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[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]

 
   THE PRESENT AND FUTURE OF E-COMMERCE FOR SMALL BUSINESSES IN THE 
          PRIVATE SECTOR AND WITH FEDERAL GOVERNMENT AGENCIES

=======================================================================

                                HEARING

                               before the

                  SUBCOMMITTEE ON GOVERNMENT PROGRAMS
                             AND OVERSIGHT

                                 of the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                     WASHINGTON, DC, APRIL 11, 2000

                               __________

                           Serial No. 106-50

                               __________

         Printed for the use of the Committee on Small Business

                    U.S. GOVERNMENT PRINTING OFFICE
67-090                      WASHINGTON : 2000

                      COMMITTEE ON SMALL BUSINESS

                  JAMES M. TALENT, Missouri, Chairman
LARRY COMBEST, Texas                 NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado                JUANITA MILLENDER-McDONALD, 
DONALD A. MANZULLO, Illinois             California
ROSCOE G. BARTLETT, Maryland         DANNY K. DAVIS, Illinois
FRANK A. LoBIONDO, New Jersey        CAROLYN McCARTHY, New York
SUE W. KELLY, New York               BILL PASCRELL, New Jersey
STEVEN J. CHABOT, Ohio               RUBEN HINOJOSA, Texas
PHIL ENGLISH, Pennsylvania           DONNA M. CHRISTIAN-CHRISTENSEN, 
DAVID M. McINTOSH, Indiana               Virgin Islands
RICK HILL, Montana                   ROBERT A. BRADY, Pennsylvania
JOSEPH R. PITTS, Pennsylvania        TOM UDALL, New Mexico
JOHN E. SWEENEY, New York            DENNIS MOORE, Kansas
PATRICK J. TOOMEY, Pennsylvania      STEPHANIE TUBBS JONES, Ohio
JIM DeMINT, South Carolina           CHARLES A. GONZALEZ, Texas
EDWARD PEASE, Indiana                DAVID D. PHELPS, Illinois
JOHN THUNE, South Dakota             GRACE F. NAPOLITANO, California
MARY BONO, California                BRIAN BAIRD, Washington
                                     MARK UDALL, Colorado
                                     SHELLEY BERKLEY, Nevada
                     Harry Katrichis, Chief Counsel
                  Michael Day, Minority Staff Director
                                 ------                                

           Subcommittee on Government Programs and Oversight

                 ROSCOE G. BARTLETT, Maryland, Chairman
MARY BONO, California                DANNY K. DAVIS, Illinois
PATRICK J. TOOMEY, Pennsylvania      RUBEN HINOJOSA, Texas
RICK HILL, Montana                   CHARLES A. GONZALEZ, Texas
                        Nelson Crowther, Counsel

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 11, 2000...................................     1

                               WITNESSES

Lee, Deidre, Administrator, Office of Federal Procurement Policy.     3
Summers, Max, State Director, Missouri Small Business Development 
  Center.........................................................    13
Knott, Scottie, Director, JECPO, Defense Logistics Agency........    15
Clark, Major, Assistant Advocate, Office of Advocacy.............    12
Bansal, Tony, President and CEO, Digital Commerce Corp...........    20

                                Appendix

Opening statements:
    Bartlett, Hon. Roscoe G......................................    31
Prepared statements:
    Lee, Deidre..................................................    34
    Summers, Max.................................................    45
    Knott, Scottie...............................................    50
    Clark, Major.................................................    60
    Bansal, Tony.................................................    70

                          ELECTRONIC COMMERCE

                              ----------                              

                        TUESDAY, APRIL 11, 2000

              House of Representatives,    
                 Subcommittee on Government
                            Programs and Oversight,
                               Committee on Small Business,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:07 a.m., in 
room 2360, Rayburn House Office Building, Hon. Roscoe Bartlett 
(chairman of the subcommittee) presiding.
    Chairman Bartlett. Good morning. Let me call our 
subcommittee to order.
    Good morning and welcome to this hearing of the 
Subcommittee on Government Programs and Oversight of the 
Committee on Small Business. A special welcome to those who 
have come some distance to participate.
    We are here today to discuss the present progress and 
future potential of e-commerce and its impact on doing business 
in the private and public sectors. The dollar volume of 
business being conducted by means of e-commerce is increasing 
at an unprecedented rate.
    An article in the Wall Street Journal last Wednesday, April 
5th, quoted a source that estimated the volume of online sales 
as increasing by 53 percent this year to $23 billion, after 
doubling the previous year to $15 billion. The same article 
quotes a trade association that estimates that there are 30,000 
or more web sites on the Internet selling merchandise to 
consumers.
    In the midst of this electronic revolution in the way 
business is done, it is imperative that we explore together 
today, in this hearing, the present state of e-commerce in the 
United States and its future potential and direction.
    Many businesses in the private sector are now relying upon 
the Internet to buy goods and services which were previously 
acquired through antiquated paper-based acquisition processes. 
The speed, efficiency, and convenience with which transactions 
can be completed are distinct advantages that e-commerce has 
over paper-based systems.
    The passage of the Federal Acquisition Streamlining Act of 
1994 provided an impetus to Federal agencies to use the 
Internet as the preferred method of procurement. The rush to 
the Internet by the Federal Government has spawned these 
headlines in a well-known Internet trade publication. The first 
one: ``U.S. Moves to Online Procurement.'' A second headline: 
``Commerce Department to Utilize E-Commerce, Go Paperless.'' 
Third headline: ``Defense Department Goes E-Commercial.''
    There are few, if any, major Federal agencies that do not 
acquire a large dollar volume of goods and services through e-
commerce transactions. We hope at the hearing today to examine 
both the commercial and Federal use of e-commerce technologies 
such as the creation of electronic shopping malls, in the 
transition to largely paperless transactions.
    The hearing will also look at the training and acquisition 
assistance that small businesses need or are receiving to 
compete in e-commerce both in the commercial and Federal 
sectors.
    We welcome your suggestions with respect to legislation or 
regulatory changes that may be needed to train small businesses 
in electronic commerce and to provide more timely and complete 
Federal procurement information than is presently provided in 
the Commerce Business Daily.
    Lastly, in the hearing today we hope to have some answers 
to the questions: Where are we going in e-commerce? And what 
are the implications for doing business in the private and 
public sectors?
    Again, thank you all for participating in this hearing, and 
thank you in the audience for attending this hearing.
    We are very pleased to be joined by our ranking member, Mr. 
Danny Davis. Mr. Davis?
    Mr. Davis. Thank you very much, Mr. Chairman.
    First of all, let me just thank you for convening this 
hearing today, and I also want to thank the witnesses for their 
attendance.
    As the rapid growth of the Internet increases, so does the 
need to conduct business on it, and, therefore, I think it is 
important that we find out as much as we possibly can about it.
    This past year electronic commerce has grown beyond 
expectations. Every day more people are finding new ways to 
provide innovative products and services electronically. The 
Internet is changing the way business is doing business, from 
the acquisition and servicing of customers to the management of 
their relations with suppliers.
    However, as the Internet usage increases, the demand for 
online services becomes increasingly important. As of today, 
the Government provides over 15 Internet sites dedicated to 
Federal procurement alone, the most popular being SBA's PRO-
Net, CommerceNet, GSA's Doing Business with GSA, and NASA's 
Small Business Programs site. In fact, the Small Business 
Committee has taken the lead to help promote electronic 
commerce and Internet usage through the Paperwork Elimination 
Act of 1997. Under the Paperwork Elimination Act, Federal 
agencies are addressing issues regarding electronic 
transactions within the Federal Government and between the 
Federal Government and other parties through the sponsorship 
and use of alternative information technologies.
    However, is electronic commerce getting better or is it 
getting worse? Well, that probably depends on who you talk to 
and when? While some companies are doing business quite well 
online, their successes could easily lead someone to assume 
that all small businesses are now ready to adopt electronic 
commerce as the new way to conduct business. On the other hand, 
I have heard many reports and complaints of the complex 
technical and legal issues facing electronic commerce.
    Today, it is my intent to try and help uncover and discuss 
some of the barriers that inhibit our small businesses from 
taking advantage of the business opportunities electronic 
commerce encourages, especially small businesses, sometimes 
businesses that are called mom-and-pop businesses, businesses 
that in many instances are getting started and in many 
instances have not had the capital to address their own 
electronic needs.
    So I would like to, again, Mr. Chairman, thank the panel 
for their attendance and thank you for calling this hearing, 
and I look forward to their testimony.
    Chairman Bartlett. Thank you, Mr. Davis.
    In a former life, I was a small business person doing 
Federal grant and contract work, and the difficulty of 
determining the opportunities available to you is absolutely 
enormous. I subscribed to Commerce Business Daily and plowed 
through that every day, recognizing that that was a fairly 
limited listing of all of the opportunities that were available 
across all of the Governmentagencies. So I look forward with 
anticipation today to the testimony. It opens up to small business 
people all across the country the opportunities for doing business with 
the Government.
    We have two panels today. The first panel is the Honorable 
Deidre Lee, Administrator, Office of Federal Procurement 
Policy. Without objection, your full written testimony will be 
made a part of the record, and you now can proceed any way you 
wish. Thank you very much.

     STATEMENT OF DEIDRE A. LEE, ADMINISTRATOR FOR FEDERAL 
      PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET

    Ms. Lee. Thank you very much, sir.
    Chairman Bartlett, Congressman Davis, the subject of your 
hearing today, applications of electronic commerce--e-
commerce--technologies to our buying process, is both timely 
and of particular interest to me. The rapid technological 
advance of the Internet is providing unprecedented 
opportunities to significantly improve how we conduct 
procurement transactions. The potential to improve information 
flow from the way vendors learn about Federal contracting 
opportunities, to the way Government buyers become informed 
about vendors and the range of goods and services they offer to 
meet the Government's needs, makes application of e-commerce 
technologies to the acquisition process a worthy priority for 
our procurement agenda.
    Today, I would like to share with the Subcommittee the key 
principles we are following and steps we are taking to seize 
upon this potential. I would like to focus my attention, in 
particular, on the Government's efforts to create a single, 
government-wide point of entry for electronic commerce and for 
accessing business opportunities. This initiative will serve as 
an illustration of how we are striving to take advantage of 
electronic tools to make interactions faster, easier, and less 
costly for both our buyers and our trading partners, small and 
large alike.
    Two years ago, the administration issued a strategic plan 
which, among other things, set forth policies to help agencies 
make and successfully manage investments in e-commerce. Two of 
the principles, in particular, lie at the heart of our approach 
to e-commerce acquisition initiatives.
    One, follow the commercial lead: This is unusual for us in 
Government, because we sometimes want to create the new story. 
But we strongly share your belief in your letter of invitation 
for today that we can benefit from the private sector's e-
commerce experience.
    Our strategic plan emphasizes the importance of Government 
reliance, wherever possible and cost-effective, on commercial 
products and services so the Government can leverage the 
investment already made in the ever-growing commercial 
infrastructure and benefit from the market-driven economies and 
innovation that commercial tools offer. We do not want to 
develop Government-unique solutions.
    Two, pursue e-commerce applications that offer 
opportunities to reengineer the procurement process. The rapid 
technological advances can create temptations to buy intriguing 
technology simply because it is available. We must instead 
ensure we are making the right investments, looking for those 
that can streamline and eliminate transaction steps, minimize 
unnecessary paperwork, and facilitate access to resource 
information or information that people need to know to do 
business with the Government. We want to improve buyer 
visibility into products and services, and we need to provide 
the sellers with quick, easy access to the contracting 
opportunities.
    We have numerous initiatives ongoing. You are going to hear 
about more of them from the second panel. But let me just give 
you a quick list. We are, of course, maximizing the use of 
purchase cards. We are trying to improve the electronic payment 
process. We have contract writing systems. We are trying to 
integrate back-room processes, a form of ERP for acquisition. 
We have distance learning, online training. We have online 
reference and guidance, and we are trying to improve data 
collection and reporting.
    But our strategic plan also reminds agencies that they must 
remain attuned to the needs of both the buyers and sellers. 
High on the list of sellers' needs--and I think you referred to 
it, Chairman Bartlett--including the small business community, 
is easy and cost-effective access to information on contracting 
opportunities. Where are they? What are they? When are they?
    Prominent on the list of buyers' needs is the ability to 
gain more effective access to the marketplace. To address these 
needs, we are emphasizing with our e-commerce initiatives 
improved access to business opportunities. Our focus is on 
creating a government-wide point of electronic entry, the so-
called single point of entry--of which we, give an acronym, 
SPE--for access to business opportunities on the Internet.
    My written testimony outlines the progress we are making 
towards this single point of entry because, unfortunately, it 
is just not as easy as we would all like it to be. Mr. Nelson 
Crowther spent a day with us in January going through the 
issues and some of the intricacies of how we can get there and 
ensure everyone is included and can fairly participate.
    As technology has blossomed, we have used FACNet and CBDNet 
and DODBusOpps and an EPS pilot. We have GSA Advantage. We have 
electronic malls, web sites, and we are also looking at 
commercial solutions.
    But as I meet with industry representatives and we discuss 
the many advances in technology and the companion solutions for 
Government procurement, one constant remains: communication, 
timely information.
    How can we simply and quickly, and at low cost, notify 
industry of opportunities and inform the buyer of trading 
partners' interest and availability? I continually hear from 
small and large businesses that they simply cannot know of and 
respond to each agency's individual web site, home page, and 
notification process.
    A single face, or SPE, single point of entry, for industry 
is needed, a place where Federal contracting opportunities from 
synopsis to the solicitation, to related procurement 
information, can be conveniently accessed.
    We are currently evaluating SPE alternatives, keeping in 
mind the principles of commercial lead and reengineering. Our 
intent is to designate a system that is sufficiently versatile 
to enable agency buyers to efficiently and effectively provide 
access at a single entry point, and to allow sellers to reach 
the SPE through different commercial electronic means.
    One area that is of paramount importance is the inclusion 
of small business in the Federal procurement process. We are 
currently testing an SPE concept in the electronic posting 
system where, in conjunction with SBA, we have linked the 
electronic posting system to PRO-Net so that small businesses 
are provided instant notice when opportunities are available. 
They go in, they register at PRO-Net. We haven't fully rolled 
this out and announced it yet, but it is hooked up. And they 
simply register once for business opportunities, when they are 
interested, on this particular system, which right now contains 
about 30 percent of our major activities. They receive an e-
mail that says there is something you might be interested in. 
They can then instantly go in and access the solicitation.
    Our system does not want people sending them to a web site 
or a home page where they have to search through and find it. 
It goes instantly from the notice to the document itself, and 
itincludes history, if there were comments or questions or 
previous discussions, so they can see a whole package of what is going 
on in procurement. And that is what we are testing, and we are hooking 
it to the small business systems so small businesses can see how that 
works for them.
    As we are moving to use the new technologies, we also have 
to make some changes to fully enhance the possibilities. We 
have submitted proposed statutory language--it is in the DOD 
bill--that hopes we can recognize some changes to take 
advantage of the wizardry of electronic commerce, and the fact 
that printed copy notifications may no longer be the benchmark 
for transaction time frames. Instead, we propose to recognize 
electronic postings through the single entry point so people 
know where it is as an effective communication strategy and 
wait times for solicitation release would be keyed from 
electronic posting.
    We hope that you will favorably act on this proposal. 
Having the requested framework in place will allow agencies and 
small and large businesses to enjoy the efficiencies that e-
commerce enables, including a more immediate return on 
investment.
    I know e-commerce offers many opportunities for improving 
acquisition through redesign of the buying process. I pledge to 
work with my colleagues at SBA to ensure we address inclusion 
of small business. We must continue to look for ways to use e-
commerce to strengthen the Government's acquisition function so 
that we can make our interactions easier, faster, and less 
costly, for both ourselves and our trading partners. 
Designating the SPE in the FAR in tandem with a revised 
legislative framework that fully recognize the benefits of the 
single point of entry are important steps in this direction. I 
look forward to working with you to achieve this goal.
    [Ms. Lee's statement may be found in appendix.]
    Chairman Bartlett. Thank you very much.
    We have been joined by Mr. Hinojosa. Let me turn now to my 
colleagues for their questions first. Mr. Davis?
    Mr. Davis. Well, thank you very much, Mr. Chairman.
    Ms. Lee, let me just say that I certainly appreciate your 
testimony, and you paint a very positive picture, and it is 
something I think all of us have to look forward to.
    Let me just ask, do you believe that removing the 15-day 
advance notification for solicitations will help small 
businesses?
    Ms. Lee. Yes, I do. We have done a little research on it, 
and what we are proposing adjusts the time between notification 
and solicitation. When we go back and find where the time 
requirement came from, the best we can figure is it came from 
the mail process, the physical Postal Service. The agency would 
put out a notice, and then they would have to wait 15 days 
before they could release the solicitation. The thought process 
was that if you released them simultaneously, the person that 
lived down the street could come pick up a copy and they would 
have it well in advance of someone who needed it mailed to 
them.
    So the advanced notification was all about was leveling the 
playing field so people would receive a notice at approximately 
the same time. Through electronic commerce, we think we can put 
the notice out there and people could access the solicitation 
more rapidly. Small business can immediately look at and say, 
``Am I interested or not ?'' rather than having to request and 
wait and get a copy, put it in their bid pile, figure out if 
they are interested.
    I think it is going to help small businesses, as well as 
large, more readily in this fast-moving world know what is out 
there and what their next steps are.
    Mr. Davis. Well, what about those that might be in remote 
places or who may not have access to the information? Would it 
mean that they are suffering under an unfair disadvantage to 
them, that others have the information and they really don't?
    Ms. Lee. Our current proposal is to continue to provide the 
information to the Government Printing Office so they can 
continue to print a CBD. But as you know, the electronic notice 
does go up faster than the Commerce Business Daily is printed.
    What we are not proposing to shorten is the proposal 
preparation time, which in most cases is 30 days, in some cases 
it is 45 or 60 days, or for huge procurements, even longer. So 
we are just proposing to shorten the notice to solicitation 
release time.
    Mr. Davis. All right. So there would be equity, at least in 
terms of the actual amount of time that companies or businesses 
would have to respond to the notice.
    Ms. Lee. Yes.
    Mr. Davis. Let me ask you one other question. I know that 
now we see computers at practically every desk within the 
Federal Government. Unfortunately, there are businesses, and 
especially small businesses, who have not caught up with that 
phenomenon.
    Is there any way to try and make sure that there is no 
punishment in a sense to these businesses because they have not 
reached the level of sophistication that the Federal Government 
and other businesses might be operating at?
    Ms. Lee. There are several ways for a smaller business or 
someone who, for whatever reason, doesn't want to be 
electronic. They can, and many do, hire companies who search 
the CBD and sort it for them and provide them information. So 
they could hire that resource and have someone else do the 
searching and provide them with the opportunities.
    As the SBA is going to tell you, the resource centers in 
most cases have the electronic connection, and they also 
provide updated information. There are also a good number of 
trade publications, particularly in the small business arena, 
that search through and identify procurement opportunities.
    One of the things we are working on that we need to do 
better is improved forecasting so that there is even more 
notice. Now, of course, our plans are to put the forecast 
online as well. But I think any of these resources could 
identify opportunities earlier and still provide the 
information.
    Mr. Davis. So you are saying that we are going to continue 
to do a number of other things to try and make sure that there 
is adequacy of information and opportunity.
    Ms. Lee. Yes.
    Mr. Davis. I tell you, it is kind of rewarding in a sense. 
I just had opportunities--I was getting ready to do my income 
tax--to need some information relative to my own taxes and 
interests doing business with someone. And to my amazement, I 
mean, rather than having to wait for any length of time or 
whatever, I mean, I just accessed the information and there it 
was. I didn't have to get anything in the mail, didn't have to 
get anything back, and it was just kind of pleasant to be able 
to do that and have instant information, although it still 
raises some fears and concerns that I might ultimately have in 
terms of the extent to which our employment opportunities will 
be able to keep up with the technology that we seem to be 
developing.
    So I thank you very much.
    Ms. Lee. Congressman Davis, the small businesses that don't 
have access to technology can face a problem. But it is 
amazing, how many of the small businesses are really up to 
speed. In fact, a good many of them are in the IT industry and 
creating these very systems. So people are coming along.
    Mr. Davis. Thank you very much.
    Ms. Lee. Thank you.
    Chairman Bartlett. Thank you, Mr. Davis.
    Mr. Hinojosa.
    Mr. Hinojosa. Thank you, Ms. Lee, for coming to talk to us 
about what the Small Business Administration is trying to do to 
help small business firms.
    I agree with the question that Congressman Davis asked 
about how many small firms have a computer at the desk of those 
folks who work with administration and finance of a small 
business. And all three of us here on this panel have had 
experience with small businesses, and we know that that is 
probably one of the weaknesses of so many of the small firms, 
especially if they are in manufacturing and they are going to 
try to bid on something for the Department of Defense or some 
Federal agency.
    We find that small businesses are started oftentimes 
because a man or a woman was the one doing the production or 
overseeing the production of a company, and they have decided 
to go off on their own and do it themselves. So they have a lot 
of experience in production and producing widgets, and they 
have a little bit of experience on sales, and that is why they 
are delving into Federal procurement opportunities. But the 
weakness always comes in administration and finance and 
business computer systems.
    As a result of that weakness of the three components of a 
successful business, we find that as you are moving, the 
Federal Government is moving towards this paperless 
procurement, we are quickly going to be left behind unless SBA, 
unless Department of Commerce through MBDA steps in and fills 
that weakness and fills that void that I just described.
    How do you feel about the women's business centers; MBDA 
offices throughout the country or schools of business of 
universities stepping in and maybe assisting these businesses, 
small businesses, small business firms, bring in a consultant 
who could be a graduate from the school of business with a 
bachelor's or a graduate from the school of business with a 
master's, and maybe work for a day with each firm and helping 
them, you know, hold their hand and taking them through the 
steps for a whole year, if necessary two years, so that they, 
too, can have a computer at the desk of every one of these 
firms and that they know how to get onto the suggestions that 
you all are using so that we don't have to go through, you 
know, the entire document to identify the opportunities that 
are for that company?
    There seems to be a need for us to help those small 
business firms strengthen the third component, administration, 
finance, and business computer systems of every small firm.
    Ms. Lee. I know when the small business comes up, they do. 
We can tell you they have a wide variety of services that they 
offer at the resource centers. I think more can always be done. 
Sometimes we need to reach out to those small businesses and 
tell them the resource center is available. How do we 
communicate that first step?
    I agree with you that small business needs everything from 
training in the very fundamentals of using your system, 
choosing your system, getting it set up and being ready to 
operate, to how does that system provide you access to Federal 
procurement opportunities.
    Unfortunately, our system is still not simple, even though 
we have simplified acquisition and other initiatives. As you 
know, we do require certain certifications, and we do have 
certain unique clauses that people that trade with us need to 
understand what they are doing and why. So absolutely there is 
an incredible opportunity for more learning.
    SBA is also trying to provide more distance learning 
classes and more of a resource center, just as Congressman 
Davis mentioned in checking on his taxes. People that are now 
trying to access Federal procurement opportunities can go to a 
resource center and ask a question: Tell me more about this 
clause or tell me more about this program. And we're trying to 
deliver that information in a more user-friendly manner, but 
more can always be done.
    Mr. Hinojosa. You didn't answer my question. Are you 
willing to try to look into how to provide, at least one day a 
week, one of these individuals who knows how to use the 
computers and know how the business computer system should be 
set up for these small businesses interested in doing Federal 
procurement to move into the paperless program that you all are 
outlining? There needs to be someone regularly going to that 
small business, once a week, at least twice a month, whatever 
the business firm owner wants in terms of help, even if they 
have to pay for it, but it would be cheaper than having to hire 
and pay a salary, annual salary, to someone who has this kind 
of knowledge.
    All I am saying is: Are you willing to explore that?
    Ms. Lee. Oh, I would be happy to work with SBA and say how 
do we do that. Where do we start? How do we test it? Where do 
we go?
    Mr. Hinojosa. Good. Thank you.
    Chairman Bartlett. Thank you very much.
    About a year ago, I wanted to build a small log cabin, and 
I got the construction manual, and it said that I needed a 16-
inch circular saw. Now, the usual circular saw is 7\1/4\-inch; 
16-inch is a big circular saw. And the manual said that Mikita 
made one. So I called the local Mikita dealer, and they 
searched their catalogues, and they said there was no such saw 
available, that Mikita did not make it.
    So I went to my son, who was familiar with the Net, went on 
the computer, and found a 16-inch saw. They asked us for our 
credit card number, and there was some little delay while they 
said they were trying to find a secure link so that our credit 
card number would be secure, and they said they finally found 
that link. And so within, oh, less than 5 minutes from the time 
we started, we had ordered the saw and 2 days later it was 
delivered by UPS to my door. I was impressed. The local Mikita 
dealer said Mikita didn't even make such a saw.
    My question has to do with security and privacy. What we 
ask of the Net is accessibility and ease of use, and these two 
requirements--confidentiality and security and accessibility 
and ease of use--those two things are in tension. What kind of 
attention are you paying to these security/privacy problems as 
these small companies are encouraged to do business by way of 
the Net?
    Ms. Lee. Chairman Bartlett, as you know, there is a great 
deal of concern about computer security generically. In fact, 
we have a priority management objective at OMB that deals with 
computer security and digital signatures.
    You look at that overall, all-encompassing issue. Then you 
go to the procurement standpoint, from this single point of 
entry, the information that we are posting there is public 
information. We want it traded. So we are just going to 
announce and provide information. The next step is to receive 
back the proposals, and there are some systems that currently 
do that. Right now different agencies do it a little 
differently.
    We are moving forward with digital signatures. We certainly 
are going to have to accept them. And regarding your comment on 
security, from a procurement standpoint it is not only the 
security of the transmittal, but it is the validation that you 
did, in fact, receive the proposal from the company. So it is a 
validation issue.
    We are actually working that in conjunction with the CIOs 
for a government-wide solution. What we don't want to do is 
step out and address a procurement-unique solution that is 
thengoing to require a different approach for other Government e-
commerce issues.
    So as hard as it is for us to say. We are intentionally 
staying kind of one step behind industry and following their 
lead on the technology. What is the right answer for digital 
signatures? What is the right answer for validation and 
verification? Ms. Knott will be able to tell you a little bit 
more about what they are doing with the Department of Defense 
consolidated contractor registration and the security that they 
have there to ensure that the information is valid from a 
contractor.
    Once we get everyone comfortable with finding the 
opportunities that way, how do we take the next step and start 
receiving back and streamlining the process even further for 
all proposals. We receive some now, but not all.
    Chairman Bartlett. Thank you. As you know, this balance 
between accessibility and ease of use and privacy and security 
is one of the biggest problems facing the use of the Net today. 
We want the ultimate in privacy and security, and we also want 
the ultimate in accessibility and ease of use. And those two 
requirements are obviously in tension, and right now everybody 
is struggling with what is a reasonable accommodation between 
those two.
    The single point of entry, we have a big, big Government 
and there is going to be lots of information there. Are you 
developing a new search engine to make sure that the user can 
find what he wants? Or is one of the existing search engines 
adequate?
    Ms. Lee. I am not the technical expert, but my experts 
explain that we don't want to create a Government-unique 
anything. And the technology out there is moving so rapidly 
that there are currently available search engines that will do 
this job. But they are also very carefully structuring this 
single point of entry in an open architecture manner so that as 
new technology changes you can integrate it into that.
    I have to have it explained to me very simply by my expert 
here, Captain Carra. The single point of entry is like a 
parking lot. We are going to park the data there. So it will be 
on some agency's different servers, but it will be located in 
one location. And that allows you to access it so that we can 
upgrade the architecture and the infrastructure as new things 
develop.
    We also can put it there so that, as Mr. Hinojosa 
mentioned, if service providers want to come and get the data 
and enhance it and deliver it to the small businesses or to 
anyone else in the new format, they can also access it. What we 
are trying to do is park the data in an easily accessed, very 
open architecture manner that we can keep refreshing and keep 
current.
    Chairman Bartlett. So that any of the existing search 
engines could be used then to access?
    Ms. Lee. I know they have one selected, and we think there 
are numerous ones out there. They are big engines because it is 
a lot of data, but we think there is a current commercial 
solution.
    Chairman Bartlett. Thank you.
    You mentioned the electronic posting system and the single 
point of entry. What is the relationship between those two?
    Ms. Lee. The electronic posting system is like the pilot 
test. NASA, GSA, Treasury and Interior have gotten together and 
are currently using a single-point-of-entry-like process and 
testing it and scaling it and learning things about it. They 
have learned things. They had questionnaires for small 
businesses who used it to reply and say how did they like it, 
what did they think about it. And we are learning little 
nuances.
    Right now you can search by SIC code, standard industrial 
code, which we will soon change to NATE code. But you can 
search by SIC. One of the things we have found from the small 
businesses is that they would also like to have place of 
performance because in some cases they really only want to work 
on a limited geographic area. And so that might be a capability 
that we need to think about adding.
    So, it truly is the test. Does this concept work? So far we 
have had quite favorable results.
    Chairman Bartlett. So electronic posting system is a 
limited demonstration----
    Ms. Lee. Yes.
    Chairman Bartlett [continuing]. Of whether or not 
ultimately we can get to a single point of entry for all 
Government transactions.
    Ms. Lee. Correct. And we learned, again, from the single 
point of entry, this is where the e-mailing concept came from. 
We heard from primarily small businesses that said, gee, it 
would be helpful if you pushed technology and you let me say I 
am interested in Western Region SIC Code 7321, and any time 
anything that is published in that notice, it sends an e-mail 
to them so they are instantly notified. We learned that from 
them.
    Chairman Bartlett. In your oral testimony, you said that 
you hoped that we would act on this proposal. It wasn't clear 
to me what the antecedent of ``this'' was when you went through 
your testimony.
    Ms. Lee. The proposal is in the DOD proposal. It is simply 
the removal of the waiting period because it is statutory. It 
is in Title X. It is statutory that we have to have this 15-day 
wait. The removal of this wait would occur only when the single 
point of entry is identified. It wouldn't be effective until we 
identify the single point of entry, which we are going to do 
through public notice, public comments, those kind of things. 
We want to make sure we get that right.
    But we think that the attendant release of time period will 
draw more agencies and will make them want to use the system 
more effectively. So that is the proposed change to the 
statute, to decrease that wait time.
    Chairman Bartlett. Okay. Thank you very much.
    My final question has to do with an issue raised by both of 
my colleagues. How many small businesses do you think, in terms 
of percentage, are not now on the Net? I am just amazed at how 
rapidly this technology has spread and how many people, 
including 11-year-olds, are conversant with it and very 
capable. What percent of small businesses now are not on the 
Net? And how quickly will this change until essentially none of 
them will not be there?
    Ms. Lee. Chairman Bartlett, I simply don't know. SBA can 
certainly tell you of the people that are in PRO-NET, how many 
of them have an e-mail address versus how many of them don't; 
how many of them accept faxes versus e-mails. They can probably 
give you a good feel for that. But I don't know how many small 
businesses that want to do business with the Government are not 
registered with PRO-Net, and I think that would probably be the 
set that we are talking about.
    Chairman Bartlett. Yes, I, too, am concerned that you 
shouldn't be left behind as a small business person simply 
because you don't choose to be conversant with the Net. But I 
understand from your testimony that you have made adequate 
opportunities for these by sending out Commerce Business Daily 
and they have the trade journals and the small business centers 
and there are lots of alternative avenues that they can use 
until they are Net-friendly.
    Ms. Lee. We have found in researching the Commerce Business 
Daily, because we needed to know how many were published out 
there, that from a high of about 55,000 copies a day, they now 
publish a little over 4,000. The majority of those go to 
libraries, and so, you know, we are just kind of putting two 
and two together. We think that the libraries are still--what 
we don'tknow is what the usage at the library is. Is it great 
or little? And as you all know, most libraries now have Internet 
access, and so they can also get to the onlines or a business could 
choose, if their library provides that capability, to use it through 
that method.
    Chairman Bartlett. Thank you very much. Let me ask my 
colleagues if they have any additional questions or comments 
before we excuse this panel and convene the next one.
    Mr. Davis. Only one, Mr. Chairman. How did that log cabin? 
[Laughter.]
    Ms. Lee. We are all waiting.
    Chairman Bartlett. Well, that was a personal and very 
interesting experience. I have always wanted to build a log 
home, and I had an opportunity to do that with this little log 
cabin. It is fine. It is under a roof, not completely finished 
but out of the elements. Thank you very much.
    Mr. Davis. You are a man of many talents.
    Mr. Hinojosa. I have no questions.
    Chairman Bartlett. Thank you.
    Ms. Lee. Thank you.
    Chairman Bartlett. Thank you very much, and we will excuse 
this panel and convene the next one.
    We welcome the members of our second panel. Again, your 
written testimony, without objection, will be made a part of 
the record. We would encourage you to summarize your testimony. 
There will be adequate time for expansion during the question 
and answer period that follows.
    Mr. Max Summers, State Director, Missouri Small Business 
Centers, who is here today, I understand, representing all of 
the Small Business Development Centers. Ms. Scottie Knott, 
Director, JECPO, Defense Logistics Agency. Thank you for 
joining us. Mr. Major Clark, Assistant Advocate, Office of 
Advocacy, who is here representing the Office of Advocacy and 
my good friend Jere Glover. Thank you for joining us. And Mr. 
Tony Bansal, president and CEO, Digital Commerce Corporation.
    Welcome to all of you to our Committee, and we will begin 
with Mr. Summers.

  STATEMENT OF MAX E. SUMMERS, STATE DIRECTOR, MISSOURI SMALL 
                  BUSINESS DEVELOPMENT CENTERS

    Mr. Summers. Thank you, Chairman Bartlett, and members of 
this distinguished Committee. I am Max Summers, State Director 
of the Missouri Small Business Development Centers, and I am 
here today on behalf of the Association of Small Business 
Development Centers. My focus is on the training and 
acquisition assistance that businesses should receive or are 
receiving to compete not only in the Federal procurement arena 
but in the whole arena of Internet commerce.
    The rules are changing in today's small businesses. Buyers 
and sellers can find one another without an intermediary. That 
is bringing challenges to the role of the traditional 
middleman. The retailer, wholesaler, banking, insurance, and 
publishing industries, in addition to many others, are being 
affected.
    Navigation, especially the ability to reach buyers and 
sellers, is where the battle for competitive advantage will be 
won or lost. Boundaries between many businesses are being 
weakened or eliminated, and price will take on a much higher 
value in consumer decisions because of the customer's ability 
to compare compatible products quickly via the online 
marketplace.
    The majority of our Nation's businesses, small businesses, 
have not learned to effectively use the electronic arena to 
sell goods and services via e-commerce. Today, the vast 
majority of businesses use the Internet to find information or 
simply post a website. Many small businesses are in a weaker 
position to embrace these new technologies, but the real 
challenge is the education of the small business owners 
regarding the huge structural shift we will experience in the 
global economy.
    We must sound the alarm to small business owners regarding 
these changes and provide assistance to them to adapt these 
rapidly changing conditions in our environment.
    Although we cannot change the market forces, we can help 
these businesses understand e-commerce and that it is likely to 
bring huge shifts in our economic structure, both in the U.S. 
and in the global economy.
    We must educate these companies to understand that e-
commerce is poised to pull significant dollars from the 
traditional economy. It is expected that business-to-business 
trade will grow disproportionately, which is likely to displace 
many existing traditional small businesses. We cannot save 
their traditional business, but we can help them understand 
what is on the horizon, we can show them options, and we can 
help them adapt to this change.
    Small businesses will require a support structure to help 
them address these fundamental changes in the new world 
economy, especially in rural and hub zone areas. These rapid 
changes will require that businesses and their personnel 
redevelop skills through systematic and focused learning. 
Technology is in the process of revolutionizing business. We 
must now do the same thing for business learning.
    This educational programming could include help for small 
businesses to deal with the major barriers to their success by 
developing and delivering: first, focused information and 
knowledge regarding what e-commerce is and how it impacts the 
business structure; second, developing and delivering processes 
for assessing e-commerce competitiveness and the associated 
business processes; third, identify what is needed technically 
to implement e-commerce and how implementation is likely to 
restructure that existing business; and, finally, how to 
perform transactions business-to-business or business-to-
Government.
    Targeting clusters of relatively similar businesses with 
this programming would be most effective and would allow small 
businesses to make intelligent decisions about the suitability 
of e-commerce for their business. It would also enable many 
companies to become better informed about electronic 
purchasing. This is especially true in the case of business-to-
business transactions and Government contracting opportunities.
    Through the SBDCs and the Procurement Assistance Centers 
program, we could assist many of these thousands of businesses 
that are unprepared to deal with e-commerce and Government 
procurement by the delivery of offerings via their programs and 
the ASBDC Internet-based training program. In addition, both 
are well positioned to customize that training through one-on-
one assistance.
    Together these programs have the procurement and the 
management expertise to facilitate positive outcomes for the 
Nation's small business, and we would encourage this 
Subcommittee and the entire House Small Business Committee to 
consider this a priority in identifying and supporting 
mechanisms of assistance to the Nation's small businesses.
    [Mr. Summers' statement may be found in appendix.]
    Chairman Bartlett. Thank you very much.
    Ms. Scottie Knott.

   STATEMENT OF CLAUDIA S. KNOTT, DIRECTOR, JOINT ELECTRONIC 
      COMMERCE PROGRAM OFFICE, U.S. DEPARTMENT OF DEFENSE

    Ms. Knott. Good morning, Chairman Bartlett and Congressman 
Hinojosa. I appreciate the opportunity to appear before this 
Subcommittee and discuss the present and future of e-commerce 
and its impact on small businesses doing business with the 
Department of Defense. I believe the DoD story is a positive 
one and clearly demonstrates the commitment of senior 
management within DoD to its revolution in business affairs.
    The Joint Electronic Commerce Program Office, or JECPO, 
serves as the DoD executive agent for accelerating the 
application of electronic business practices and associated 
information technologies to improve DoD acquisition processes 
and other Department business operations. Our efforts unit 
three communities that benefit from the use of electronic 
commerce: first, the DoD warfighter--the sailor, soldier, 
airman, and marine--that uses the products and services of 
commercial industries; second, the thousands of large, small, 
and medium-size businesses that conduct business with DoD; and, 
third, the DoD acquisition community.
    The progress that DoD has made in fielding, actually using 
our electronic business initiatives is in stark contrast with 
the old way that we did business. The old way was serial 
processed, paper-based, extremely labor-intensive, and very 
time-consuming, and generally resulted in frustrated trading 
partners, both industry and Government. Today, DoD is pursuing 
paperless processing--keeping pace with industry in the use of 
Internet-based commercial technologies while ensuring secure 
transactions and authorized access based on, again, 
commercially available security solutions.
    All of the initiatives that I will discuss today can be 
accessed by any authorized user, Government or industry, large 
or small, through commercial Internet access. The ease of entry 
into the DoD market space is really equivalent to an annual 
subscription service on the Internet.
    The first initiative I would like to address is the Central 
Contractor Registry (CCR). It provides vendors with an 
unprecedented method of marketing themselves and their products 
to all potential buyers within the Department of Defense. Now 
any business can register in one easy place on the Internet, 
and their information is available to all 800 contracting 
offices as well as their supporting finance centers.
    Contractors register in the database one time, with 
subsequent annual renewals, and their information is available 
to all of these contracting and payment offices. As a result of 
the information available in the CCR, 80 percent of the 
contract payments within DoD are able to be done using 
electronic funds transfer.
    The second initiative is the DoD Business Opportunities 
Website, developed specifically to easily interface within a 
Federal single point of entry. It provides a single search 
mechanism for vendors to locate and access DoD online 
solicitations. Through the DoD Business Opportunities Website, 
users can also link to the appropriate DoD components--the 
Army, Navy, Air Force, Marine Corps, and defense agency sites--
to actually make offers on these specific solicitations. This 
centralized and coordinated approach allows a single view of 
all DoD business opportunities while maintaining flexibility at 
the local level within all of our components within DoD to 
their initiatives and the increasing use of electronic commerce 
and paperless operations.
    The next initiative is Wide Area Workflow, which has made 
it easier for industry to get paid for the work performed or 
for goods delivered through the use of what we call a virtual 
payment folder.
    In DoD, we require that three key documents line up 
together before a vendor can get paid: the original contract, 
the invoice, and the receiving report, or the document that 
demonstrates that the goods and services were actually received 
and accepted.
    The process of contract award and payment involves some 800 
geographically dispersed Government offices, and then many more 
locations that receive the products and services. Without new 
initiatives using electronic commerce, this process of trying 
to get together these three documents for all of the myriad of 
transactions that we do within the Department of Defense could 
take up to 6 weeks.
    At one of our payment centers, this process alone had 
created 15 linear miles of files. So you can see the 
administrative burden associated with this paper-based process.
    In response to this, DoD has developed an Internet 
application that allows the Government to process these three 
documents online. By storing these documents on the Web, we 
have begun to turn the paper off that is actually going to some 
of our finance centers to decrease that 15 linear miles of 
files that we created.
    Another initiative, the DoD EMALL, also demonstrates our 
commitment to making it easier and faster to find and acquire 
commercial items of supply that are needed by DoD. The DoD 
EMALL provides ``point, click, and ship'' shopping for over 3 
million commercially available items. It is comparable to 
Amazon.com, CD Now, and multiple other types of commercial 
electronic catalogues for online shopping.
    But what the DoD EMALL additionally does, it also provides 
assurance of buying against long-term Government contracts in 
which all of the Federal procurement rules and regulations have 
already been addressed as part of the award process before 
coming on to the mall. The DoD EMALL also facilitates the use 
of the Government Purchase Card, allowing our vendors to be 
paid in the same way as their commercial credit card payments. 
Additionally, there are no unique programming requirements 
necessary to be a vendor on the DoD EMALL.
    In all of the electronic business initiatives that I have 
presented, we have worked to use commercial technology to 
establish a single view or access to processes within the 
Department of Defense. This has made it easier to do business 
with DoD and allows DoD to take advantage of the best 
commercial business practices used by our industry partners. 
With electronic business, we have created a seamless business 
process where the flow of electrons allows streamlined 
interface between DoD and industry to expedite the delivery of 
the right information, to the right place, at the right time.
    Thank you very much.
    [Ms. Knott's statement may be found in appendix.]
    Chairman Bartlett. Thank you.
    Mr. Clark.

    STATEMENT OF MAJOR CLARK, ASSISTANT ADVOCATE, OFFICE OF 
          ADVOCACY, U.S. SMALL BUSINESS ADMINISTRATION

    Mr. Clark. Good morning, Mr. Chairman and members of the 
Subcommittee. As you stated earlier, Mr. Glover, who is chief 
counsel for the Office of Advocacy, is unable to be here today. 
He sends his regrets. But you know quite well his commitment to 
small business. He has askedthat I present part of his 
testimony. The full testimony will be, as you stated, submitted for the 
record.
    If I appear to be a little bit nervous, it is probably 
because I am, seeing that some few years ago I had I guess what 
is considered to be the pleasure to be chief of staff of this 
very Committee, and many times looked out from where Mr. 
Crowther is looking now at the audience and the witnesses and 
wanted to know why were they so nervous. Now I understand why 
they were nervous, so please bear with me. [Laughter.]
    The views expressed here are the views of Mr. Glover and do 
not necessarily reflect the views of the Administration or the 
SBA Administrator.
    Congress has struggled for years to determine how to 
address the problem of regulatory burdens on small business, 
how to make agencies consider the value of small businesses to 
the economy.
    Government procurement has been a particularly challenging 
issue. Congress has been rightly concerned that the Federal tax 
dollars be used to get the best buy, that Government manage the 
procurement process efficiently--meaning at the lowest possible 
operating cost--and that at the same time be assured that tax 
dollars do not promote industrial concentration, that they do, 
in fact, promote competition to ensure lowest costs in the long 
run. And safeguards were instituted to ensure against abuse 
such as favoritism in the award of contracts, failure on the 
part of contracting officers to shop the marketplace, et 
cetera. Mandates were also established to ensure that small 
businesses would have some viable access to Federal contracting 
opportunities.
    Congressional reforms created a single acquisition 
regulation, what is called the Federal Acquisition Regulation. 
Other legislation--the Prompt Payment Act, the Equal Access to 
Justice Act, and the Competition in Contracting Act--were all 
enacted in the name of reform, with a view toward ensuring 
fairness and small business access to Government contracting.
    I guess as a sidebar, many of these initiatives were 
enacted during the period of the 1980s in which I served as 
chief of staff, so to some extent, they are very dear to me. 
But at the same time, with the passing of the decade, we 
recognize that the entire procurement process has come under 
criticism for being inefficient, too bureaucratic, too costly 
from an agency operating cost perspective. And in response, 
Congress has rightly enacted the Federal Streamlining Act, the 
Federal Acquisition Reform Act, and other reforms.
    However, in pushing for streamlining, which Advocacy 
largely supported, Advocacy nevertheless remained concerned 
that enough safeguards were not built into the reforms. The 
safeguards we believed were needed were those that would ensure 
the Government continuously shop for the best buy--found most 
often in the small business sector.
    We remained concerned that reforms advanced in the name of 
efficiency would result in more bundling of contracts into 
larger contracts on which small businesses could not bid. We 
were also concerned that contracting officers, being given more 
discretion in selecting contractors at the same time that the 
number of contracting positions was being reduced, would not 
have the right incentives to reach out to small businesses on 
contracts and purchases where small businesses were truly 
competitive.
    Computer technology and the Internet provided an option to 
help implement operating efficiencies while providing important 
information on small business capabilities. To reduce search 
costs, contracting officers needed a service, properly 
designed, that would make it easy for them to find qualified 
small businesses. Thus, PRO-Net was developed by the Office of 
Advocacy. It is a database that profiles small businesses, 
providing information on what services and products they offer, 
their history, and other conditions related to their ability to 
perform. It has as its long-term goal to be a one-stop 
information portal on small business which all contracting 
officers, public and private, could consult to find qualified 
small business vendors. It was a major step toward making it 
easy for small businesses to do business with all Federal 
agencies and to have the database linked to other Federal 
programs then under development to increase the efficiency of 
contract management.
    But this new Internet-based service could not and was never 
intended to address all the concerns Advocacy had about the 
most recent reforms. Mr. Chairman, more than 5 years has now 
elapsed since the 1994 Federal Acquisition Streamlining Act. We 
are now beginning to document what has happened. Advocacy has 
contracted for several studies: one on contract bundling, one 
on credit card purchasing, and one on Federal Procurement 
Center data. Some of these studies have already been presented 
to the committee, and I will not go into them in detail. But 
what is important is that the contract bundling report 
indicates that between fiscal years 1989 and 1997, only 8.9 
percent of all Federal procurement contracts were bundled, and 
that seems like a small number, except when one considers that 
the dollar value of those contracts represented 56.6 percent of 
all Federal prime contracts. The small business share of all 
Federal contracts shrank 1.43 percent between 1996 and 1998.
    In the area of credit cards, we have contracted with Eagle 
Eye Publishers to examine data from the Federal Procurement 
Data Center to see if determinations can be made as to the 
number and amount of credit card purchases made with small 
firms. Preliminary data does show that credit card purchases 
have increased dramatically, as expected. The total value of 
purchases made by credit card in fiscal year 1999 was $10 
billion. If small business' share remained constant, that would 
mean $4 billion would have been spent with small business. 
Whether or not this is happening is what remains to be 
documented.
    You are familiar with the Federal Procurement Data Center 
study that was done in fiscal year 1999, which basically 
documented the amount of contracts being spent with small 
businesses by each Federal Procurement Center, approximately 
2,000 Federal Procurement Centers.
    Mr. Chairman, the data does tell us that something is 
wrong. It does not, however, tell us how to fix the problems. 
Advocacy makes no claim to hands-on experience with procurement 
processes. Nor does it have working knowledge of the day-to-day 
management of Federal contracting. Thus, as is our practice, we 
convened a meeting of private sector individuals who are 
conversant with the procurement processes and with the world of 
small businesses trying to do business with the Government. 
This meeting included such individuals of distinction as Dr. 
Steven Kelman, the former Administrator of the Office of 
Management and Budget Office of Federal Procurement Policy, 
who, as you know, has returned to Harvard University after his 
stint with OFPP.
    Several areas were found to be wrong with the Federal 
procurement system as it relates to small business. 
Streamlining rules that give contracting officers significant 
discretion to deal with large firms, without any built-in small 
business safeguards and Government-Wide Agency Contracts that 
bundle for ease of contract administration were just two of the 
areas that this informal group looked at.
    They came out with corrective steps: developing GWACs, 
Government-Wide Agency Contracts, on which only small 
businesses can bid and establish such vehicles for small 
business goals for each agency.
    This group also had a recommendation of making PRO-Net the 
central registration for small business, expand mandatory use 
of and reliance on PRO-Net to overcome contracting officer 
inertia in searching for small business.
    These recommendations have been forwarded to the Office of 
Federal Procurement Policy and SBA, and I am pleased to report, 
as Ms. Lee stated earlier, some steps have been taken to bring 
this more into light of reality. But more needs to be done.
    Now, what does all this have to do with e-commerce and 
small business? Let me share with you what we do know. 
Procurement reforms have led to Federal agencies posting 
business opportunities on the Internet. All Federal contractors 
are now required to transmit invoices electronically. Many 
Federal contractors are also being required to accept contract 
payments by credit card. The question these changes pose is: 
How is this affecting small business?
    An Advocacy study published in 1999 showed that over 4.5 
million small employers used computer equipment in their 
business in 1998. The percentage of small businesses with 
access to the Internet nearly doubled from 1996 to 1998 from 
21.5 percent to 41.2 percent, respectively. However--and this 
is significant--only 1.4 percent of Internet use among small 
businesses is directed to e-commerce sales.
    In addition, this report identified several obstacles 
facing small business and e-commerce. Costs, security concerns, 
technical expertise, and customer service were the major 
roadblocks to greater small business participation in e-
commerce. Cost was singled out as the most common and greatest 
impediment to expanding e-commerce.
    The three basic concerns identified by respondents were: 
lack of funds for up-front implementation costs; lack of 
monthly cash flow to maintain their sites; and the probability 
that there would not be a real return on their investment.
    All of these taken together leads us to the conclusion that 
without managerial systems in place, or accountability measures 
that provide incentives for agencies to do business with small 
business, or services that make it easy for contracting 
officers to find small business, the benefits of e-commerce as 
used by the Federal procurement system will not redound to 
small business. Moreover, without such changes, small 
businesses will not have the incentive to increase its use of 
the Internet. There will grow and remain a digital divide--a 
divide that will be caused in large part by the failure of 
Federal policies to ensure small business access to Federal 
procurement opportunities. E-commerce and the Internet are but 
tools that without the right building blocks can be used to 
bypass small business.
    The building blocks on which the use of technology is 
ground are what concerns us. Ensuring that the Government does 
business with small business is not dependent on technology, 
but it is dependent on policies and mandates. And it is 
important to remember that doing business with small business 
is not social welfare. It is good Government and good business. 
To prove this point, I defy anyone to find a $700 toilet seat 
sold by a small business.
    Mr. Chairman, e-commerce is at the center of efficiency 
reforms in the Federal Government. It requires businesses to be 
computer oriented. But none of this addresses the rules by 
which contracting officers are to make decisions. Without such 
rules, small business' share of Federal procurement dollars 
will continue to decline. Mr. Chairman, in conclusion, that is 
our concern.
    Thank you.
    [Ms. Clark's statement may be found in appendix.]
    Mr. Bartlett. Thank you very much.
    Now, Mr. Bansal.

 STATEMENT OF TONY BANSAL, PRESIDENT AND CEO, DIGITAL COMMERCE 
                          CORPORATION

    Mr. Bansal. Good morning, Chairman Bartlett and Congressman 
Hinojosa. My name is Tony Bansal, and I am the president and 
CEO of a privately held small business in Reston, Virginia. Our 
flagship product, FedCenter.com, is a Government-focused 
electronic commerce-enabled mall with over 5 million line items 
and over 600 Government vendors.
    I thank you for giving me this opportunity to present my 
views here. Like all of the other esteemed witnesses here, I, 
too, am engaged in the process of bringing efficiency to 
Government e-procurement. But unlike them, I have invested 
personal savings to this end. Like my grandfather once remarked 
over a breakfast of bacon and eggs, he said, ``Son, it is 
important to be committed. Look at this breakfast here. We all 
know that the chicken is involved, but the pig is committed.'' 
[Laughter.]
    ``And that is why it is called bacon and eggs.''
    Well, I am here to tell you that Digital Commerce is 
committed to this process. We are a local small business. We 
have invested millions of dollars in creating a Government-
focused procurement utility, an electronic mall, if you will, 
in which Federal Government buyers can come and compare 
products from several different vendors and make best-value 
decisions.
    We thought that if the law of the land, look at the Federal 
Acquisition Streamlining Act, you look at the Paperwork 
Reduction Act, you look at all of the other executive orders, 
if the law of the land requires that the Government must sell 
electronically, it just makes sense that the vendors must be 
able to sell electronically. So by creating a clearinghouse, if 
you will, in which Government buyers can come buy 
electronically and sellers can sell electronically, we believe 
we have created an efficient way of meeting legislative 
mandates without the use of taxpayers' money, and we have 
leveled the playing field for small businesses.
    Small businesses need help in this new Internet economy. 
The Web is now an essential cost of doing business. In addition 
to bricks and mortar, small businesses must understand and 
invest in Web-enabled machines and networks. Small businesses 
need to migrate to the Web, but do they have the resources to 
evolve, market and maintain a Web presence. In my opinion, they 
do not have the resources to create the technical 
infrastructure or have the marketing muscle to be able to sell 
to the Government effectively.
    FedCenter.com helps by providing small businesses with 
their own website on fast servers. It helps them with hosting 
and maintaining their Government catalogues, their pricing; it 
helps them with making them e-commerce-enabled; it helps them 
with education, training and outreach; it helps them with 
marketing; it helps them with access to not only Federal 
contracts, but State and local contracts.
    I know Congressman Hinojosa, you had earlier made a comment 
with the previous panel that these businesses do not have the 
wherewithal sometimes to either have the e-commerce capability 
or just understand how the process works. We provide that. And 
so essentially all of the basic infrastructure that a small 
business needs to transact and work with the Government, we 
provide. And above all, this entire infrastructure, 
FedCenter.com, was built without any taxpayers' dollars and is 
provided free to the Government.
    And the Government has several other advantages that arise 
from here; one, it makes itunnecessary for the Government to 
spend money in building this infrastructure, which will allow the 
Government to allocate their taxpayers' dollars and other Federal 
resources not on establishing capabilities that are already in the 
private sector. It also allows the Government to focus on functions 
that I believe are more inherently governance; i.e., creating rules, 
and guidance, and certifications on how to do business in these malls. 
It also allows the Government to focus on meeting the purchasing needs 
from small businesses.
    How can the Federal agencies help? I believe the Federal 
agencies can help by not allocating their dollars in building 
these systems, these malls. They are already built in the 
private sector. An analogy that comes to mind, which may not be 
very perfect, but is close, which is, should the SEC be 
building stock exchanges? They don't. They guide and go on and 
set the rules of how the stock exchanges work. I think that is 
what Government needs. It does not need to build these malls. 
They exist.
    All of these resources that are being spent on building 
these malls should be spent on helping small businesses settle 
in these malls, help them with things they need to take 
advantage. The Government is doing a tremendous job, in terms 
of letting out these contracts, the multiple awards schedules, 
the GWACs and others. That is what they should be focusing on.
    Some of the things that Ms. Knott, here, presented earlier 
in terms of the initiatives that the Government is taking, in 
terms of helping the businesses with the electronic invoicing 
and quicker payment, those are the things that the Government 
must be involved with. That is where you can help the 
Government.
    If I had a dollar to spend and if I were the Government, 
would I spend that dollar on building a mall or would I spend 
that dollar on helping a small business? My vote every time 
would be to use that dollar in helping a small business go to 
malls, Government malls, that already exist. The Government 
should focus on, I believe, Governmentwide guidelines on how 
these malls should operate and certifications, if necessary, 
helping small business settle in. I don't think the Government 
should be a mall builder, but should be a subscriber of these 
malls. Private capital is efficient. Private capital goes to 
places where the risk reward is inequitable. I don't think that 
the Government should use taxpayers' dollars to take risks that 
are in the private sector.
    I encourage all of you to log onto FedCenter.com today and 
see for yourself what we have built. And thank you, once again, 
for giving me this opportunity.
    [Mr. Bansal's statement may be found in appendix.]
    Chairman Bartlett. Thank you very much for your testimony. 
I want to thank all of the witnesses for their testimony. Some 
of the questions and concerns raised in the first panel have 
been addressed by this second panel. Thank you very much.
    Let me turn now to Mr. Hinojosa for his comments and 
questions.
    Mr. Hinojosa. Thank you, Chairman Bartlett.
    It was interesting to hear each one of you because I could 
identify with your presentation, and I don't know that I have 
questions for each one of you, but I will say that the comments 
that Mr. Bansal made at the end, that if you had the money, you 
would invest it in training the small business firms instead of 
building the malls has a lot of merit.
    The comments that Major Clark made at the end of his 
presentation that talk about how e-commerce in the Federal 
procurement program will continue to decline with small 
businesses because of what we don't have, and that is the 
infrastructure and the know-how to be able to use it, addresses 
the concerns that I posed to the first presenter. Scottie, the 
presentation you made gives me a lot of encouragement that 
there are a lot of opportunities for the small businesses to be 
able to identify contracts where they could sell to the Federal 
Government. I happen to come from the era of the 1980s, where 
we started selling to the Federal Government as an 8A 
contractor. And the first year we were able to sell about 
$300,000 of hamburger meat to the Department of Agriculture 
under the National Lunch Program. It was very difficult. We 
couldn't understand the specifications. We really needed 
someone to hold our hand and take us through this land mine.
    I was able to get a technical assistance grant, under the 
7J program of SBA, and they sent me to a Swift plant in Dallas 
that was making a product, a ham, for the Department of Defense 
to supply our troops. The gentleman who owned that plant told 
me that it was very difficult, that he was the first 8A 
contractor to ever get a meat contract, and he went on to 
explain how difficult it was to understand specifications and 
all that was required.
    Well, now, with what is being done here under e-commerce, 
it just continues, and bundling, which was addressed also by 
Major Clark, is just a continuation of making it more difficult 
and putting more obstacles for women and minorities to get into 
these contracts. I have been out of the food processing 
business now for 4 years. And the number of family-owned 
businesses that used to be in that industry have diminished by 
more than half.
    And where we used to have approximately 38 little business 
firms competing under the 8A program for meat products, you are 
down to one-third; and under the bundling, you have probably 
lost 80 percent. I think that we need to sort of put the brakes 
on this fast technology that we are doing under e-commerce, and 
as we pause, that possibly Mr. Summers, through your 
association, could come up with something that would be quick 
to bring all of these small firms under all industries and 
occupations, under all of the SIC codes, up to par to be able 
to utilize this paperless procurement program that the Federal 
Government is wanting to do. There is no doubt, there is no 
doubt in my mind, that the big, large firms are the ones who 
are benefitting from this. And I have had constituents come to 
talk to me and say how we, as Small Business Administration or 
Small Business Committee members are turning a blind eye to 
what is occurring to them.
    Mr. Summers, I heard somebody say you had the answer to a 
question that I was asking the first presenter.
    Mr. Summers. Well, I don't know whether that was accurate.
    You asked the question about the possibility of using 
students to the first presenter?
    Mr. Hinojosa. Graduates.
    Mr. Summers. Graduate students?
    Mr. Hinojosa. Not a student, but somebody who has graduated 
with a bachelor's degree out of the School of Business, to team 
up with some of our small business firms to help them set up 
and use the equipment and participate.
    Mr. Summers. This could be done without a great deal of 
difficulty. Many SBDCs are housed on university campuses. I 
don't know the exact number of campuses we are on, but we have 
a thousand centers. Probably that represents 5 or 600 
universities across this country, and that enables us to be a 
good facilitator to identify students who would be qualified to 
assist and match that assistance to the local business. DLA's 
Procurement Assistance Centers can bring the procurement 
expertise that is needed with that.
    So if you link those together, we could quickly and simply 
solve the one problem that you are addressing. Just a thought.
    Mr. Hinojosa. Chairman Bartlett, I can't help but think 
that that is a good idea for theconsideration of our committee, 
and see how we could work with the agencies that are responsible for 
funding those small business components, either through SBA or 
Department of Commerce. I know that both of them have them under the 
MBDC and SBA agencies.
    But, again, how fast can this be done?
    Mr. Summers. The charge of SBDCs is to provide management 
assistance. This is a component. Assisting with issues of 
administration, finance and computer systems are all under the 
umbrella that we would see as our charge today. How quickly can 
we facilitate the students? That is the hard part of the 
equation. But we are well positioned to do that.
    I don't know that I can put a time frame to it today, but 
we are positioned to make this happen fairly quickly. If we 
could get the components and figure out how to really approach 
this, we would like to have more student involvement. And if 
this were a mandate for us, I think that is something we would 
take on. I can't speak for the DLA Procurement Assistance 
Program, but they have a representative on this panel, so they 
can speak for themselves.
    Mr. Hinojosa. Major, I want to say that your studies that 
you identified are very accurate and that as a member of this 
committee, I would like very much to somehow get more 
communication and dialogue with your component of the SBA and 
see how we could maybe think this out as to how we can utilize 
Mr. Summer's recommendation and move in that direction because 
this booming economy is leaving out some of our small business 
firms if we don't respond.
    And I, Mr. Chairman, would like to say that I would love 
the opportunity to work with you in finding a solution to 
leapfrog, not go at a turtle's pace to make it happen. That is 
why I was asking the question how soon can we get it done so 
that we can help our small business firms be a part of this e-
commerce business-to-business boom that is before us.
    Mr. Bartlett. I thank the gentleman very much for his 
concerns and his questions.
    Several members of the Small Business Committee were small 
business people before we came here. And you can tell by Mr. 
Hinojosa's questions that he is very familiar with the concerns 
of small business. What we need, Mr. Hinojosa, I think is the 
equivalent of SCORE. SCORE are retired executives, probably not 
as familiar with computers and the Net as younger people, but 
we need the equivalent of that made up of younger people who 
are available too. SCORE does a fantastic job of interfacing 
with small business in the management business plan aspect of 
it. We need that kind of capability at this technical front now 
to help our small businesses become more familiar and more 
expert in using the Net.
    Consistent with your concerns, let me ask Scottie Knott, 
what percentage of the businesses in your DoD EMALL, which I 
gather Mr. Bansal says you don't need to make because he has 
already done it.
    Ms. Knott. He is a participant on the EMALL.
    Chairman Bartlett. Oh, he is a participant. What percentage 
of your businesses in your DoD EMALL are small businesses?
    Ms. Knott. Right now, of the vendor catalogues, I would say 
about 40 percent of them are small businesses.
    Let me just comment, though, on what my colleague had to 
say about that. One of the things that you mentioned, in terms 
of looking for solicitation and the small business vendor not 
wanting to go to multiple websites, and having to look here, 
and then look here, and then look here in different website, in 
the same way our DoD customers, the people that need these 
commercial goods and services, don't want to have to go to 
multiple different websites in order to find all of the 
different chain saws, for example, that may be out there in the 
marketplace.
    So what the DoD EMALL does is uses available commercial 
catalogues, as the FedCenter, and brings them together for a 
single view of all of those commercial sites, as well as DoD 
inventory to our DoD customers. So we are not building a unique 
capability for--we are not building our own malls. All we are 
doing is we are bringing together all of the different 
catalogues and malls that are available from commercial 
industry, as well as our Government, visibility of our products 
in the warehouses, and providing that to our DoD customers. So 
I just wanted to make that distinction in that regard.
    But the DoD EMALL is available to any vendor within DoD who 
has a Government contract. We want to put on the mall contracts 
that are available for ordering because what we are doing is we 
are presenting this information to the person who is the 
orderer, not the person who is the procurement professional 
putting together the procurement. That has already been done 
for them. So we are going directly to the customer who is 
ordering this product.
    Chairman Bartlett. Forty percent of your businesses in your 
mall are small businesses. What percent of the dollar awards 
are small business?
    Ms. Knott. In the mall?
    Chairman Bartlett. Just what percentage of the money spent 
by DoD is spent on small business? If 40 percent of your 
potential contractors are small business, what percent of the 
dollars do they get?
    Ms. Knott. I don't know what the total percentage is for 
all of DoD in terms of all of DoD procurement. I am not 
specifically in that particular business. But there is no 
distinction made between the vendor who is a large business or 
a vendor who is a small business in any of our e-commerce 
initiatives. They are available to all on the same playing 
field.
    Chairman Bartlett. Thank you.
    Several of you have mentioned legislative actions that 
might be desirable for the Committee to make. One of the first 
of those----
    Mr. Hinojosa. May I interrupt you, Mr. Chairman?
    Chairman Bartlett. Yes, sir. Please do.
    Mr. Hinojosa. Before you get off of the percentages, you 
said 40 percent were using computers. In the study that was 
presented by Major Clark on page 9, there is a paragraph that 
is alarming and should be alarming to us in our Committee, 
which says, ``However--and this is significant--only 1.4 
percent of Internet use among small businesses is directed to 
e-commerce sales.'' That is alarming.
    And there is no doubt that what Scottie is talking about, 
the opportunities and all of that, are tremendous. But unless 
we address the reasons, it says, ``The three basic cost 
concerns identified were lack of funds for up-front 
implementation costs; number two, lack of monthly cash flows to 
maintain their site; and, three, the probability that there 
would not be a return on their investment,'' at least that is 
the perception.
    Unless we address this, I don't think we are going to see a 
big improvement in small business firms taking advantage of 
business-to-business e-commerce. I think the Government is just 
going to be patted on the back by the big companies and thanked 
for getting rid of all of the small business firms that used to 
compete with them so that they can up the prices so that we can 
have the $700 toilets.
    Mr. Bansal. Can I make a comment?
    Mr. Hinojosa. Sure.
    Mr. Bansal. We have addressed at least two of those three 
concerns that was in that report you just read out. We do, for 
small businesses, we do bring them into an e-commerce world, so 
we do do a set-up for them. We do maintain it monthly for them, 
and we do get them transactions, so they can bill 
electronically.
    I think the point that I did not make very emphatically is, 
really, the Government can help by encouraging the use of these 
solutions to send business to small businesses. And I think the 
e-mall has taken the lead in the sense that we are in 
partnership with them so that they have the ability, if they 
want it today, to do that. And we are free to the Government. 
We don't charge the Government for use, but we do charge 
businesses. But what we charge to small businesses is so low, 
so compelling, that we have not had problems from getting them 
to participate. And in some cases, we have even waived that fee 
because we truly believe that there are hundreds of thousands 
of vendors that have prenegotiated contracts with the 
Government that most of them need to be in malls like this for 
the Government to succeed.
    Mr. Hinojosa. Mr. Chairman, I agree with Mr. Bansal that 
what his company and his group have is applicable to the 
solution that I am looking for. But before we commit to the 
legislation changes that you were about to talk about when I 
interrupted, I hope that we would make that conditional on the 
Federal agencies who can help implement the solution that I am 
asking for, that if we are to make legislative changes like 
removing the 15-day waiting period and other things that were 
requested earlier, that all of that be conditional on there 
being, I guess, a huge effort in human resources and monies for 
technical assistance to address what I want, and that is that 
small businesses have a human being who can help them utilize 
this opportunity of business-to-business e-commerce.
    Chairman Bartlett. Thank you. Thank you very much. Your 
concerns I think are the concerns of the Office of Advocacy. 
And I would hope that in any legislation that we are working on 
that we would work closely with them because they are out there 
every day working with small businesses and know the problems 
and the concerns that they have.
    I was mentioning the suggestions that you all have made for 
committee action. Mr. Summers made one of those first 
suggestions. And what I would like you to do is to make sure 
that our staff has those because we will be looking at them. 
This is such a rapidly changing field that a 4-year-old bill is 
probably now obsolete, isn't it, for many of the needs and 
concerns of small business. So we do need to update this, and I 
appreciate your suggestions for changes.
    And, Mr. Summers, if you would make sure that the committee 
actions that you would like to see us make are clearly spelled 
out for our staff people.
    Scottie Knott, you mentioned the virtual payment folder.
    Ms. Knott. Yes, sir.
    Chairman Bartlett. Government has a great reputation for 
being a very poor payer, slow. By poor, I mean slow payer. Does 
this new technology help us move a little faster, so that we 
won't continue to have that reputation?
    Ms. Knott. Yes, sir. I believe so. The vendor can actually 
submit their invoice electronically. And built into that 
process are some validations so that the invoice that they 
submit is correct; in other words, it has all of the required 
information.
    As you know, under the Prompt Payment Act, and we have some 
cash management requirements associated with paying vendors. 
And in order for the clock to start ticking on the payment, you 
have to be in receipt of a valid invoice, and it has to be 
correct. So this helps the business entity submit the invoice 
and make sure that all of that information is correct.
    Additionally, it marries up those other two documents that 
I told you are necessary, the receiving report, as well as the 
contract, and it makes it available to any payment official 
within the DoD community online, so they don't have to wait for 
the mail, they don't have to wait for somebody to file it and 
put it in the right folder, they don't have to wait for that to 
actually appear on their desk. So it is instantaneous access to 
information the minute it is available or actually created, 
when all three of these documents are created. So it should 
speed that particular process up.
    Chairman Bartlett. We hope so. One of the major complaints 
of people doing business with the Government is that they are 
so slow paying. As a matter of fact, I know of some small 
businesses that do not contract with the Government simply 
because they do not have the financial resources to wait 90 or 
more days for payment.
    Ms. Knott. Yes, sir.
    Chairman Bartlett. So, hopefully, this new technology will 
speed that up, which I think will be very beneficial to the 
taxpayer because we are going to have small businesses, who 
will be even more competitive, becoming involved when they have 
finally learned that they will get paid on some timely basis.
    Major Clark, you mentioned that Mr. Glover's views are not 
necessarily the views of the administration. Jere Glover is 
typical of a number of people, not enough, but a number of 
people in the Government who when they tell the person they are 
conversing with that, ``I am from the Government and I am here 
to help you,'' the person doesn't start laughing, which is the 
usual response when somebody from the Government says, ``I am 
from the Government and I am here to help you.''
    Your organization, particularly Jere Glover, really is 
there to help, and I am pleased that an increasing number of 
people, particularly those who are interfacing with the small 
business community, have the kind of attitude that Mr. Glover 
has. When he gives a talk and he says, ``us,'' he is talking 
about small business, and when he says ``them,'' he is talking 
about the Government bureaucrats. And we need more of our 
people to use that kind of vocabulary when they are interfacing 
with the public, particularly with the small business 
community.
    You mentioned the $700 toilet seat. Whose fault is that? We 
have $200 hammers and $700 toilet seats. Whose fault is that? 
How much of that fault is the fault of Government procurement 
policies and how much of it is the fault of the business? You 
said that small business was never there, that when that sort 
of thing came up it was always large business. Whose fault is 
that? How much of that fault is our procurement policy and how 
much of that fault is the business?
    Mr. Clark. Mr. Chairman, if I may go back in time just a 
little bit, the toilet seat issue came up, at least came to our 
attention back in the 1980s, and at that time it was at least 
the belief of staff, looking at various documents, that fault, 
if there is fault to be placed, was part placed on the system 
itself, in terms of how it encouraged, how it allowed for this 
type of situation to occur. And in many situations, and in most 
situations, small businesses simply were not available to 
participate at that level of play and, therefore, small 
businesses were not selling the $700 toilet seat to Defense or 
the $250 hammer, whatever the case may be.
    But in many situations because of the system, while we saw 
the $700 toilet seat as being ridiculous, the system itself saw 
the $700 toilet seat as being just a very small part of a 
larger mission that had to be accomplished, and that mission 
was to make sure the fighters were able to fight, and we were 
able to conduct the type of war that was necessary.
    So, to a very large extent, the procurement regulations at 
that point in time allowed for this tooccur, and that is, to 
some extent, why we, at least the staff level, recommended to the 
members, and they took the recommendations and moved forward with 
legislation, in terms of correcting some of those deficiencies.
    Chairman Bartlett. I appreciate your answer.
    Most frequently when this is mentioned, it is mentioned in 
the context of greedy, inept businesses who are just finding 
opportunities to gouge the Government and the taxpayer. I 
appreciate your answer very much because I think that most of 
the blame there lay at the regulations, which didn't only 
permit, but in some ways of looking at them, almost required 
this kind of thing. And I appreciate your concern about 
changing these so that that wouldn't happen again. There is no 
big business that wants this kind of a thing to come out in the 
press about their contract with the Government. That doesn't 
help anybody, the Government or the business.
    You also mentioned contract bundling. Relevant to that, 
there is another concern that a number of small businesses have 
come to us with, and that is bid shopping. Is that problem 
finally corrected? Bid shopping is where a prime goes out and 
gets a bunch of subs to team with them in bidding. And then the 
prime gets the contract, and he comes back to the subs, and he 
says, ``Well, now I have got the contract. I am going to rebid 
these subs. How much lower can you make your bid cost on 
that?''
    And frequently the subs that were a part of the bid and 
maybe part of the reason that the award was made to the prime 
are not involved at all in the performance of the contract 
because the prime has now gone out and done what is called bid 
shopping. They have shopped it around. They have gotten other 
small bidders who would do it for lesser dollars. Had they been 
on the team, originally, they might not even have gotten the 
contract because the Government buyer might not have seen that 
as a responsible team.
    The difference in dollars is just put in the pocket of the 
prime. It is called ``bid shopping.'' Have we found a way to 
correct that abuse?
    Mr. Clark. Mr. Chairman, we have not looked at bid shopping 
as a study, at this particular point. We do, however, know that 
from anecdotal information that has been brought to our 
attention, that it is occurring. So, therefore, we have not 
moved forward with any type of recommendation as to how to 
curtail it simply because we have not studied the problem in 
its totality.
    It does exist, and it is unfortunate that the small 
business owner is, in most situations, the victim of this 
particular process. It is something that we will be looking at 
in the very near future, but we have not yet been able to fully 
document the magnitude of it.
    Again, bid shopping, in past legislation, there has been 
attempts to correct this. There are some laws in place now 
which can address this if they are properly implemented.
    Chairman Bartlett. I think in terms of fairness, almost 
everybody would like to see the team that won the contract be 
the team that performs on the contract. And if legislation is 
needed to make that happen, please let us know. If 
administratively, the Government procuring agencies can make 
that happen, that is okay. But if you need legislative support 
to do that, please let us know.
    Mr. Bansal mentioned the relationship of the chicken and 
the pig to your breakfast ham and eggs. For the chicken, that's 
a one-day effort, for the pig, that is pretty much a total 
commitment, isn't it.
    Mr. Bansal. Sure.
    Chairman Bartlett. And there are many small businesses who 
feel more like the pig than the chicken----
    Mr. Bansal. Absolutely.
    Chairman Bartlett. When they are dealing with the 
Government.
    I want to thank all of you very much for your testimony. 
This is a rapidly growing technology. It is very difficult to 
keep up with it, particularly difficult for our small 
businesses. The most relevant legislation is now 4 years old. 
And I think very clearly since it is 3 or 4 years old, that we 
need a new look at legislation. Appreciate your suggestions for 
what this legislation might include.
    And, again, thank you very much for your participation in 
today's hearing.
    Our Subcommittee is now adjourned.
    [Whereupon, at 11:55 a.m., the Subcommittee was adjourned.]
    
    
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