effort that is verbatimly coming out of FAR itself. A 

prime contractor, when responding to a solicitation, often details 

their team. When they submit their solicitation, their proposal, 

they submit a proposal that will highlight who their mechanical is, 

who their electrical company is. 

But they should also include in there who their minority prime 

is. Not all, but some. I am not asking them to buy down the entire 

job at that time, but describing the way to do this, they should be 

encouraged by way of evaluation criteria. So to specifically identify 

two or more small business partners in the submittal of their solicitation. 

I can detail that and walk any of your staff through that point, 

if I could. I was a director of a small business in Prince George’s 

County, minority business office. I have worked as outreach manager at EPA and, as I said, I worked at the Missile Defense Agency. So I have been through the gamut of all of these different institutions or government entities, so I know specifically that it is possible to happen. 

7 

Once the plan is submitted, the Government then tells the prime 

contractor that they should report twice a year. So, in construction, 

they report twice a year in what is called a 294 and a 295. The 

294 and 295 is currently being replaced by the electronic subcontracting reporting system. It is the individual subcontracting plan 

and the summary subcontracting plan. And in reporting twice a 

year in construction is just grossly inadequate. 

No one should report twice a year. Under 49 C.F.R. Part 26, 

what DOT says to the States is that there should be a monthly report. So in the State jurisdiction we have a monthly report that we 

have to do. In construction, if you make a guy have to report once 

every six months, between Division 01 work and Division 04 work, 

it has all been done. So from setting up the fence to temporary 

electrical work under Division 01 to Division 04 masonry work, it 

has all been completed by then. So there needs to be some accountability and some understanding as to how the industry operates. So 

this right here is impractical if we have a reporting method twice 

a year in construction. Very much so impractical. 

The Office of Small Disadvantaged Business Utilization offers 

many remedies to small business concerns in order to do business 

with the Government. One of the remedies that you will hear from 

some of the OSDBU offices is that, well, small businesses, they 

need to do intelligence, they need to gather information. There is 

nothing more hostile than trying to go into a government office and 

to try to find some information. 

The thing is, though, is that what you have—and you have, in 

FAR Part 10 describes how the contracting officer should be conducting market research. So you have this information already. If 

the contracting officer did the market research, then you would 

wind up having information that would be going out to the small 

businesses. But let me be more specific, go back a little. 

In the OSDBU office, the director of the OSDBU office should 

have a direct relationship with the secretary of the agency or the 

under secretary. If that right there was enforced, then the OSDBU 

director would be saying to the agency heads, I want you, on a 

monthly basis, to come and to give the public a pronouncement as 

to what you were doing. If the public understood what the agency 

was doing, where they were going, the small business would in fact 

receive intelligence, would be able to do their research and have an 

understanding as to what the government agency was going to procure or what the government agency’s mission was and where it 

was in fact going over the next fiscal year or two. 

The small businesses have an uphill battle when trying to do 

business with the Federal Government, even when they are awarded a contract. I had a contractor call me about a contract. This was 

an 8(a) firm who won an award, so they thought. The firm was told 

by ATEC, the U.S. Army Test and Evaluation Command, they had 

been awarded, via GSA e-Buy—which I am not as familiar with— 

a contract for $1.1 million. This was an award to establish an asset 

management system. This was in January of 2008. 

Then they were told, the next day, oh, no, they had not won the 

award. After they had been sent an e-mail and information, the 

firm was saying to me that—firms are very scared to in fact—or 

very afraid to complain, because they are afraid that they in fact 

8 

may be stopped the next time they go after a solicitation. The 

award was made to Hewlett Packard instead. The small business 

was intimidated by the tone and reference to what they should do 

by the contracting officer or the COTAR. 

In summary, it is declared policy of the Congress that the Government should aid, counsel, assist, and protect insofar as possible, 

the interest of small business concerns in order to preserve free 

competitive enterprise, to ensure a fair proportion of total purchases and contracts or subcontracts for property and services for 

the Government, including, but not limited to, contracts or subcontracts for maintenance, repair, and construction, be placed with 

small business enterprises, to ensure a fair proportion of the total 

sales of Government property be made to such enterprises, and to 

maintain and strengthen the overall economy of the Nation. 

In accordance with Public Law 95-507, that stipulated that it is 

the policy of Government to provide maximum practical opportunities in its acquisitions to small businesses, small disadvantaged 

businesses, and women-owned businesses. This stipulation also extends to having the maximum practical opportunity to participate 

as subcontractors in contracts awarded by an executive agency. 

Let’s make this legislation, Public Law 95-507, a reality. Thank 

you. 

Ms. NORTON. Thank you, Mr. Smith. 

Our Ranking Member, Mr. Graves, has come, and I would like 

to ask if he has any opening remarks he would like to make. 

Mr. GRAVES. Thank you, Madam Chair. I want to say that I appreciate your holding this hearing today. I am looking forward to 

hearing the rest of the testimony this morning on small business 

contracting opportunities within the agencies. 

This is a very important issue to me. As a Member of the Small 

Business Committee also, I have been dedicated to fighting for the 

rights of small business owners. Small businesses play an essential 

role in our economy. In fact, they represent more than 99 percent 

of all employers, employing 51 percent of private sector workers. 

Additionally, small businesses are indispensable for job creation: 

they produce 60 percent to 80 percent of all new jobs. 

Because of the vital role small businesses play in the United 

States economy, it is important that we ensure that small businesses can navigate the Federal bureaucracy. The Federal Government should not discriminate against businesses because of their 

size but, instead, should encourage entrepreneurship. The Small 

Business Act directs the Federal Government to protect the interest of small businesses in order to preserve free and competitive 

enterprise, ensure that a fair portion of Federal Government contracts are placed with small businesses, and maintain and 

strengthen the overall economy of this Nation. 

However, many Government agencies are not achieving their 

goal for contracting with small businesses, particularly as prime 

contractors. I look forward to hearing whether the agencies represented here today are meeting those contracting goals and what 

programs they have in place to ensure that small businesses have 

the opportunity to compete for Federal Government contracts. 

Additionally, I am concerned about the practice of consolidating 

contracts, or contract bundling. This practice limits the ability of 

9 

small businesses to compete and ultimately hurts the American 

taxpayer. Therefore, I ask for all of our witnesses today to help our 

Nation’s small businesses by limiting within their agencies the 

bundling of contracts for larger companies. Also, I strongly encourage all of you to work to level the playing field for small businesses 

by continuing efforts to increase small business subcontracting, reduce contract bundling, obviously increase transparency in contracting data, and approve access to Federal procurement opportunities. 

Again, Madam Chair, I appreciate the opportunity to give my 

statement as a result of votes, and I very much appreciate this 

hearing. This is something I have been interested in for a long 

time. 

Ms. NORTON. Thank you very much. I am sure that your background in the Small Business Committee will be central and important to this hearing. 

Mr. Joel Zingeser, Associated General Contractors of America. 

Mr. ZINGESER. Thank you, Madam Chair and Mr. Graves, Members of the Subcommittee. My name is Joel Zingeser, of Grunley 

Construction, a local construction company here in the Greater 

Washington area, where I lead the firm’s strategic planning, business development, and new technology programs, including our efforts in sustainable design and construction, and integrated project 

delivery opportunities. 

For over 50 years, our firm has specialized in renovations, restorations, and modernization of large-scale government and commercial buildings, including office, laboratory, and educational facilities. We have had the good fortune of working in this building 

and appreciate all the opportunities we have to work with the Federal Government. In addition, we have constructed new facilities in 

addition to existing buildings for both public and private sector clients. 

On behalf of the Associated General Contractors of America, we 

strongly support full and open competition for the many contracts 

necessary to construct improvements to real property. This includes 

competition among general contractors, specialty contractors, suppliers, and service providers. Over the years, it has been established that such competition energizes and improves the construction industry to the benefit of the industry as a whole and the Nation as a whole. As the Subcommittee considers the changing Federal procurement landscape, AGC offers the following points for 

consideration. 

At this point, I would like to stand on the submitted statement, 

discussing information about construction inflation, reprogramming 

authority, and agency consistency. Given your focus on small business and the involvement of small business, I would like to highlight three particular areas in my written statement. 

Contract bundling. Contract bundling has been a concern in the 

construction industry for several years. While there is no definition 

of bundling, it appears that the consolidation of various projects is 

occurring more frequently. Small contracts are being bundled to result in large dollar solicitations that small businesses are not able 

to compete for unless they partner with large firms. While on the 

surface this may not seem harmful, this practice can undermine 

10 

the intent of the small business program by allowing large business 

to obtain work normally set aside for smaller firms. This confluence 

of pressure is leaving many small firms with fewer opportunities 

to grow in their own prime business area. 

Rather than creating additional set-asides or goals, the Congress 

should instead focus on how the existing programs can be improved 

to increase opportunities for small firms. We believe construction, 

as an industry, should be included in any revised definitions of contract bundling, to ensure that these consolidations are reviewed for 

potential negative impact on existing small businesses. 

A second point related to small business activity in our industry 

is the Alaska Native contracting program. Over the last few years, 

the volume of complaints AGC has received from its members 

about the growing reliance of the use of Alaska Native Corporations by Federal agencies as a contracting vehicle to easily attain 

small business contracting goals continues to increase. The fact of 

the matter is that, in today’s Federal contracting market, ANCs 

have extraordinary special preferences that significantly reduce 

Federal contracting opportunities for traditional small businesses. 

Some ANCs have taken excessive advantage of their special benefits to obtain multi-million dollar sole-source government contracts. In April of 2006, the General Accountability Office issued a 

report demonstrating how ANCs have been using the SBA program, reporting that awards to ANCs went from $265 million in 

fiscal year 2000 to $1.1 billion in fiscal year 2004; by 2005, ANC 

contracting dollars had more than doubled to $2.4 billion; and between fiscal year 2000 and 2004, 77 percent of ANC contracts were 

sole-source awards. 

The SBA must better track the growth of ANCs. While the GAO 

report states that this program is fulfilling its purpose, it is clear 

that the Government must improve its management and oversight 

of the program. Congress should encourage agencies to examine the 

impact that these preferences have had on other disadvantaged 

groups and the overall effect of these awards to the Federal market. 

The third point I would like to touch upon is one that, actually, 

I personally have been very, very committed to within the AGC organization. Another major challenge that prime contractors continue to face is the inability to report the real total dollar amount 

of small business participation on contracts. Currently, prime contractors are not allowed to report subcontractor participation beyond the first tier subcontractor. Allowing prime contractors to report the dollars associated with small business participation below 

the first tier is critical data not only to demonstrate a full calculation of total subcontractor participation, but also to provide additional incentive to those prime contractors that achieve their subcontracting goals. 

I would like to add to this that we do have the movement away 

from the 294 and 295 forms to this electronic data system. That 

system holds the promise of being able to dig down and get in more 

real time real information about those second-and third-tier subcontracts. Now, the reason that is important is that it is critical to 

understand the construction industry operates differently than 

many other industries. In fact, a large contract for, say, $100 milVerDate Aug 31 2005 12:17 Jun 09, 2009 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 P:\DOCS\41234 JASON
11 

lion, will go to subcontractors in packages that in many cases a 

small business cannot do at that first tier. But the real work, when 

you dig down, you will find who is doing the work, and it is the 

second-and third-tier subs under that contractor that is doing the 

work. 

For example, a large renovation project of $100 million might 

have $30 million in mechanical work. When you look to see who 

is really doing the mechanical work, you will find that the secondand third-tier subs are small businesses. So the flow of Federal dollars in the construction industry gets down to small businesses 

much deeper than it is recorded and reported, and it is because of 

this limitation of only being able to report at the first tier level. I 

hope that registers. 

In conclusion, thank you for the opportunity to provide our views 

on working with the Federal market. We believe this market offers 

tremendous opportunities for both construction contractors and the 

Federal Government. AGC looks forward to working with the Subcommittee on balancing the needs of the Government and creating 

an environment in which construction contractors can continue to 

work to improve the quality of construction delivered to the owner, 

the Federal Government, and ultimately the American taxpayer. 

I would be happy to answer questions about any of the other 

parts that I skipped over. 

Ms. NORTON. Thank you very much, Mr. .Zingeser. 

We want to hear now from Catherine Giordano, who is the President and CEO of Knowledge Information Solutions, Inc. 

Ms. GIORDANO. Good morning, Chair Holmes Norton, Ranking 

Member Graves, and other Members of the Subcommittee. My 

name is Catherine Giordano. I am the CEO of Knowledge Information Solutions, located in Virginia Beach, Virginia. I am a valueadded network integrator with a full range of products and services 

to create, manage, and secure networks. We are an 8(a) womanowned firm. 

I am appearing today on behalf of Women Impacting Public Policy, a national bipartisan public policy organization representing 

well over a half a million women and minorities in business, including 45 associations that partner with us. Thank you for holding 

this hearing and for inviting me to testify. 

I would like to spend some time this morning talking about my 

own experience with Federal contracting and then touch on policies 

that affect all small businesses as they seek Federal contracts. Let 

me say at the outset that while I have been very successful in the 

Federal contracting arena, it has not been without challenges. 

In 2002, when I bought this company, its revenue was roughly 

$9 million, and almost all of that was in the commercial arena. I 

made a conscious decision to expand my business by making a 

major component of that revenue Government business. Since that 

time, my business has grown 20 percent each year, with 90 percent 

of that revenue attributable to government contracting. 

One of the first steps we took was to get a GSA IT 70 schedule 

contract. We submitted our paperwork in October of 2002 and were 

awarded the contract in December of 2003. This year-long delay 

cost millions of dollars of lost revenue to KIS. We spent approximately $50,000 to get on the IT 70 schedule, on internal and exterVerDate Aug 31 2005 12:17 Jun 09, 2009 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 P:\DOCS\41234 JASON
12 

nal resources. This is not just a problem specific to my company; 

many small businesses spend significant dollars preparing the paperwork for getting on schedule. I know Administrator Doan has 

made a big push to get contracts awarded 30 days after businesses 

submit their paperwork, and I applaud that effort. 

It is important to note that a small business must also maintain 

their schedule contract. We have spent approximately $20,000 for 

contract updates for each Multiple Award Schedule we hold. On 

that note, the time and effort for small businesses spending on implementing changes to their schedule contracts can be long and laborious: in some cases over a year. 

KIS has found GSA Multiple Award Schedules redundant and 

overlapping in categories of information technology delivery services. Each Multiple Award Schedule holder, such as KIS, must bid 

for each contract opportunity under the schedule, which adds to the 

cost of bidding and proposal costs. In other words, if you were 

awarded an 8(a) STARS contract, it only means you can bid on opportunities that are assigned to that contract; no business comes 

with the award. We estimate that we have spent $850,000 on competitive bids on these schedules. Needless to say, that is out of the 

reach of most small businesses. 

On a positive note, the 8(a) STARS contract has been good for 

KIS. It is run by a professional team in Kansas City, Missouri that 

practices rapid response and skilled contract officers. My only regret is that it is not utilized as the preferred GSA Multiple Award 

Schedule for small businesses. Redundant GSA schedules offering 

the same services and products force small businesses to participate in a number of schedules rather than just one. Redundancy 

is not exclusive to GSA; every agency has its own information technology services contract, for which we must also compete. 

Now let me turn to some policy issues that affect small womenowned businesses. The most pressing issue is the SBA’s proposed 

rule on the women’s procurement program, whose comment period 

ends March 31 of 2008. Public Law 106-554, passed in 2000, established a women’s procurement program because Federal agencies 

did not meet their 5 percent women-owned contracting goal. In 

fact, the Federal Government has never met the goal; the highest 

number it has ever achieved is 3.4 percent. 

The SBA studied the data for seven long years, only to publish, 

on December 27 of 2007, an unsatisfactory proposed rule: WomenOwned Small Business Federal Contract Assistance Procedures. 

The SBA chose the narrowest method of data analysis and identified only four NAICS codes that will be subject to restricted competition: cabinetmaking, engraving, other motor vehicle dealers, 

and national security and international affairs. 

But there is another hurdle to clear before these limited four categories can be eligible for set asides. An agency must perform an 

internal audit of its past contracting actions to show that it is rectifying past discriminatory contracting practices before any contract 

can qualify for a set aside. By requiring this additional finding of 

past discriminatory practices by agency, we believe this proposed 

rule sets forth a new legal standard which will be damaging not 

only to this program, but potentially every women business enterprise in the Country. Women Impacting Public Policy and its coaliVerDate Aug 31 2005 12:17 Jun 09, 2009 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 P:\DOCS\41234 JASON
13 

tion partners are asking the SBA to withdraw this rule. In addition, many Members of the House and Senate have urged the SBA 

to withdraw the rule, and we are grateful for their support. 

There are other policies which affect the ability of women-owned 

businesses to do business with the Government. Consolidated contracts, also known as bundled contracts, hurt small businesses. 

OMB reported in 2002 that for every $100 awarded on a bundled 

contract, there is a $33 decrease to small businesses. A 2004 GAO 

report shows that Federal agencies are confused over what constitutes contract bundling. We urge the Subcommittee to clear up 

the confusion for the agencies. 

WIPP continues to believe that if you list us, it is important principle in subcontracting you must use us. Small businesses spend 

thousands of dollars in staff resources to be part of the subcontracting plan on a prime contractor’s bid. We believe prime contractors should utilize the small businesses they include in their subcontracting plan unless the small business could no longer meet 

the requirements. There should be penalties assessed for violating 

the subcontracting plan. 

The Federal Government’s ability to meet small business goals is 

far from impressive. According to SBA, fiscal year 2006 Federal 

contracting numbers show that only 7 of 24 Federal agencies met 

the 23 percent small business goal. Additionally, only 10 major 

agencies met 5 percent women-owned contracting goals of 5 percent. 

In conclusion, it is not impossible for small women-owned businesses to be successful in Federal contracting. But our success does 

not rest solely on the quality of our products and services; Federal 

acquisition policy largely dictates if and when we will be successful. 

The Congress and the Federal agencies must work together to ensure that the policies they enact and the paperwork they create do 

not shut out the ability of women-owned businesses to succeed in 

the Federal marketplace. 

Thank you for your time. 

Ms. NORTON. Thank you, Ms. Giordano. 

I want to thank all four of you. We had you come before our 

agency witnesses. Sometimes the protocol for the opposite because 

we would like them to respond to some of what they have heard 

here. Could I just ask, across the panel, what agencies have you 

personally or do you know personally of doing business with the 

Federal Government? What agencies? 

Ms. STEPHENWOOF. You mean that we work with specifically? 

Right now we are working with, under the BRAC we are working 

with the—I am sorry—okay, I am working with the U.S. Army 

Corps of Engineers specifically at this time. 

Ms. NORTON. Mr. Smith, you mentioned the Missile Defense 

agencies? 

Mr. SMITH. I was contracted as a program manager in their 

small business office. 

Ms. NORTON. What other agencies in the Federal Government 

are you familiar with? 

Mr. SMITH. That I work with? I work with EPA. As a consultant, 

I have written proposals, successful proposals for AOC. 

Ms. NORTON. Architect of the Capitol? 

14 

Mr. SMITH. Yes. EPA. I work with the Army. I work with HUD. 

I work with many of these agencies. 

Ms. NORTON. Mr. Zingeser, if you have done work in this building, what agency were you working with to do that? 

Mr. ZINGESER. We are very, very fortunate to be working for the 

Architect of the Capitol, the General Services Administration, the 

Corps of Engineers, the NAFAC, and some work for some other 

three-letter agencies. 

Ms. NORTON. I just want to put on the record your experience 

across the board. 

Ms. Giordano? 

Ms. GIORDANO. We are privileged to hold a number of contracts: 

GSA, NIH, all agencies within DOD. We also have the FBI, Department of Justice, the Securities and Exchange Commission, and several others. 

Ms. NORTON. So we have heard from witnesses that run the 

gamut from construction to high tech, so we have a good cross section here. 

Ms. Stephenwoof, you indicated a forum, that a forum was held 

by your organization. 

Ms. STEPHENWOOF. Yes. 

Ms. NORTON. You say that you recommend targeted forums created by Federal agencies to reach the small and minority business 

community. I want to know if any of you have had any experience 

with such forums or meetings that were called for small businesses 

by any Federal agency. 

Ms. STEPHENWOOF. I can start. This past fall—— 

Ms. NORTON. I am not talking about—I am speaking largely to 

the notion of intelligence, to the notions that Mr. Smith raised 

about notices to business. I am trying to understand how the small 

business community knows, except through in the ordinary course 

of business like every business person, about what kinds of business is available. 

Mr. ZINGESER. I can just say that, in our industry, all of the 

agencies that I mentioned, perhaps with the exception of AOC—I 

am not sure that they do or do not do this, but, in general, GSA, 

the Corps of Engineers, NAFAC, they routinely hold programs for 

small businesses to attend and we, as a large business, attend 

those because it is very useful and helpful to us to meet new small 

business representatives. An awful lot of business cards get passed 

around; people get to know each other. And then within the Greater Washington Area, which is where we work, a number of the 

trade associations, in addition to agency, but the real estate trade 

associations and so forth, again, hold various meetings which encourage small business participation. 

Ms. NORTON. So do you find that this leads to the kind of information that helps various small businesses get work with the Federal Government? 

Mr. ZINGESER. I would think so. The only other point I would 

make is that most large general contractors themselves have their 

own outreach programs, which are really required as part of the 

FAR. 

Ms. NORTON. Yes, but you criticized at least the way in which 

some records are kept. On page 4 of your testimony, Mr. Zingeser, 

15 

you say that prime contractors aren’t allow to report subcontractor 

participation beyond the first tier. The implication is that some of 

the work beyond the immediate or first tier subcontractor is in turn 

subcontracted. Is that what you are saying? 

Mr. ZINGESER. Well, I definitely do not want to be misunderstood. I believe that the SBA regulations that the agencies must 

follow in scoring their small business programs will not allow those 

agencies to reach down to the—— 

Ms. NORTON. I am trying to find out—if in fact you think that 

some of the business gets further subbed, as it were, what is the 

reason that you believe the Government wouldn’t want to know 

that? 

Mr. ZINGESER. My point—let me make sure that I am clear. My 

point is real simple. I think that the agencies that are procuring 

construction are not doing all that bad a job in trying to meet these 

goals. I think the issue is that, in general, there are many more 

dollars that are truly flowing to small businesses—— 

Ms. NORTON. Mr. Zingeser, okay, I will take that point. Mr. 

Smith says that twice a year—and you understand the construction 

business the way he does—they have got to report twice a year. I 

can’t imagine, in these twice a year reports, why they wouldn’t 

want the Government to know, and by the way, beyond the subcontracts that we have, we want you to know about this, that, and 

the other and that the Government wouldn’t want to record those. 

Ms. STEPHENWOOF. Well, if I could, I could speak to follow up on 

what he was saying. The Government, under the FAR, when they 

count the small business dollars, they only count the first tier. 

Ms. NORTON. Well, that is what I know. I am trying to understand if there is a lot more work going on out there, you would 

think everybody would want that to be known. 

Ms. STEPHENWOOF. Exactly. 

Ms. NORTON. So I know what you are testifying to. I am trying 

to understand, from your point of view, assuming Mr. Zingeser, 

who is in the business, is correct, why this wouldn’t come out and 

why the Government, who is always criticized for its small business contracting work, wouldn’t want to shout it to the hilltops. I 

mean, I am really perplexed here. 

Ms. STEPHENWOOF. That is a question we would like to have an 

answer to. 

Ms. NORTON. Well, I can understand that in order to get the contract you may have to indicate what your small businesses are. 

Are you saying, Mr. Zingeser, that perhaps they won’t know at 

that time that there are other subs that they will be using, or 

would a good contractor know, by the time she submitted a bid, 

that kind of information? 

Mr. ZINGESER. No, I think it is two different things you are asking. When a job is bid is one thing, but when the job is underway 

there were these forms that were paper forms that have now been 

replaced by an electronic system. The potential of that electronic 

system is that it will not be that difficult to flush out and report 

up where those dollars are flowing below the first tier. 

Ms. NORTON. Mr. Zingeser, I am asking you a question. I don’t 

know enough about the business. Should the contractor know or 

should be required to indicate that she will be using subs beyond 

16 

the contractor or the subcontractor that is reported initially to the 

Government, the first tier, as you call them? Would the contractor 

already know that information? 

Mr. ZINGESER. The contractor will know, at the time of award of 

a subcontract, generally where the dollars are going, and can report that information. Your question is why isn’t the Government 

seeking that, and the answer is I believe that they are not allowed 

to score that. They only are allowed to get the information—— 

Ms. NORTON. That is not the why; that is the what. 

Mr. ZINGESER. Okay. 

Ms. NORTON. And, you know, these figures become controversial 

and they are really better than we know, then, again, that is something that I will have to try to find out. 

Before I do more questions, I want to ask Mr. Graves whether 

he—so that is one of the things I am going to have to find out, because if they are better than we know, we want to know it. 

Ms. Giordano, you have got to make me understand this new 

rule, the narrowness of the rule and the choosing of cabinet—identified four codes, cabinetmaking, engraving, motor vehicle dealers, 

and national security and international affairs—and these are 

codes to improve—— 

Ms. GIORDANO. That there are—— 

Ms. NORTON.—to help to meet the 5 percent goal that they have 

habitually—— 

Ms. GIORDANO. That is the narrowest—— 

Ms. NORTON. What do you think is at work here choosing these 

particular sectors or areas? 

Ms. GIORDANO. My belief is that they chose the narrowest form 

for the reluctance to implement the program from the outset, and 

by selecting—— 

Ms. NORTON. Well, why these particular areas—cabinetmaking, 

engraving? Are there a lot of women in that that help you meet the 

5 percent goal? That is a lot of work that the Government does 

there, is that it, and they need these people? 

Ms. GIORDANO. That is probably their rationale. 

Ms. NORTON. Motor vehicle dealers? 

Ms. GIORDANO. Madam Chair, I can’t speak to their rationale. 

Oh, it is other motor vehicle dealers, which means it is ATVs. 

Ms. NORTON. All right, well, we will have to try to discern that 

too. 

Ms. GIORDANO. I would appreciate your asking the question to 

SBA, to be perfectly honest. 

Ms. NORTON. I thought maybe in the course of doing business 

with them, in frustration with them—— 

Ms. GIORDANO. We are a certified—— 

Ms. NORTON. Or that they had perhaps come forward at the time 

of the rule with a rationale, since they are not before us today. 

Ms. GIORDANO. We have yet to see that rationale in an explainable way. 

Ms. NORTON. Okay. 

Mr. Smith, you indicate that 80 to 90 percent of the Missile Defense contracts went to five companies. Couldn’t this be the nature 

of the work? I mean, it is pretty specialized work, isn’t it? 

Mr. SMITH. Oh, yes, it is specialized work, but 80—— 

17 

Ms. NORTON. Those were major companies. That doesn’t go to 

small—you are not speaking about small businesses, are you? 

Mr. SMITH. No. Major companies: Northrop Grumman, Boeing, 

Lockheed. 

Ms. NORTON. Well, that is the nature of the work. How about 

their record in small businesses, minority-and women-owned businesses and the like? Once they get this, once these five companies 

have the work, do they show, in your experience, were they able, 

then, to have—— 

Mr. SMITH. Subcontracting? 

Ms. NORTON. Yes, to meet subcontracting responsibilities. 

Mr. SMITH. Under DoD they have a comprehensive subcontracting plan. It is a test program that DoD has that is managed 

by DCMA, and under that particular plan it is very difficult to decipher whether or not they have in fact met some subcontracting 

codes. 

Ms. NORTON. Part of this is, you know, it is hard to even find 

out what is happening, it seems to me, but let me ask you about 

the AOC contract. That is pretty easy to figure out. 

Mr. SMITH. Yes, it is. 

Ms. NORTON. Now, here we have this new Visitors Center, right? 

We are talking about the new Visitors Center, I suspect. And they 

are looking for various support services. I got some of them down: 

pest control. What else? 

Mr. SMITH. Housekeeping, landscaping, elevator, lift maintenance. These are all under one contract. And they are asking for 

a company to come in to manage the building and to, in fact, have 

all of these services under their umbrella. 

Ms. NORTON. So you believe that the overall company that is 

managing the business is going to have all of these services. Do you 

believe these services, in turn, will be subcontracted to small businesses? 

Mr. SMITH. No. I mean, the thing is—— 

Ms. NORTON. Or do you think this is just a case of massive bundling? 

Mr. SMITH. This is a case of massive bundling. I mean, the thing 

is, ideally, I would not want to be a subcontractor. If I am a landscape company, I want to come in and I want to have a direct contract with you as the prime. 

Ms. NORTON. Why? 

Mr. SMITH. Why? Because I would rather negotiate with the 

owner directly. That way I will have my 15 percent markup with 

the owner. If I go in and negotiate with the prime contractor, my 

markup is going to be brought down because he wants his markup 

as well. 

Ms. NORTON. And, of course, that is the whole bundling issue. 

Well, let me put it this way. One would assume that the rationale 

for bundling would have been that the Government thought it was 

going to save money by putting all these contracts together. You 

know, the whole notion of putting things together is always about 

the more you can put them together, the less the cost in overhead 

to the Government, perhaps; the less in the cost in the kind of 

bookkeeping that the Government would have to do dealing 

18 

landscaper by landscaper, housekeeper by housekeeper. These 

things seem to me to be very much unrelated. 

Mr. SMITH. Very much so. 

Ms. NORTON. Whether or not the Government could save a few 

cents by putting them together, my question really goes to the good 

faith of wanting to do contracting with the kinds of businesses who 

would do this kind of business. Let’s look at the kind of business 

who would do it. Pest control. These are small businesses. Sometimes they are minority-owned and women-owned businesses, but 

we know that they are small businesses of various kinds, unless 

you get some great big company that does it. But you already have 

the big company because that is who the prime is. In your view, 

does the bundling law contemplate that the services will be related? 

Mr. SMITH. No, it does not. No. In this particular, the Architect 

of the Capitol is seeking a building management company that has 

experience in managing a facility itself, and they have a particular 

software that they want this company to in fact use. I am just suggesting that, fine, find your building management company and the 

software, but you, AOC, submit solicitations out for your landscape, 

for snow removal, for housekeeping, janitorial service, for elevator 

and lift maintenance service. Do that separately and place those 

companies in under the general management of the facilities management company. Don’t have the facilities management company 

go out and get these people and bring them in. 

If I am going to negotiate, I would rather negotiate with you, the 

Government. I know I can get paid in a relatively reasonable time 

period. I know who I am working with. That is who I want to go 

to. 

Ms. NORTON. What kinds of people are likely to end up, you 

think, getting these pest control, housekeeping, etc.? 

Mr. SMITH. Well, the thing is what you wind up doing is in terms 

of this resulting firm, firm fixed price will be awarded to one contractor. This particular contractor is a large property management 

firm that oftentimes they themselves may perform some of this 

work themselves on some other private facilities that they have. 

They have relationships with firms in the private sector where they 

do this. 

I have attempted, at one time—I think it was the Thurgood Marshall Building, and they had a very similar solicitation last year or 

the year before last, when it came out bundled as such—to pull a 

team together to respond to this, where I went to one of the large 

property management firms and said can I pull a team together 

with you, and the property management firm said, oh, we have 

looked at that before. And AOC uses a particular firm that they 

generally use and they weren’t interested in putting forth the effort 

to go after solicitations. But the small business firms then have to 

team or find themselves with a large building management firm. 

Ms. NORTON. Ms. Giordano, your description of the Multiple 

Award Schedule made me wonder the advantage of being on the 

schedule in the first place. How has being on the schedule helped 

you? 

Ms. GIORDANO. Madam Chair, it is a license to hunt. 

19 

Ms. NORTON. Well, it must save you something. You know, you 

don’t have to start from scratch, do you? 

Ms. GIORDANO. It is a vehicle that the Government agencies can 

utilize. Unfortunately, a number of DoD agencies will not utilize 

the GSA schedule. 

Ms. NORTON. What do they use, then? 

Ms. GIORDANO. They have their own. And I had to compete for 

those as well, which are the exact same categories as all of the IT 

schedules, or information technology products and services schedules within GSA. 

Ms. NORTON. The Multiple Award Schedule should at least limit 

the competition. 

Ms. GIORDANO. It limits the competition to those schedule holders. However, when a task—— 

Ms. NORTON. And what number would that usually be? 

Ms. GIORDANO. Thousands. And then what happens is those 

thousands or multiples of thousands compete with that RFP that 

has been issued under that particular Multiple Award Schedule, so 

you are constantly doing bid and proposal preparation. 

Ms. NORTON. Ms. Stephenwoof, on page 2 of your testimony you 

indicated what you say is a great disparity of the average gross receipts of minority firms, $162,000, compared to $448,000 of the average of non-minority firms. Would this have something to do with 

the areas where minority firms are doing business? What are the 

areas in which these minority firms chiefly do business? Are they 

broad enough so that they could be fairly compared to the non-minority firms? And what would enable them to perhaps be broader? 

Ms. STEPHENWOOF. Well, these statistics were reported by the 

Department of Commerce’s Minority Business Development Agency, and I do have here the statistical breakdown by trade and by 

jurisdiction. I do have that available. 

Ms. NORTON. What are the major trades or areas in which these 

firms operate? 

And for Ms. Giordano I would ask the same question. Are the 

women-owned firms operating in a fairly narrow sphere or how 

across-the-board have they become? When you see this huge disparity between the 3.4 or whatever it is, they never even come 

close to making the goal in the 5 percent. 

Ms. GIORDANO. Our membership, Madam Chair, runs the gamut 

from people who manufacture products for commercial and Government use to the manufacturing of a nuclear fuse or nuclear batteries to be utilized in sending missiles off, ignition of missiles. 

There are a number of us who are information technology-related 

corporations and, of course, professional services. We run the 

gamut. 

Now, if I may, the Rand study said that—that was the study that 

was done for the SBA—that you could cut the data in any way they 

chose from 87 percent of under-represented industries or womenowned to zero, and they could be found under-represented, so the 

SBA chose the four categories that were the narrowest. They gave 

them options of how they would utilize their information. 

Ms. NORTON. Could I know from you whether or not your experience has been that the Federal Government has been generally 

timely in processing and paying out invoices? 

20 

Ms. GIORDANO. I am 120 days in arrears with several agencies 

within the Federal Government as we speak, Madam Chair, which 

means—— 

Ms. NORTON. I think the law says you people have to be paid in 

30 days, doesn’t it? 

Ms. GIORDANO. Yes, ma’am, that is correct. I am limited to interest payment and—— 

Ms. NORTON. What do you mean you are limited to interest payment? 

Ms. GIORDANO. Well, there is one, I believe it is 1.5 percent that 

I am only allowed to charge for late fee. We usually charge 3 percent in the commercial environment. That is the Federal late fee. 

I rarely get paid a late fee. 

Ms. NORTON. So you don’t get the late fee. 

Ms. GIORDANO. No, ma’am. It has been very, very rare. At one 

point, three years ago, the Federal Government owed me—in particular, the Department of Navy owed me—$4.3 million. It took me 

nine months to collect. Being a small business in business, providing services and products to the Government, my products were 

deployed into the war zone, being utilized by the military and, in 

fact, nine months later I got paid for it. 

Mr. GRAVES. Owed you that in late fees or in products? 

Ms. GIORDANO. Product delivered being utilized, whether it was 

on ships or on the war fighters themselves. I was carrying the payment for the Government; therefore, they were utilizing the products that I had to pay for on my back. 

Mr. GRAVES. How late was it? 

Ms. GIORDANO. Nine months. 

Mr. GRAVES. Nine months. 

Ms. STEPHENWOOF. Okay, I do have the response available now. 

Ms. NORTON. This is close to criminal. I don’t know how people 

stay in business. How do people stay in business? You can understand how large companies. What do you do, borrow because if you 

have a contract, they know that somehow the Federal Government 

will one day pay it? How does that work? 

Ms. GIORDANO. I am fortunate enough that I have a commercial 

business sector that has been capable of sustaining us, and we 

have very good customers—— 

Ms. NORTON. But I thought you said 80 percent of your contracts 

were Federal contracts. 

Ms. GIORDANO. That is correct. I also have a banker who believes 

in my company, and my home has been utilized as collateral more 

than once and has secured the loan requirements. 

Ms. NORTON. That is not a good thing these days, is it? 

Ms. GIORDANO. But I still pay my employees. 

Ms. NORTON. Ms. Stephenwoof? 

Ms. STEPHENWOOF. Yes. The first note that I wanted to make 

sure that was made on the record is that I just found that there 

is no current information about the report. It was amazing to me 

that a Federal Government agency is still using data from a 2002 

survey and published the results in 2006, and there is no new information that we can use as minority and small businesses in 

terms of tracking and forecasting and planning for our economic 

development initiatives. But in this report it stated—you asked 

21 

about the locations. The ranking areas where there is a high percentage of minority firms. Our Washington Metropolitan Area is 

not included. 

Ms. NORTON. No, I wasn’t interested in, sorry, areas of the Country; I was just trying to find sectors. These figures don’t mean 

much across the board. They will give us a starting point, but unless we know that we are gradually seeing small businesses in a 

number of areas where the Federal Government does business, 

which, by the way, is a whole lot of areas—it is almost every area, 

I guess, that the private sector does business—then it is hard to 

know how to hold the particular agency accountable. 

Ms. STEPHENWOOF. But it is also reported by sector. But as you 

are experiencing your frustration, we also experience our frustration with getting information from the Government sector in terms 

of, number one, their goals and the deliverables. We can’t find data 

that measures the success of the small business contracting plan. 

They always talk about the goals, but the data that gives you the 

statistical reporting of the success of the goals and the listing of 

those companies that participated is also our frustration, because, 

again, this report also reports by sector, by trade, and where the 

minorities across the board are participating and flourishing, and 

construction, again, is one of the highest trades that is in the competitive marketplace statistically, and the second being second only 

by real estate, rental leasing, and the retail trade. 

So the concern that we experience is the same thing that you experience. We try to grasp where is the market, where are the jobs, 

where is the business opportunity, and then it is like quick silver; 

they say we have a 51 percent goal on this project. And then you 

say, how do you propose to achieve it, what is your measure of success. And they will say, well, we try. And then you say, well, tell 

me what companies are you using that have satisfied your requirements, and they say, well, we don’t have to report that. But then 

how do you measure your success? You know, you can’t be a stated 

measurement. They can’t be a statistical chart. It has to be some 

compliance. Follow the dollars. Like he said, how many dollars are 

actually paid to those businesses that have been identified as fitting within those categories—small, disadvantaged, women-owned, 

HubZone—those requirements. And those are the data that we try 

to capture so, if there is a hole in that process, then we can help 

to fill that void by creating some new opportunities or some new 

measures for fitting those businesses within that area. That is the 

frustration that we—— 

Ms. NORTON. Thank you. I think the hole is not that they don’t 

know how to get it—— 

Ms. STEPHENWOOF. They don’t want to report the activities that 

they do when they don’t—— 

Ms. NORTON. Well, again, I don’t think that the way in which— 

if I could sort of close this panel, unless Mr. Graves, our Ranking 

Member has—it is apparent to me that you can’t leave it to the 

Small Business Administration alone to look agency-by-agency; it is 

too many agencies. It is too much difference with agencies. The 

agencies under our jurisdiction certainly engage in construction, on 

the one hand; and if you look at FEMA, those contract are across 

the board in very diverse areas of life. 

22 

But unless the Subcommittee takes an interest in the area, I 

don’t see how any umbrella Committee, which has overall responsibility is going to keep track of—I don’t know how many Federal 

agencies there are who do work contract with small businesses, but 

virtually every Federal agency does. So what we are going to do is 

to take what we have heard from you and try to use it to enable 

us to deal with the agencies over whom we have some oversight. 

I want to thank each of you for being our lead witnesses so that 

we would have some understanding of how to move forward and 

question the witnesses who come after you who are the agency witnesses. Thank you very much for coming. 

Panel two is Michael Rigas, Deputy Associtate Administrator of 

the General Services Administration Office of Small Business Utilization; Al Sligh, who is the Director of the Office of Management 

at FEMA. We will be pleased to hear your testimony at this time. 

Welcome to both of you. Mr. Sligh, am I pronouncing your name 

right? 

Mr. SLIGH. Yes, you are. 

Ms. NORTON. From GSA. Would you like to go first? 

Mr. SLIGH. Chairwoman Norton, Members of the Subcommittee, 

thank you for the opportunity to appear before you today. My written statement goes into great detail on how FEMA is incorporating 

small, minority, and disadvantaged businesses in its acquisition 

strategy, meeting its social economic contracting goals, and engaging in the private sector across FEMA’S critical mission areas: preparedness, protection, response, recovery, and mitigation. 

As you know, the first priority of FEMA during the initial phase 

of a major disaster is and has always been to provide relief to the 

victims in the most efficient and effective way possible in order to 

save lives and property. FEMA’S goal is to use competitive strategies while also providing local and social economic businesses contracting opportunities whenever possible. 

I am proud to report that FEMA competed 81 percent of its procurement dollars in fiscal year 2007. FEMA went from last place 

within DHS for its competitive dollars in fiscal year 2006 to first 

place in fiscal year 2007. 

Now let me address some our achievements in meeting social 

economic goals. First and foremost, FEMA has recently dedicated 

a full-time small business specialist whose primary responsibility is 

to increase contracting opportunities for small, minority, and disadvantaged businesses. This assignment will further help institutionalize our small and minority contracting efforts and help maintain a level playing field. 

To date, FEMA has achieved exceptional results in meeting and 

exceeding most of its social economic goals. From 2006 to the 

present, FEMA has awarded $2.4 billion to small businesses. In fiscal year 2006, FEMA awarded $1.8 billion to small businesses. This 

amount represents approximately 27 percent of the total procurement dollars awarded. In fiscal year 2007, FEMA awarded $485 

million to small businesses. This amount represents approximately 

33 percent of the agency’s total procurement dollar awarded that 

fiscal year, thus exceeding our small business goal of 30 percent. 

Additionally, in fiscal year 2007, the agency exceeded the small, 

disadvantaged business goal by approximately 12 percent, the 8(a) 

23 

goal by approximately 7 percent, and the HubZone goal by approximately 4 percent. During the same fiscal period, FEMA also exceeded the women-owned business goal of 5 percent. 

So far, in fiscal year 2008, FEMA is on target and has awarded 

$83 million to small businesses. This represents approximately 29 

percent of the total procurement dollars awarded so far this fiscal 

year. 

The only category where FEMA needs improvement is servicedisabled veteran-owned small businesses. In fiscal year 2007, 

FEMA was 1.1 percent below its goal. This shortfall is not unique 

to the agency, but, rather, a common challenge that runs across the 

Federal Government. The service-disabled veterans-owned small 

business program is relatively new and is not yet well known. 

Nonetheless, it is worth noting that the small, minority, and disadvantaged business investments made in fiscal year 2007, approximately 14 percent were for professional, administrative, and 

management support services; approximately 13 percent were for 

utility and housekeeping services; and approximately 10 percent 

were for information technology services. Another 18 percent covers 

both maintenance, repair, and alterations to real property, and the 

lease or rental of facilities. 

As the Committee considers how FEMA is working with small, 

minority, and disadvantaged businesses in procurement, we urge 

you to also take note of how we are engaging the private sector, 

small and large, across the homeland security landscape. With 

FEMA’S new structure and vision now in place, the agency is aggressively pursuing new inroads with the private sector and business community on various fronts to build a stronger emergency 

management system such as: one, standing up a new FEMA Private Sector Office; two, building new and enhancing existing preparedness partnerships; three, soliciting private sector participation in the development and refinement of the National Response 

Framework and national preparedness systems; four, creating 

stronger and more vibrant public-private partnerships through programs and initiatives, namely, Citizen Corps, Ready Business, and 

FEMA Aid Matrix, and other national, regional, State, and local 

planning exercises and training efforts. These efforts help to foster 

open lines of communication with our homeland security partners 

in the business and non-profit communities. 

Increasingly, we are leveraging the resources and expertise of 

our partners in the private and non-profit sectors, even above and 

beyond the important roles they have always played in the past. It 

is important, however, to give perspective on the opportunity and 

challenge involved in effectively engaging the private sector in 

emergency management. The magnitude and complexity of business opportunities—with its varying needs, capabilities, capacity— 

make coordination a daunting challenge and will require a longterm effort. 

FEMA, in any event, is up to the challenge. Through its Private 

Sector Office, the agency is building a network with non-government organizations, business and trade associations, local, regional, 

and national chambers of commerce, and looking to make significant progress in integrating the private sector as a full partner in 

incident management. 

24 

We know the worst time to build relationships is during a disaster. We are building them today. We are committed to making 

the vision a reality. Thank you for the opportunity you have afforded us today to speak about the new FEMA. 

Ms. NORTON. Thank you very much, Mr. Sligh. 

Mr. Rigas, am I—Rigas? 

Mr. RIGAS. Rigas, yes. 

Ms. NORTON. Of GSA. 

Mr. RIGAS. Good morning. Thank you for the opportunity to appear before you today to discuss doing business with the Government and the General Services Administration’s record and goals 

for small, minority, and disadvantaged businesses. I am Michael 

Rigas, Deputy Associate Administrator for Small Business Utilization at the General Services Administration, and I am pleased to 

be here this morning. 

As the premier acquisition agency of the Federal Government, 

GSA’s mission is to help Federal agencies better serve the public 

by offering, at best value, superior workplaces, expert solutions, acquisition services, and management policies. 

GSA works hard to ensure that small businesses have ample opportunities to compete in GSA procurements. We know that small 

businesses are the engine of our national economy and that they 

bring new and innovative solutions to Government challenges, and 

that a successful and strong small business community is integral 

to job creation, community empowerment, and economic revitalization. 

GSA works hard so that small businesses—including disadvantaged, women-owned, HubZone, veteran-owned, and service-disabled veteran-owned small businesses—have every opportunity to 

participate in the Federal procurement process. And as an agency 

we actually exceed the goals Congress has set. 

The Small Business Act establishes, for Federal executive agencies, an annual goal of awarding 23 percent of prime contract dollars to small businesses. For GSA, this equated to $1.25 billion in 

fiscal year 2006. In fiscal year 2006, GSA spent over $1.7 billion, 

or 32 percent, of all prime contract procurement dollars on small 

business. That impressive result is 40 percent higher than the statutory goal and an increase of 13 percent over fiscal year 2005 level 

of $1.5 billion. We are proud that we have surpassed the statutory 

goal. 

Washington, D.C., being the home of our Federal Government, is 

also home to many Federal buildings, of which GSA is the steward. 

Our Public Building Service contracts for a wide variety of services 

to support their mission of providing superior workplaces for Federal customer agencies at good economies to the American taxpayer. In fiscal year 2007, of the more than $1.8 billion spent in 

these areas, over $692 million, or 38 percent, were spent on contracts with small businesses. In the National Capital Region of 

Washington, D.C., over $244 million has been spent by the Public 

Building Service on small business, equaling a percentage of over 

45 percent of all procurement dollars spent by the Public Building 

Service going to small businesses. 

GSA has developed a number of outreach programs to heighten 

awareness within the small business community of GSA conVerDate Aug 31 2005 12:17 Jun 09, 2009 Jkt 000000 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 P:\DOCS\41234 JASON
25 

tracting opportunities. This includes small business fairs, trade 

group seminars, targeted informational and educational seminars, 

pre-award and post-award small business opportunity fairs. These 

efforts have helped GSA to exceed its statutory small business 

goals. 

But the story of GSA’s support for small business doesn’t end 

with our direct GSA contracting. GSA has a strong record of supporting small business contracting through the Government-wide 

acquisition contracts and through GSA’s Multiple Award Schedules 

Program. 

The Schedules Program provides ordering activities with a simplified procurement process whereby GSA establishes contracts 

with firms for commercial products and services. It offers Federal 

agencies a broad range of products and services from private sector 

vendors and suppliers at fair and reasonable prices that have been 

negotiated by GSA. 

And I am happy to report that 80 percent of the companies which 

hold GSA Schedules contracts are small businesses. In fiscal year 

2005, through the GSA Schedules Program, Federal agencies 

awarded over $12 billion in Schedule orders to small businesses. 

That amount increased to over $13 billion for fiscal year 2006, 

which is approximately 37 percent of all prime contracting Schedule spending Government-wide going to small businesses. 

The ordering procedures applicable to the Schedules Program encourage ordering activities to consider and, where applicable, give 

preference to small businesses. GSA’s online buying tool promotes 

increased access to the small business community by allowing customers to tailor their searches specifically for products and services 

provided by small, minority, veteran-, and women-owned businesses. Contracting officers ordering via the Schedules may make 

socioeconomic status a primary evaluation factor when making a 

best value determination. 

Madam Chairwoman, as an agency, GSA’s focus on small business starts at the top. As one of the few Government agency heads 

who was an entrepreneur, a former small and minority business 

owner, and a Federal Government contractor, Administrator Doan 

is our agency’s biggest advocate for small business. She knows from 

experience that starting a business is hard, and that sustaining 

and growing a business is even harder. She is the agency’s biggest 

advocate for ensuring that doing business with GSA is not one of 

those hardships. 

Our Office of Small Business Utilization conducts hundreds of 

outreach events a year across the Country for small businesses to 

open doors to Federal contracting opportunities for them. We conduct one-on-one counseling sessions to help companies in understanding and participating in the Federal procurement process; we 

attend procurement conferences to conduct workshops that provide 

important information to small business owners on how to do business with GSA; and we consult with small businesses in person, 

over the phone, and by answering the many questions that are submitted in e-mail and letters. 

Madam Chairwoman, GSA has a strong record of supporting 

small businesses and small business contracting, and we pledge to 

continually work to improve on our already impressive performance 

26 

record with regard to small business contracting. I thank you for 

the opportunity to appear before you today, and I would be happy 

to answer any questions you and other Members of the Committee 

may have. Thank you. 

Ms. NORTON. Thank you very much. 

Mr. Rigas, you or Mr. Sligh can perhaps clear up this issue that 

I asked the panel about when it was alleged that there were contractors who weren’t being counted because you can’t count below 

the first tier. I am sure there must be a good reason for that. And 

apparently the Post-Katrina Emergency Management Act of 2006 

places limitations on tiering on subcontracts. What is the Government getting at there, please? 

Mr. RIGAS. Well, it is my understanding that, for subcontracting, 

SBA rates the agencies on their prime contracting small business 

dollars and on their subcontracting dollars—— 

Ms. NORTON. Say that again. I am sorry. 

Mr. RIGAS. SBA rates agencies on their prime contracting dollars 

that go to small business, as well as the subcontracting dollars that 

they spend on small business. And with regards to subcontracting, 

they only allow agencies to count first tier. 

Ms. NORTON. Yes, that I know. 

Mr. Sligh is, I guess, who has this in his statute, which apparently explicitly places a limit on tiering beyond the tiering of subcontractors? I am simply trying to find out what is the policy goal 

here, what is the reason, if there is a complaint from some that 

some are not being counted. That, of course, came from a contractor that said some of the subcontractors were in fact not being 

counted and, therefore, the figures are not accurate. 

Mr. SLIGH. It is my understanding that the requirement is that 

we report to the first tier level and that, at FEMA, we have been 

doing that. And the difficulty for us may be a systems issue, that 

our systems may not be, at this point, robust enough to collect the 

data for below the first level. 

Ms. NORTON. Well, I can understand that, but at least if they 

say—and each of you will have to explain to me how the Government can justify, in construction contracts, monitoring twice a year, 

going in twice a year. But at least at that time you would think 

that you would know whether or not there were small business 

contractors, minority, women-owned, disadvantaged business contractors. Do you monitor these contracts? 

Mr. SLIGH. Yes, we monitor the performance under our contracts, 

yes. 

Mr. RIGAS. Yes, we conduct subcontract—— 

Ms. NORTON. What is your response to Mr. Smith’s criticism that 

twice a year monitoring of a construction contract misapprehends 

the construction business, that the business proceeds rapidly, is 

done, and, therefore, your monitoring misses the point? What is 

your response to that? 

Mr. RIGAS. There is a difference between knowing and reporting. 

The electronic subcontracting reporting system can capture subcontracting levels down to the second, third, and fourth levels. However—— 

Ms. NORTON. Was that reported? Do you get credit for that in 

your report? 

27 

Mr. RIGAS. No, we don’t. And you might want to ask SBA about 

that, because we would love to be able to—— 

Ms. NORTON. You don’t have any idea? Is it possible to abuse it? 

There has got to be a reason why nobody wants to even know 

whether or not a sub-sub, or whatever the sector calls it, may involve one of the very groups that you are trying to target. You don’t 

have any idea? I mean, I just can’t believe that each Government 

agency carries out whatever SBA says without reading and understanding the policy reason for a particular goal. So I am left here 

knowing—see, when I hear something like that, my first response 

is these people are crazy. It’s never my response. Far more analytical about it. I am saying they had something in mind. Our goal 

is to find out what they had in mind before I can criticize it. And 

if you don’t know, but you are carrying it out—indeed, we put it 

in a statute and I don’t know, because it looks like FEMA may not 

have been absorbing these tiers. So obviously there is something at 

work here; it may be abuses of one kind or the other. But even if 

that is the case, if in fact contractors and subs below the small 

business reported are being used, one would wonder why—since 

you say that it does show up—why that isn’t reported. 

Let me ask you both about bundling. You heard the criticism of 

bundling. That is the kind of criticism we hear constantly, that essentially what you are doing is crippling opportunities for small 

businesses by grabbing up in a bundle services that would otherwise be available to small businesses, thus virtually at odds with 

the policy of increasing representation of these various—has either 

of you, would you give me the number of contracts that you bundle 

in each agency, whether it increases or not? 

Mr. SLIGH. At FEMA, we have a competition advocate who has 

a specific responsibility of looking at contractual actions to identify 

and eliminate bundling where it occurs. 

Ms. NORTON. Say that again. 

Mr. SLIGH. Within FEMA, we have a designated competition advocate who has a responsibility to look at procurement actions specifically for bundling type activity and look for alternatives to bundling procurement actions so that procurements—— 

Ms. NORTON. And what has been the result of having a special 

advocate of that kind? 

Mr. SLIGH. We get another look, other than the contracting officer, other than the normal process of putting together an acquisition strategy and moving forward with the procurement. We have 

someone going in looking specifically for any type bundling type activity. In addition to that, our small business specialist is looking 

for bundling type activity on behalf of the small business community. 

Ms. NORTON. So are you saying that your agencies in fact are not 

doing much bundling, because you have got somebody there monitoring, saying you can’t bundle this; these things are not related, 

there is no reason to bundle them? So you are just not doing it, you 

are not one of the agencies that are doing it? 

Mr. SLIGH. I can only speak for FEMA currently. Currently—— 

Ms. NORTON. How long have you had this advocate trying to keep 

bundling from occurring at FEMA? 

Mr. SLIGH. At least a year, maybe two. 

28 

Ms. NORTON. Would you repeat to this Subcommittee how many 

contracts have been bundled in each of your agencies over the last 

five years? 

Mr. Rigas, what are you all doing about bundling? 

Mr. RIGAS. We have a similar process in place where our procurement plans are reviewed by our small business technical advisors 

in each region, and I know in Central Office, where we are located, 

in Washington, D.C., we have not had any bundled contracts. But 

there are 11 regions throughout the Country, and I would be happy 

to question each of them as to any—— 

Ms. NORTON. I want agency-wide, obviously. I would like to know 

for the last five years how many contracts have been bundled. We 

would like that in 30 days, please. 

I am informed by staff that the tiering prohibition is related to 

liability because only the prime contractor can sue or be sued by 

the Government. That doesn’t answer my question about why you 

wouldn’t get credit for it if in fact, in the course of doing business, 

you did—unless you are not even supposed to do sub-subs. But I 

can’t believe that is the case. 

Mr. RIGAS. I don’t know. If I could build on that. Perhaps it may 

be that because the contract is between the prime contractor and 

the Federal Government, and within that contract is a subcontracting plan for them to subcontract out so much of their work to 

small businesses, and it could be that because the contractual 

agreement does not go beyond the Government and the prime, that 

we can’t hold—— 

Ms. NORTON. Well, but even if you couldn’t hold, you could get 

credit for it if in fact that occurred. I am only going by one contract, so I am not here to day that this is happening governmentwide, but apparently it is the case that it is not being reported. You 

say the information is captured, though. Is it? 

Mr. RIGAS. Yes. Actually, I just had someone send me some information here that it is not—apparently, the acquisition counsel has 

not approved the electronic subcontracting reporting system to collect any data below the first tier, although presumably it is capable 

of collecting such data. 

Ms. NORTON. Well, we will just have to find out. 

Constant complaints ever since there have been goals about not 

meeting women-owned goals. Have your agencies been meeting its 

goal for women-owned businesses? 

Mr. SLIGH. Madam Chairman, FEMA has met its goal for 

women. 

Ms. NORTON. Typically or recently or what? 

Mr. SLIGH. Typically. 

Ms. NORTON. Congratulations. 

Mr. RIGAS. Yes, we have actually—GSA has exceeded its womenowned goal for the last fiscal year 2005 and fiscal year 2006. 

Ms. NORTON. Your statistics were very impressive, but I do note 

that the National Small Business Association says that up to a 

third of SBA’s list of top 100 small business contractors in 2005 

were actually large businesses. The National Small Business Association is recommending that the size of the business be re-certified 

every three years, using a rolling average during this time. They 

say that this approach would not overburden small business. But 

29 

this is quite an accusation. They don’t report who they are, but I 

would—this was reported by the Eagle Eye Publishers, objective 

observers here, and I would like to ask each of you to look at the 

size of the small businesses you are reporting in these statistics 

and to look at them in the way SBA recommend over the last three 

years. 

Mr. RIGAS. I know a lot has been done to address the issue that 

was raised by Eagle Eye, and I believe OFPP Administrator 

Dennett sent a memo to all chief acquisition officers to review their 

data because some of those businesses had either been acquired, 

they were small businesses that were acquired by large businesses 

or had simply outgrown their size standard. But that had not been 

reflected because I guess the period of time that folks went back 

to look back to review size standards had not been—— 

Ms. NORTON. That is a pretty large number. You know, the 

women-owned and minority-owned businesses have to graduate 

once they reach a certain level. I can’t understand why it wouldn’t 

apply across the board to small businesses. We are trying to help 

small businesses, really small businesses. 

What about this late payment? That was very distressing. I had, 

Mr. Sligh, a very distressing experience with FEMA where Federal 

Protective Service contractors were not paid on time, and scandalous results of not being paid on time. These are people who are 

security officers. I worked very closely, though, with Federal Protective Service and with ICE, and we were able to get those payments in fact done. They set up a whole system for making sure 

that they did not in fact encounter this problem, and, yet, the 

Small Business Association reports 30 percent of those that they 

surveyed reported experiencing extreme delays. Do you each pay 

within 30 days, as the law requires? And if not, do you pay the 3 

percent, I think it is? Well, that is the private sector. We go cheap 

on that and say a percent and a half, apparently. Do you pay on 

time these small businesses? 

Mr. SLIGH. As a rule, we pay on time. There are those rare occasions where we don’t pay on time, and when those occasions occur, 

we pay the interest payments in accordance with the law. 

Mr. RIGAS. I am not aware of any instances where GSA has been 

late paying, but I would be happy to—— 

Ms. NORTON. I wish you would check that. It seems almost criminal. Small businesses have a very hard time staying in business. 

The Federal Protective Service experience involved somebody who, 

because he had a Federal contract, he could borrow in order to pay 

his people, and that is what he did, just kept borrowing to pay his 

people in order to keep the contract. You might expect that of some 

failing business; you wouldn’t expect it of the—so I really would 

like to make certain. We are, I alert you, we are going to be following very significantly this work. We don’t believe, as you heard 

me say to the prior panel, we don’t believe that SBA can take all 

of these agencies and do the kind of work we are trying to do here 

today. Therefore, we are going to be doing this work. Your statistics are impressive to us. We don’t know whether or not the problems we heard about even apply to you, but we will know simply 

by the way we are going to keep in touch with you. 

30 

What savings do you believe the Government is getting from 

bundling? Make me understand why the Government would bundle. What are the savings, overhead savings? What does the Government seek? 

Mr. RIGAS. Well, as a small business advocate, we take a very 

critical look at proposed contracts that are bundled and as far as 

I know, in our office, we have not approved any. I believe the 

threshold standard—and I don’t know if it is regulatory or if it is 

just a rule of thumb, that the savings to the Government have to 

be 10 percent or greater in order to justify a contract being bundled. 

Ms. NORTON. And you believe you are complying with that, of 

course? 

Mr. RIGAS. Yes. 

Ms. NORTON. Well, the wholesale bundling that is going on leads 

us to believe that if not you, somebody is not. Could I ask what 

kind of small business contracts do your agencies have? Are they 

completely across the board? For example, there is concern that 

services can easily get stereotyped, by minority, by women. Do you 

perform small business—what are the major areas of small business contracts you perform? 

Mr. SLIGH. Within FEMA, it pretty much runs the gamut: IT 

services, building maintenance, professional support services. I 

think generally in all areas we look for opportunities for small 

business participation and with that, once we identify an area 

where we have sufficient number of small business interests, then 

we target that as a small business opportunity. 

Ms. NORTON. Now, GSA, you are just everywhere; you are all 

across the board. You do it for all these agencies. 

Could I ask you, Mr. Rigas, you heard the testimony of Ms. Giordano about the cost of getting on and staying on the Schedule, 

which made me wonder what in the world is the point, and I said, 

well, maybe you have limited competition, and she said, yeah, by 

the thousands, apparently. She also described the cost of getting 

on, spending the amounts of money one spends afterwards. One 

understands that for large contractors. It seems out of keeping with 

the Government policy of encouraging small business contracting. 

I say that to both of you, but particular GSA. Is there any way to 

cut down the cost of the GSA Schedule, which people die to get on 

and then find they are still spending lots of money to get on and 

stay one? 

Mr. RIGAS. Well, I mean, there is no charge to get on to the GSA 

Schedule—— 

Ms. NORTON. We are not talking about a fee to get on. 

Mr. RIGAS. Right. 

Ms. NORTON. Mr. Rigas, give me a break. We are talking about 

what an agency has to do in order to, shall I say, qualify to get on 

the Schedule, which is supposedly the gold standard. 

Mr. RIGAS. Right. I mean, getting on Schedule, I guess you can 

say it is akin to doing your taxes. You can do them yourself at 

some investment of time and energy, or you can hire an accountant 

to do your taxes for you, in which case it costs you money to do 

your taxes. But our office and our regional offices across the Country conduct regular sessions, training seminars on how to get on 

31 

GSA Schedule, and once on GSA Schedule, how to market your 

Schedule, because as Ms. Giordano correctly said, it is a license to 

hunt, it is your ability to go out and generate—— 

Ms. NORTON. And I can speak specifically to your very helpful forums that help people get on. I think you may even do them weekly here. You do a lot of work that way. Again, it is a license to 

hunt. I am now speaking to the expense. Have you cut down what 

looked to be a kind of very difficult technical processes to get on 

in the first place, just the technical underpinning of what it takes 

to get on, then the costs related to that, and then the costs of staying on? And what would you say are the advantages to being on? 

Mr. RIGAS. Right. Well, since Administrator Doan came to GSA, 

one of her top priorities was reducing the amount of time it took 

to get on GSA’s Schedule, and within a year of her being here we 

reduced the amount of time through the MAS express program, the 

Multiple Award Schedule Express Program from 152 days to 30 

days. 

Ms. NORTON. I think that is the one Ms. Giordano was on. 

Mr. RIGAS. Well, she was on, I think she mentioned, the IT 

Schedule 70, which is our IT hardware/software, and I am sure 

probably a few other Schedules as well. But the benefit to being on 

the GSA Schedule is for the investment of time and energy into 

getting this one contract vehicle, you are able to sell to every agency in the Federal Government. You are able to sell to the City of 

Washington, D.C. and certain other non-profits. So you have access 

to the entire Federal Government. 

And as for other contract vehicles that are out there, that is actually something Ms. Doan has also spoken out against, the proliferation of other agencies developing their own contract vehicles, and 

it goes against what the purpose of GSA—GSA is here to take care 

of that work for the rest of the Government. 

Ms. NORTON. Do most agencies use your Schedule? 

Do you use it, Mr. Sligh? 

Mr. SLIGH. Yes, ma’am, we do. 

Ms. NORTON. Okay. 

Mr. SLIGH. And when we use them, one of the advantages I see 

to us is that we have a—I would call it a set of vendors that have 

already signed up to typical Government terms and conditions that 

will allow us to expedite the procurement, as opposed to someone 

who may not have dealt with—— 

Ms. NORTON. I would think everybody would want to have these 

kind of pre-screened folks. How many agencies don’t use it, or do 

they use it sometimes and not other times? And why wouldn’t an 

agency use it all the time? 

Mr. RIGAS. It is my understanding every—— 

Ms. NORTON. Well, you said—no, I am responding to your own 

testimony. 

Mr. RIGAS. Right. Yes. What I mean is some agencies make, in 

addition to GSA contract vehicles, create their own contract vehicles. 

Ms. NORTON. And why would they do that is my question. 

Mr. RIGAS. That is a good question. 

Ms. NORTON. Well, maybe because everybody can’t get on the 

GSA Schedule. 

32 

Mr. RIGAS. One example I know the Administrator has spoken 

about has been the NASA SEWP contract, which is a contract vehicle that NASA has to sell high-tech computers, hardware, software 

to the Federal Government, which is something which is in direct 

competition and provides the same kinds of goods and services that 

IT Schedule 70, which Ms. Giordano is on, GSA’s contract vehicle 

sells and provides the same kinds of goods and services to the Federal Government that you can get from NASA SEWP. So all of the 

time and energy and Federal taxpayer dollars that are put into creating and maintaining this separate contract vehicle, in our opinion, doesn’t need to be done. 

Ms. NORTON. The staff said that if they are commercially available, generally commercially available, the law requires them to 

use a GSA schedule, and what you just described are what are 

commercially available, I believe. These are not specialized products. 

Mr. RIGAS. Right. 

Ms. NORTON. Well, that is something we have to enquire about. 

I want to thank both of you. You are the largest agencies among 

those that come under our jurisdiction and we want to keep in 

touch with you and encourage you on what is working, and particularly encourage you to have—and I noticed that both of you were 

here when the small business participants were here—to encourage 

you to take their testimony to heart. Thank you both for appearing. 

Now I want to call our last witnesses. 

Oh, excuse me, I am sorry. The Ranking Member. 

Mr. Sligh, would you come back? The last thing I want to do is 

the Ranking Member rattled on, but he had a very good question 

that I would like to hear the answer to. 

Mr. GRAVES. During a natural disaster, I am just curious how 

you reach out to small business, because there are a lot of opportunities and, obviously, with what happened down in New Orleans 

and Hurricane Katrina and Rita, there was a lot of small businesses participated, but it was as a result of the tiering and everything else. But I am just curious, when you have a disaster, if you 

have a tornado that comes in, or hurricane or whatever the case 

may be, a flood, what do you do? How does FEMA reach out and 

try to find those small businesses to do the actual work that is involved, or do you just leave that to someone else? 

Mr. SLIGH. Actually, our outreach starts long before—— 

Mr. GRAVES. You mentioned that in your testimony and I am curious about that. 

Mr. SLIGH. We have undertaken a fairly extensive program to 

put pre-positioned contracts in place. What I am saying is we are 

putting contracts in place that we would use during a disaster situation. We are putting them in place in a competitive environment 

long before any disasters actually occur. When the disasters occur, 

we use the contracts that we need to use that are in our portfolio 

of contracts that are in place already. During the course of a disaster, we would start to look for small local businesses that might 

be able to support us as we start to get the disaster under control, 

and we would pull some contracts out and bring in other small 

local companies that could do this work. We are starting to build 

our arsenal for being able to do this through what we call a disVerDate Aug 31 2005 12:17 Jun 09, 2009 Jkt 000000 PO 00000 Frm 00044 Fmt 6633 Sfmt 6633 P:\DOCS\41234 JASON
33 

aster registry. We are actually going out seeking, identifying small 

contractors in areas that are prone for floods, disasters, and preregistering them so that, should a disaster occur, we can reach out 

and start to utilize those immediately. 

Mr. GRAVES. How do you determine where—I mean, it has got 

to be an awful tough job to try to pre-determine where disasters 

are going to be, but my question is, too—and it has got to be a horrendous task trying to update that, because, as was pointed out, 

companies get bought out, they get absorbed, they no longer meet 

the criteria of what a small business is, whatever the case may be. 

Mr. SLIGH. We started to create this database and it will be a 

challenge to keep it up to date. It will be a challenge to definitely 

keep it current. And what we are looking at is basically, across the 

Country, identifying sources that could possibly help us in a disaster type situation. 

Mr. GRAVES. I know in Missouri, with the possibility of the new 

Madrid Fault and the earthquake there, I know you guys, or I assume you are pre-positioning. Kansas City is supposed to be one of 

the refuge cities, whatever the case may be. So what opportunities 

are out there right now? What sort of thing are you doing, for instance, in Kansas City to get ready for that? 

Mr. SLIGH. I am not prepared to speak to those specific initiatives that we have in place, but I can get that information and provide it back. 

Mr. GRAVES. If you would, yes. 

Ms. NORTON. Thank you very much, Mr. Sligh. 

Could I ask the last four witnesses from Architect of the Capitol, 

Capitol Visitor Center, John F. Kennedy Center, and Smithsonian 

to come forward now? 

I have this note that they are saying we could have Committee 

as a whole votes around 1:30. Even I vote in Committee as a whole. 

I vote on the House Floor in Committee as a whole, so I would 

have to go. 

I am going to ask you each to summarize your testimony, therefore, in about five minutes, if you can, because we want to hear 

from everyone. And if that bell rings, I don’t have control over that. 

Let’s start with Ms. Marshall of the Office of Equal Employment 

and Minority Affairs at the Smithsonian. Summarize your testimony, please. 

Ms. MARSHALL. Good afternoon, Madam Chair. I am the Director 

of the Smithsonian’s Office of Equal Employment and Minority Affairs, and we really appreciate having this opportunity to testify 

this afternoon so we can tell you a little bit about our program and 

what we are doing to promote and utilize small and disadvantaged 

businesses. 

To summarize our efforts, I just want to say that the Smithsonian has a very effective and successful Supply Diversity Program. 

Our record, if you had an opportunity to look at it, would show that 

we have done a lot of things to support small businesses. Particularly, over the past two years, we have actually achieve double the 

Government-wide small business goals and quadrupled the disadvantaged business goals. We do this and we are very successful, 

and the reason we are so successful is that we have a cooperative 

working relationship among the Supply Diversity Program, the OfVerDate Aug 31 2005 12:17 Jun 09, 2009 Jkt 000000 PO 00000 Frm 00045 Fmt 6633 Sfmt 6633 P:\DOCS\41234 JASON
34 

fice of Contracting, and procurement officials in our unit, and everyone enthusiastically supports it. 

Supplier Diversity at the Smithsonian is the way we do business 

at the Smithsonian. It is outlined in two of our Smithsonian directives; it is a part of our management excellence goals; it is in the 

Smithsonian strategic and annual performance goals. It really is 

the way we do business, and Supplier Diversity is a requirement 

in every manager’s and procurement official’s performance plan. 

I report to the head of the agency, so I think that speaks volumes 

about the commitment that the Smithsonian has for this program. 

I am responsible for providing leadership, direction, and management for the Supply Diversity Program, as well as the Equal Employment Opportunity program. 

Let me speak quickly, because I understand you do have to move 

quickly and leave here. So here are some practices that we employ 

to promote Supplier Diversity. 

At the beginning of each fiscal year, we work with the procurement officials in our top 10 spending units to identify projects that 

are suitable for small business. We require prime contractors to develop subcontracting plans, to identify opportunities for small businesses, and we have a cadre of Supplier Diversity zones in our museums, our research centers, and offices who advocate for the use 

of small business along with us. We provide diversity training; we 

participate in conferences, procurement fairs, and meetings; and we 

conduct vendor fairs and on-site capability assessments for firms 

who would work with us for our facility related projects. 

In the past year we provided advice and assistance to more than 

650 small businesses. We create and operate a Supplier Diversity 

online database that allows businesses to set register, and we now 

have more than 1500 small businesses registered on that database. 

And that database is used by our managers and our procurement 

officials to look for the small businesses to meet their procurement 

needs. 

Finally, we are using information technology in a way that we 

feel is most effective. It helps us to ensure procurement information. Procurement officials enter their data into the Federal procurement data system Next Generation and our contractors are 

now registering themselves on the Central Contract Registration 

System. These practices have increased our ability to promote and 

use small business in our contracting and procurement activities. 

I want to close my remarks by saying once again that the Smithsonian is committed to Supplier Diversity and that contracting 

with small business and small disadvantaged business is not only 

our policy, it is the way we do business. 

Ms. NORTON. Thank you very much. I am sorry to rush you like 

this, but you certainly gave us a lot of information. We have your 

chart, which is very impressive. May I ask you and all of the witnesses to look to make sure that your small businesses that you report are not on the top 100, the list of the Small Business Association which reports that one-third of those small businesses are in 

fact not small businesses? Would you please to do a three-year look 

at whether or not these are in fact small businesses? Because some 

of this reporting could be inadvertent. 

35 

May I go to Roger Mosier, Vice President, John F. Kennedy Center for the Performing Arts? Would you summarize your testimony 

in five minutes, please? 

Mr. MOSIER. Thank you. My name is Roger Mosier. I am the Vice 

President of Facilities for the Kennedy Center. Michael Kaiser, the 

President of the Kennedy Center, is out of the Country right now, 

so he has asked me to appear to read his testimony. 

We appreciate the Committee’s interest in the promotion of small 

businesses, and I will provide an overview of the Center’s efforts 

to promote the use of small, minority, and disadvantaged businesses in its contracting process. 

In fiscal year 2007, the Center received direct Federal funding of 

$17.5 million for the operations and maintenance of the presidential memorial and $12.8 million for capital repair. While our 

contracting activities are quite small in comparison with the other 

agencies appearing today, the Center is committed to awarding a 

fair portion of its Government purchases to small, minority, and 

disadvantaged business enterprises. 

The Center continually looks for opportunities to offer contracts 

to small businesses. Given the Center’s relatively small budge, the 

opportunities for such awards are limited; however, each contracting action is evaluated as to its suitability for a small, minority, and disadvantaged business opportunity. In general, the Center’s Chief of Contracting serves as our small business advocate. In 

addition, project managers and other contracting officer’s representatives are also advocates for the program due to our track 

record of successful work with small businesses. 

Many basic services and minor repair contracts are awarded to 

small, minority, and disadvantaged firms. These operations and 

maintenance contracts range in size from around $2,000 for power 

lift repair services to just under $2 million for housekeeping services. On an ongoing basis, the Center utilizes small businesses for 

services as varied as fire extinguisher maintenance; elevator inspections; door repair; asbestos abatement; chiller and other equipment inspection, repair, and maintenance; pest control; moving 

services; and brass and bronze maintenance. Additionally, supplies 

such as carpet and flooring, lighting fixtures, safety shoes, uniforms, and condenser pumps are regularly purchased from small 

businesses. 

For construction projects, from capital projects to major maintenance, the Center utilizes small businesses for both consulting and 

contracted services. In the realm of professional services, the Center has contracted with small businesses for architectural and engineering services, cost estimating, and construction scheduling review. 

For general construction work, the Center has awarded a number 

of mid-sized contracts to small businesses. These have included the 

recently completed Roof Terrace Doors Replacement project, Motor 

Lobby Life Safety Upgrades project as well. Both of these projects 

were successfully completed within budget and on schedule by 

small businesses. Most recently, the Center awarded its Roof Terrace Life Safety project to a small business. This contract award 

was just under $3 million. In fact, in August 2005, the Center established a pre-qualified bidders list that includes six small busiVerDate Aug 31 2005 12:17 Jun 09, 2009 Jkt 000000 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 P:\DOCS\41234 JASON
36 

nesses for general construction services and the Center solicited 

qualifications exclusively from small businesses to form this list. 

Beyond this arrangement, which typically provides a contracting 

vehicle for mid-sized projects that are often over $1 million, the 

Center has also established open contracts with small, disadvantaged general contracting businesses participating in the 8(a) program. These contracts are utilized for minor repair and significant 

maintenance projects that typically cost less than $250,000. The 

Center has worked with 8(a) firms for many years and currently 

has four 8(a) firms under Indefinite Delivery Indefinite Quality 

contracts, with one set to graduate from the program after working 

with the Center for their entire 8-year tenure in the program. 

Based on the size and scope of the contract to be awarded, the 

contracting office will avail itself of the option to go directly to the 

Small Business Administration for set aside or may limit competition to only small, minority, and disadvantaged businesses. This 

method proved successful in the award of our housekeeping contract, which is in the third year of a four-year contract. 

While not every contract can be awarded utilizing these small 

business vehicles, many of the capital projects outlined in the Center’s five-year comprehensive building plan will be of a size and 

complexity that will fit well with services we obtain through our 

small business relationships. In fact, with the majority of our large 

construction projects nearing completion and the focus of the Center’s capital plan shifting to relatively smaller infrastructure 

projects, the Center expects to be able to further award contracts 

to small businesses in the future. 

In summary, our experiences with small, minority, and disadvantaged businesses have proven to deliver a successful outcome in a 

variety of areas, including services, supplies, consulting, and construction. As a result, we are proactive in seeking out opportunities 

for the appropriate award of small business contracts. 

We appreciate the Subcommittee’s interest in this program and 

for including the Kennedy Center in this discussion this morning. 

Thank you. 

Ms. NORTON. Thank you very much, Mr. Mosier. 

We will move to the Acting Architect of the Capitol, Mr. Stephen 

Ayers. Please summarize in five minutes your testimony. 

Mr. AYERS. Madam Chair, Congressman Graves, thank you for 

inviting me here today to discuss AOC’s efforts to increase procurement opportunities for small businesses. 

I am happy to report that AOC is actively committed and making 

great strides in developing a program that enables and encourages 

small, disadvantaged, and women-owned businesses to effectively 

compete for contracts. As you know, the Legislative Branch agencies are not subject to the Small Business Act and, therefore, do 

not have authority to set aside procurements for small businesses. 

AOC procurement statutes require that all of our procurements 

over $100,000 be competed on a full and open basis. 

Nonetheless, we recognize the importance of encouraging and 

working with small businesses, and are implementing the following 

initiatives: first, the Small Business Subcontracting Program for 

construction contracts greater than $1 million; second, a Small 

37 

Business Outreach Program; and, third, a Small Business set-aside 

program for procurements between $5,000 and $100,000. 

Last August, we launched our Small Business Subcontracting 

Program, requiring large businesses that are awarded construction 

contracts exceeding $1 million to submit and adhere to a small 

business subcontracting plan. This plan includes goals for the 

prime contractor for recruiting small businesses as subcontractors. 

The AOC awarded its first contract under this new program—worth nearly $4 million—in late 2007. We require each 

large business to submit a semi-annual progress report detailing 

how well they are achieving the proscribed goals. 

A small business outreach program also has been launched to 

identify small businesses that are currently working with the AOC 

or interested in competing for work. As we expand our current vendor database to include small business information, our procurement staff continues to communicate business opportunities with 

diverse audiences through workshops, business fairs, and small 

business conferences. 

For example, last September, our staff participated in the Minority Procurement Workshop sponsored by the Committee On House 

Administration. We also plan to participate in the Small Business 

Administration’s National Small Business Week in April of this 

year. In addition, we will soon enter into negotiations with SBA to 

solicit their assistance in establishing our small business program. 

Although our small business outreach program is relatively new, 

we can identify several contracts that were awarded in fiscal years 

2007 and 2008 to small businesses that successfully competed 

against large businesses. Eleven contracts were identified totaling 

more than $10 million. 

In addition to the two earlier initiatives, we have begun implementation of a Small Business Set-Aside Program for our small 

business purchases between $5,000 and $100,000, when adequate 

competition exists. 

Recently, I formalized the AOC’s Small Business Program by 

issuing a policy memo directing our staff to fully implement the directives I outlined previously. We have a strong interest in encouraging small and disadvantaged businesses to successfully compete 

for AOC contracts. This increased competition ensures we receive 

the best value for taxpayers’ dollars while supporting employment 

opportunities and businesses in our community. 

Madam Chair, that concludes my statement, and I would be 

happy to answer any questions you may have. 

Ms. NORTON. Thank you, Mr. Ayers. 

And, of course, we now hear the bell you were alerted would go 

off, and I am going to have to go to the Floor, as, of course, will 

the Ranking Member. 

Our final witness is Terrie Rouse, CEO for the Visitor Center. 

Ms. ROUSE. Thank you. Thank you, Madam Chair and Congressman Graves for inviting me to participate in today’s hearing. I 

would like to begin by thanking the Architect of the Capitol and 

Congress for giving me the opportunity to be part of history: in 

opening the doors to the largest expansion of the Capitol that is devoted to the citizens of the United States. I believe that the Capitol 

Visitor Center, CVC, is a symbolic door to Congress, a portal that 

38 

will become an inviting place to remind visitors of their roles as 

citizens. As an extension of the Capitol, it will provide a fitting welcome and introduction to the People’s House so all may witness the 

workings of our legislative process. Our mission is to inform, involve, and inspire generations of Americans. 

To provide the Subcommittee with a bit of background about myself, I am originally from—— 

Ms. NORTON. I would appreciate, Ms. Rouse, if you would go on. 

Ms. ROUSE. I will skip that. 

Ms. NORTON. We have that. Go on to your operations, because 

even though I don’t have to go to the Floor, I do have to move out 

of here shortly. 

Ms. ROUSE. Okay. 

Ms. NORTON. So would you go to what you are doing on the subject matter of this hearing? 

Ms. ROUSE. Sure. I have been serving as the AOC’s Chief Executive Officer for Visitor Services for six months, and one of my top 

priorities has been to hire a diverse and professional staff to help 

prepare the CVC to receive visitors. We are planning a job fair in 

April and we are actively reaching out to Members of Congressional caucuses, including the Congressional Black Caucus, Congressional Asian Pacific American Caucus, Congressional Hispanic 

Caucus, and Congressional Native American Caucus to help inform 

potential candidates of job opportunities with the CVC. 

My goals for the CVC mirror those of the AOC: to aggressively 

work to hire personnel and award contracts to individuals and companies that reflect the diversity of our Country. I believe such efforts enhance our ability to serve Congress and all who will visit 

our Nation’s Capitol. 

For our procurements, the Capitol Visitor Center team follows 

the same statutes and policies as the AOC. Over the past several 

months, three contracts of note have been awarded to support the 

new Office of Visitor Services. The first one awarded last spring 

provides food services in the CVC restaurant; another was awarded 

last fall to a small business to develop an advanced reservation system; and a third was awarded to a woman-owned small business 

for designing the CVC Web site. 

As we move forward, we are following the same small business 

program which Mr. Ayers discussed in his testimony. For example, 

we will soon be seeking small business suppliers for our gift shop 

to provide materials that are related to our mission. We agree that 

we have a vested interest in supporting small businesses because 

the use of small businesses helps facilitate competition and lowers 

prices by providing additional sources for our requirements and improves our relationship with the local community. 

Madam Chair, you have my commitment as CEO for Visitor 

Services for the CVC to work on ensuring that we continue to do 

business with small, minority, and disadvantaged businesses. 

Thank you. 

Ms. NORTON. Thank you very much, Ms. Rouse. 

In all fairness, I think I should go to Mr. Ayers first, because, 

if he was in the room, he heard his agency called out, as they say, 

as a kind of textbook case in bundling that could perhaps have 

gone to small businesses, bundling of landscaping, housekeeping, 

39 

and the like. If one is serious about small, minority, women-owned 

business, even though we are trying to make sure that they don’t 

get stereotyped and that we also are mindful of professional and 

other services, I will have to ask you to explain why such services 

would have been funded. 

Mr. AYERS. I am happy to answer that, Madam Chair. I think 

there is a little confusion. I did hear an RFP number quoted and, 

with the great use of technology, was able to track down that RFP 

number, which was 060085, I believe I heard. And that 06 means 

it is a fiscal year 2006 procurement, so it is not something that 

could be advertised today. 

Ms. NORTON. So, in other words, it didn’t happen today, but it 

did happen in 2006. So I have to ask why. 

Mr. AYERS. No, I don’t think so. I looked up that 06 procurement. 

It is for professional landscape services and it was awarded to a 

small business. 

I do believe that the one we are speaking of now is—and I think 

the gentleman brought up two examples. There was one that we 

did a few years ago for Thurgood Marshall Federal Judiciary Building. In a building like that, a standalone building, we will typically 

go out and award a contract to a single building management company to do all of the building management services in that building. They will then potentially sub out construction work, architect/ 

engineer work, pest services, custodial, and the like. 

Ms. NORTON. Do you then monitor to see whether or not small 

and disadvantaged businesses are subcontractors in such buildings? I mean, you say it is because it is a single building. Does that 

mean—— 

Mr. AYERS. That particular example it is. I can give you another 

example. We have recently competed for facilities management 

services for our police buildings, and we have maybe 20 police kiosks throughout the campus. We are going to bundle all of those 

little police kiosks together. 

Ms. NORTON. What do you mean police buildings? 

Mr. AYERS. Police guard stations where you would see—— 

Ms. NORTON. Oh my goodness. Nobody would expect those each 

little guard station—please, Mr. Ayers, we are talking about—I am 

not sure anybody would—— 

Mr. AYERS. That is out on the street. 

Ms. NORTON. Well, but I don’t think anybody would bid to do one 

of the guard stations as you come into the house and somebody else 

do another guard—— 

Mr. AYERS. That is exactly why we pooled them all together. 

Ms. NORTON. We recognize that—you know what we are talking 

about. I shouldn’t have to talk about whether a 2-by-4 guard station is what we are talking about, Mr. Ayers. Do you do bundling 

in the general course of business? At the Visitors Center, for example, would any of those services—because here is a clean slate to 

write on—be bundled, or would the services provided there be open 

to small business contractors? 

Mr. AYERS. That particular building we are managing ourselves. 

We are not turning that over to a building management company. 

So we are going out individually to purchase custodial services and 

purchase some building repair services. 

40 

Ms. NORTON. And are you using small businesses on that? Are 

you able to use small businesses? 

Mr. AYERS. We are able to use small businesses between $5,000 

and $100,000. We are able to set aside for small businesses. Above 

$100,000, our procurement statutes require us to have full and 

open competition. 

Ms. NORTON. With full and open competition, are you able to use 

small businesses? 

Mr. AYERS. Oh, absolutely. 

Ms. NORTON. Because those things are not necessarily inconsistent or inimitable. 

I think it is you, Mr. Mosier, gave us no statistics, no overall statistics for the Kennedy Center. I recognize you are smaller than 

others. For that reason, it should be easy to know what your overall small business utilization, minority-owned, etc. 

Mr. MOSIER. Well, we receive our appropriation in two basic categories, O&M and capital, and the O&M is fairly steady. In fiscal 

year 2007, it was about 25 percent utilization of small businesses, 

and in fiscal year 2008, so far, it is about 22 percent. If you take 

utilities out of that, the numbers go up significantly, to 40 and 36 

percent. 

Ms. NORTON. So you are fairly small agencies. I have a very specific rundown for the Smithsonian, thank you. Does the Smithsonian use bundling? 

Ms. MARSHALL. We have had no problems with bundling, but a 

couple of years ago we did bundle, I believe,—well, not a couple, 

it has been about five years—we were bundling for supplies, and 

that no longer is being done. The way we are doing it now is since 

we have been able to go to the people soft system and what have 

you, we really aren’t doing bundling. 

Ms. NORTON. It occurs to me that precisely because of your size, 

there are many opportunities for smaller business contracts, because you don’t let these mammoth contracts the way GSA does. 

I applaud the fact that the Legislative Branch agencies are using 

the same methodology. If you weren’t, then, of course, it would be 

incumbent upon me to make sure that you were legislated into 

using it. But I think that you have understood that the difference 

is purely technical, the separation of powers branch not in fact intended to draw a distinction between you and Executive Branch 

agencies 

If I may so, I think, if anything, we in the Legislative Branch 

should be held to a higher standard. As I say, we are policing all 

those contractors in the private sector out there; we are telling all 

these agencies that are Executive agencies that we are monitoring 

you and what you should do. Well, I just want to say here for the 

record that I think that the Legislative Branch agencies should be 

held to an even higher standard, should set the example. I am not 

saying you aren’t, but I am putting you on notice that this Subcommittee does intend to follow this issue. You heard me say that 

the SBA just can’t possibly do it all. They can’t do it at all for you 

because you are a Legislative Branch agency, so I want to say how 

much I appreciate your testimony, your work, and, with that, with 

the bell ringing in my ears, I think I should let you go and I should 

probably run to the Floor. Thank you very much. 

41 

[Whereupon, at 1:33 p.m., the Subcommittee was adjourned.] 

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64 


41234.030
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41234.031
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41234.032
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41234.033
68 


41234.034
69 


41234.035
70 


41234.036
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72 


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81 


41234.047
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90 


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91 


41234.057
92 


41234.058
93 


41234.059
94 


41234.060
95 


41234.061
96 

Æ 


41234.062