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SUBCOMMITTEE HEARING ON

ENSURING SMALL BUSINESSES

HAVE FAIR ACCESS TO

FEDERAL CONTRACTS

SUBCOMMITTEE ON CONTRACTING AND 

TECHNOLOGY 

COMMITTEE ON SMALL BUSINESS 

UNITED STATES HOUSE OF 

REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

APRIL 16, 2008

Serial Number 110-84

Printed for the use of the Committee on Small Business

(

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

HOUSE COMMITTEE ON SMALL BUSINESS 

NYDIA M. VELA ́ ZQUEZ, New York, Chairwoman 

HEATH SHULER, North Carolina 

CHARLIE GONZA ́ LEZ, Texas 

RICK LARSEN, Washington 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

MELISSA BEAN, Illinois 

HENRY CUELLAR, Texas 

DAN LIPINSKI, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

BRUCE BRALEY, Iowa 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

BRIAN HIGGINS, New York 

MAZIE HIRONO, Hawaii 

STEVE CHABOT, Ohio, Ranking Member 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

STEVE KING, Iowa 

JEFF FORTENBERRY, Nebraska 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

DAVID DAVIS, Tennessee 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida

MICHAEL DAY, Majority Staff Director 

ADAM MINEHARDT, Deputy Staff Director 

TIM SLATTERY, Chief Counsel 

KEVIN FITZPATRICK, Minority Staff Director

Subcommittee on Contracting and Technology

BRUCE BRALEY, IOWA, Chairman 

HENRY CUELLAR, Texas 

GWEN MOORE, Wisconsin 

YVETTE CLARKE, New York 

JOE SESTAK, Pennsylvania 

DAVID DAVIS, Tennessee, Ranking 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

MARY FALLIN, Oklahoma

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page

Braley, Hon. Bruce .................................................................................................. 1

Davis, Hon. David .................................................................................................... 2

WITNESSES

Ott, Mrs. Fay E., Associate Administrator, Office Of Government Contracting 

& Business Development (ADA GCBD, U.S. Small Business Administration ........................................................................................................................ 4

Dorfman, Ms. Margot, CEO, U.S. Women’s Chamber of Commerce ................... 6

Bates, Mr. Chris, President, National Office Products Association ..................... 7

Day, Dr. Charles F., Senior Member, Charles F. Day & Associates LLC, 

Davenport, IA ....................................................................................................... 9

Wilcox, Ms. Aundrea, Executive Director, Kingsport Office of Small Business 

Development & Entrepreneurship (KOSBE), Kingsport, TN ........................... 11

APPENDIX 

Prepared Statements: 

Braley, Hon. Bruce .................................................................................................. 23

Davis, Hon. David .................................................................................................... 25

Ott, Mrs. Fay E., Associate Administrator, Office Of Government Contracting 

& Business Development (ADA GCBD, U.S. Small Business Administration ........................................................................................................................ 26

Dorfman, Ms. Margot, CEO, U.S. Women’s Chamber of Commerce ................... 30

Bates, Mr. Chris, President, National Office Products Association ..................... 36

Day, Dr. Charles F., Senior Member, Charles F. Day & Associates LLC, 

Davenport, IA ....................................................................................................... 47

Wilcox, Ms. Aundrea, Executive Director, Kingsport Office of Small Business 

Development & Entrepreneurship (KOSBE), Kingsport, TN ........................... 55

(III) 

(1)

SUBCOMMITTEE HEARING ON ENSURING 

SMALL BUSINESSES HAVE FAIR ACCESS 

TO FEDERAL CONTRACTS 

Wednesday, April 16, 2008

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 2:00 p.m., in Room 

1539, Longworth House Office Building, Hon. Bruce Braley [chairman of the Subcommittee] presiding. 

Present: Representatives Braley, Davis, and Akin. 

OPENING STATEMENT OF CHAIRMAN BRALEY 

Chairman BRALEY. I call this Subcommittee hearing on small 

business contracting to order. 

Today we will examine whether small businesses are given a real 

opportunity to access the Federal marketplace. The topic comes before us as a time when the U.S. economy is in a sharp downturn. 

The subprime mortgage crisis that began in 2006 was one of the 

worse we have seen since the 1930s, and the GDP data for the last 

quarter of 2007 shows less than 1 percent growth in our economy. 

Two weeks ago the U.S. Department of Labor reported that unemployment had risen from 4.8 to 5.1 percent, with an 80,000 job 

loss shown during the month of March alone. Oil prices continue 

to climb, and the average price of a gallon of gas is now $3.33, a 

record. Meanwhile, credit is drying up, liquidity is limited, and 

businesses are finding it difficult to secure affordable capital. 

This picture may sound grim, but there is hope in small businesses. Entrepreneurs have always led the way to economic recovery and growth. However, the question of whether this administration is giving them a fair chance to do it again remains. 

While most sectors of our economy are struggling, the Federal 

marketplace, in contrast, continues to grow. Last year alone, Federal procurement spending rose by over 9 percent. In fact, the Federal Government now spends upwards of $400 billion in goods and 

services, which amounts to more than the GDP of many nations. 

Our Government buys everything from thumbtacks and staples 

to navigation components for satellites and turbines for submarines. The likelihood of a small business making one of these 

products or providing a needed service to the Federal agency that 

uses them is very high. 

Just as important, small businesses increase the diversity and 

quality of the supply base and stimulate the economy. Congress 

2

recognized this fact 55 years ago when it passed the Small Business Act. That law commit our Federal agencies to ensure a fair 

portion of Government contracts are awarded to entrepreneurs. 

But this administration has moved away from those goals. Over 

the past 7 years, it has not met the Government-wide 23 percent 

targets for contracting with small businesses at a single time. 

Moreover, contract bundling, which robs small firms of the opportunity to compete for Federal projects, is on the rise. Within the 

agency, the situation is worse. Contracting systems are being mismanaged, and we are seeing many large businesses chosen to tackle projects that entrepreneurs could do far more efficiently. 

Last May, the Committee approved H.R. 1873, the Small Business Fairness and Contracting Act. I introduced this legislation to 

bring greater transparency to the contracting process, because it is 

obvious a high level of miscoding and contract bundling is shutting 

out small firms. 

In March of last year, the Subcommittee held a hearing on the 

delayed implementation of the Women’s Procurement Program. At 

the time, I was less than 3 months into my tenure in my Congress, 

and I was shocked by the utter disregard of the administration for 

the important role women entrepreneurs play in our economy. Incredibly, the SBA continues to drag its feet on the implementation 

of this important initiative. 

In January the agency even issued a regulation that was completely unworkable. That was just the latest in a series of contracting decisions that run clearly counter to the intent of the current law. 

America’s small businesses are the drivers of innovation and 

growth. That is a fact. They increase quality and help give us taxpayers the biggest bang for their buck. Offering these businesses 

a fair chance to compete for Federal contracts is the least we can 

do. I remain committed to ensuring the administration lives up to 

that commitment. 

I want to thank each of the witnesses for sharing their time with 

us today, and I look forward to their testimony. 

And I now yield to my colleague and friend from the State of 

Tennessee, Ranking Member Davis, for his opening statement. 

OPENING STATEMENT OF MR. DAVIS 

Mr. DAVIS. Good afternoon. Thank you, Mr. Chairman, for holding this hearing on ensuring that small businesses have a fair 

chance at Federal contracts. 

The House Small Businesses Committee, this Subcommittee, and 

our Nation recognize that small business is critical to the country’s 

overall economic well-being. The drive, creativity and innovation of 

small businesses are the hallmarks of entrepreneurship and the 

keys to job creation and economic growth. 

I would like to extend a special thanks to each of our witnesses 

who have taken time to provide the Subcommittee with their testimony. I would especially like to welcome my fellow Tennesseean, 

Ms. Aundrea Wilcox, executive director of the Kingsport Office of 

Small Business Development and Entrepreneurship of the Kingsport Area Chamber of Commerce, also known as KOSBE. She is responsible for advising startups and existing small businesses. 

3

Welcome to the Small Business Subcommittee on Investigations 

and Oversight, Ms. Wilcox, and I am sure that we will find your 

testimony extremely helpful. 

The SBA Act was signed into law in 1953, creating the Small 

Business Administration. The Act recognizes that competition is 

the essence of the American economic system of private enterprise. 

The preservation and expansion of such competition is vital, not 

only to the economic well-being but the security of our Nation. 

Such security well-being cannot be realized unless the actual and 

potential capacity of small businesses is encouraged and developed. 

Congress has amended the Act or authorized a number of programs such to ensure small business concerns receive their fair 

proportion of contracts for property and services. These programs 

are controlled and managed by the Small Business Administration. 

As a result of these initiatives, small businesses produce 13 to 14 

times more patents per year per employer than large firms. Small 

businesses participate in all major industries and represent 99.7 

percent of all employers and 50 percent of all private-sector workers. In addition, small businesses employ 39 percent of high-tech 

workers such as scientists, engineers and computer workers. 

For President Bush and many Americans, small business embodies so much of what America is about: self-reliance, hard work, 

innovation, the courage to take risks for future growth. The President states that these values have served the Nation well since its 

very beginning. They are values that are passed on from generation 

to generation. We must ensure that all small businesses continue 

to thrive and prosper, not for their own sakes for but for all of our 

benefit as well. 

The SBA has overall done a good job implementing the congressional direction of the Small Business Act and specifically the contracting programs. The SBA, as this Committee does, should continue to assess the effectiveness of existing Federal contracting programs, recommending changes for improvement. They should also 

review the synergies that would benefit all small businesses. This 

course of action would reduce or eliminate infighting among the 

small businesses in the community involved by competing Federal 

contracting programs. 

We have excellent witnesses here today to provide us with the 

insight into how well the congressional directions to assist small 

businesses in the procurement process and increasing opportunities 

to do business with the Federal Government are working. I look 

forward to their testimony. 

Thank you again, Mr. Chairman. And I yield back the balance 

of my time. 

Chairman BRALEY. That obnoxious noise you heard is a call to 

the floor for votes. And, unfortunately, neither Mr. Davis nor I can 

control the floor schedule. So I have to apologize to the witnesses. 

We are going to ask to indulge your patience a little bit longer. And 

I will give you my commitment—I am sure Mr. Davis will as well—

to get back here as soon as we can after the votes are concluded. 

It is a series of four votes. And then we will look forward to your 

testimony at that time. In the meantime, staff will be available to 

answer any questions you might have. 

And, with that, we stand in recess. 

4

[Recess.]

Chairman BRALEY. The hearing is called back to order. I would 

like to welcome everyone back. 

The first witness is Ms. Fay E. Ott. She is the Associate Administrator of the Office of Government Contracting and Business Development at the Small Business Administration. And in that capacity, she is responsible for overseeing implementation of agency 

initiatives within the Office of GCBD, including the 8(a) Business 

Development Program, the Women’s Procurement Program, and 

HUBZone Empowerment Contracting Program. She is also responsible for managing agency efforts to determine if small business 

contracts are awarded to businesses that meet the appropriate size 

standards. Prior to becoming the Associate Administrator, Mrs. Ott 

served as a senior manager at the SBA. 

Welcome. And we look forward to your testimony.

STATEMENT OF MRS. FAY OTT, ASSOCIATE ADMINISTRATOR, 

OFFICE OF GOVERNMENT CONTRACTING AND BUSINESS DEVELOPMENT, U.S. SMALL BUSINESS ADMINISTRATION 

Mrs. OTT. Chairman Braley, Ranking Member Davis and members of the Committee, I thank you for the chance to testify today. 

My name is Fay Ott, and I am the SBA Associate Administrator 

for Government Contracting and Business Development. On behalf 

of Administrator Preston, I welcome the chance to discuss increased access for small business. 

SBA has made strides to improve small business access to Federal contracts. From fiscal years 2000 to 2006, prime contracting 

dollars going to small business have grown 54 percent, from $50 

billion to $77 billion. During that time, subcontracting dollars increased 71 percent, from $35.5 billion to $60.7 billion. 

In terms of small business jobs, this increase in prime contracting translates into more than 571,000. Among some contractors, we estimate that more than 450,000 jobs were created or retained. This is real progress. 

Looking forward, SBA recognizes the need to improve small business contracting programs. We have worked to provide data that 

more accurately measures agency results, and we continue to improve SBA’s scorecard measuring progress toward small business 

goals. 

We addressed the long-standing problem of the size standard recertification through regulations that will focus the efforts of agencies on providing contracts to small businesses. Finally, we are ensuring greater access to Federal contracting opportunities by adding to and providing better direction for the personnel who work 

directly with small businesses. 

Currently, there are 66 procurement center representatives. I 

know that the Committee realizes the important role that PCRs 

play, and SBA is committed to supporting this work. PCRs are an 

integral part of our plan to address access to contracting opportunities and issues such as contract bundling. SBA’s fiscal year 2009 

budget request is based on 66 PCRs, and this number includes the 

5

recent hires that Administrator Preston discussed during his testimony before this Committee. 

Along with more PCRs, SBA is implementing a plan to improve 

the services provided. One of Administrator Preston’s 2008 priorities is to review the duties of the PCRs. This review is ongoing, 

but, once fully implemented, it will allow PCRs to focus more intently on this vital work. It will allow SBA and our resource partners to focus on getting small businesses the training they need to 

compete for Federal contracts. 

In the 8(a) program, we are streamlining the process for annual 

reviews and certifications and focusing on the skills that businesses 

need to succeed. We have established new customer service training for district staff to improve the application review and contracting assistance stages. In the HUBZone program, eligible firms received $7.1 billion in prime contracts and $2.6 billion in subcontracts in fiscal year 2006. 

In terms of jobs, the prime contracts supported nearly 53,000, 

while subcontracts provided more than 19,000. The HUBZone program is directly benefiting historically underutilized areas and the 

small firms located there. 

Today, one of our major objectives for HUBZone is improved accountability. The May 2006 Inspector General’s audit of the program identified needed improvements, and we have taken steps to 

address each of these issues. These plans and actions have satisfied 

the Inspector General in regards to its audit. 

Additionally, in regards to oversight and certification issues, we 

stepped up program examinations. So far in fiscal year 2008, we 

have completed 362 program examinations, resulting in 144 positive findings, 183 proposed decertifications and 35 decertifications. 

This process is continuing, and we are working for greater accountability in the HUBZone program. 

In August 2007, SBA released the Small Business Procurement 

Scorecard. The scorecard measures current performance and the 

progress plans of Federal agencies in providing more small business contracts. Based on performance, seven agencies were rated 

green, five yellow, and 12 were red. Since its release, the scorecard 

has provided a real incentive for agencies to increase access for 

small business. We work effectively with these agencies, and this 

new level of accountability is increasing access to Federal contracting. 

Chairman Braley and members of the Committee, thank you 

again for the opportunity to testify today. And I am happy to answer any questions you I may have. 

[The prepared statement of Mrs. Ott may be found in the Appendix on page 26.]

Chairman BRALEY. Thank you. 

Our next witness is Margot Dorfman, who is the founder and 

CEO of the U.S. Women’s Chamber of Commerce. She is dedicated 

to championing opportunities to increase women’s business growth, 

career and leadership advancement. The U.S. Women’s Chamber of 

Commerce is a leading national voice advancing economic opportunities for women in America. Ms. Dorfman has an extensive background in business, business ownership, publishing and nonprofit 

6

leadership. Her corporate experience includes 10 years in executive 

positions with General Mills and other Fortune 500 companies. 

Welcome. 

STATEMENT OF MS. MARGOT DORFMAN, CEO, U.S. WOMEN’S 

CHAMBER OF COMMERCE 

Ms. DORFMAN. Thank you very much. Chairman Braley, Ranking 

Member Davis, and members of the Subcommittee on Contracting 

and Technology, I am here today on behalf of the millions of American women business owners to make you aware of serious issues 

in reporting of Federal contracting with women-owned small businesses. 

Today I will illuminate how the failures of the SBA cause false 

contracting data to be reported and fail to provide this Committee 

and the American people with the true picture of the Federal contracting with women-owned firms. 

I begin with a snapshot look at the tremendous growth in Federal contracting between 1999 and 2006 versus the incredibly small 

growth in contracting with women-owned firms during the same 

period. While total Federal spending grew by $200 billion in 1999 

to over $340 billion in 2006, an increase of $140 billion overall, 

spending with women-owned firms increased only by $5 billion. 

And if this were not bad enough, as we took a closer look, we 

find a very serious issue with the accuracy when reporting contract 

actions with women-owned firms. As contracts are awarded, contract actions are recorded in the Federal Procurement Data System. This data is used by the SBA to create annual goal reports, 

and that provides us with information on Federal purchasing such 

as total contract actions and total dollars spent. 

Using data from the FPDS, one can easily generate a report listing the largest contractors to which women-owned small business 

actions have been attributed. In 2006, the top 100 contractors with 

actions flagged as women-owned represented over $5 billion of the 

total $11.6 billion that the SBA claims was spent with womenowned small businesses. By simply making a careful analysis of 

these top 100 contractors, the SBA could go a long way toward assuring the accuracy of their own reporting. 

With just a cursory look through this list of firms, it is clear that 

this list is shockingly full of businesses that are either not small 

or not appropriately designated as women-owned. 

Suggestion number one: Require the SBA to provide an annual 

report on the top 100 firms with contract actions attributed as 

women-owned businesses. 

As we perused the CCR and Online Representations and Certifications Application system, we found that the ability to assert 

women-owned status is far too simple and lacks clarity with regard 

to how one determines women-owned status. ORCA simply reiterates the FAR definition of women-owned with no further assistance 

or differentiation that might prevent some of the overt misrepresentations that we found in the data. 

Suggestion two: Include more detail in the FAR, in CCR and in 

ORCA regarding the definition of a women-owned business concern. Include a simple checklist of attributes that force the corporation registering as women-owned to make sure it understands the 

7

elements of the women-owned definition and meets at least the 

most cursory of requirements. 

And be aware that even when we do finally have a women-owned 

small business set-aside program, there may be a difference in how 

a business secures women-owned status for the purpose of the setaside and for the purpose of registering in CCR. We must make 

sure that this loophole is closed in both places. 

The NRC recommended that the SBA should produce more useful reports on Federal contracting. And we would also like to see 

in our suggestion three that the SBA heed the advice of the NRC 

to provide more thorough analysis of small business contracting, to 

include such characteristics as type and size of business, thorough 

agency breakouts, and contracting and regional breakouts. 

Each year, the SBA publishes the total dollars spent and the 

total transactions completed with women-owned firms. However, no 

further analysis is presented. Never does this Committee or the 

American public have the opportunity to understand the total number of women-owned small businesses receiving contracts, the size 

of these contracts, the geographic disbursement, the number of new 

firms receiving contracts, the dollars flowing through joint ventures, the top 100 women contractors, or similar data relative to 

each of the major agencies purchasing with women-owned firms. 

I strongly urge you to take action to require deeper accountability, transparency and useful reporting from the SBA. The information gleaned from these actions will most certainly assist in the 

efforts to assure small businesses have fair access to Federal contracts. 

Thank you. 

[The prepared statement of Ms. Dorfman may be found in the 

Appendix on page 30.]

Chairman BRALEY. Thank you. 

Our next witness is Mr. Chris Bates, who is the president of National Office Products Alliance, known as NOPA. Prior to joining 

this organization, Mr. Bates served as president of the Motor and 

Equipment Manufacturers Association, and he has worked as an 

independent consultant, international economic policy advisor with 

the U.S. Government, and congressional legislative assistant, and, 

most importantly, apparently is a native of my district of 

Bettendorf, Iowa. 

In addition to that, NOPA, which is based in Alexandria, Virginia, is the U.S. industry association for office products dealers 

and their key industry partners who are focused on continuous improvement to increase profitable business growth. 

Welcome. 

STATEMENT OF MR. CHRIS BATES, PRESIDENT, NATIONAL 

OFFICE PRODUCTS ASSOCIATION 

Mr. BATES. Thank you very much, Chairman Braley, Ranking 

Member Davis, Congressman Akin. Thank you very much for the 

opportunity to be here with you today. 

NOPA represents and serves more than 700 independent office 

product dealers throughout the United States, undoubtedly in all 

of your districts. We appreciate the opportunity to talk with you 

8

today about the need to ensure that small businesses have fair and 

equal access to Federal contracting. 

This Subcommittee and the full Committee have worked very 

hard on this issue, with very significant results, the past couple of 

years. And we are very pleased with that and appreciate that support. We thank you all for that. 

And, in particular, we would like to highlight the passage of H.R. 

1873 and other legislation that I know you have had an important 

role in crafting to try and help the small business community. We 

are working hard to encourage the Senate to pass a counterpart to 

H.R. 1873, if they can’t adopt your measure as it stands. We are 

still hopeful that we can get some action this year, though, admittedly, it is an uphill battle in an election year. But we are trying 

very hard to get that done. 

In particular, H.R. 1873 establishes a strong foundation for needed reforms in the areas of contract bundling, data collection, reporting and oversight that we believe will help small businesses, and 

our industry among them. And it is particularly relevant that these 

kind of foundational changes be made, because it really does help 

the community overall. 

That bill also increases the target for Federal purchasing from 

small businesses from 23 to 30 percent and would improve Federal 

agency and congressional oversight to help achieve that goal. Having plans in place which are measurable we think will have a 

major bearing on the ability of all Federal agencies to make a 

major step forward. 

We do need additional help, however, to address a very serious 

growing problem that affects our industry, and that is the small 

business fronts or small business pass-through issue. This problem 

would not be resolved directly by H.R. 1873. It does have a widespread affect on our industry and perhaps others. Small business 

fronts harm legitimate independent small businesses across the 

country, as well as Government customers who are trying to boost 

their own purchases from them. 

Just what are these small business fronts? In the simplest terms, 

these are situations in which a large national company approaches 

a small business and proposes to create a quote, ′′partnership′′ relationship for the sole purpose of gaining improper access to contracts set aside for small business. 

Let me emphasize that these fronts are not the same thing as 

legitimate small business mentoring program relationships. In that 

case, the small firm plays a commercially useful subcontracting 

role which is definable and adds value. 

The abuses—and I would refer you to appendix 1 of our prepared 

testimony—are highlighted in appendix 1. These usually occur 

when, first, the small business has little or no prior experience as 

a reseller of office products; two, the large company performs most 

or all of the selling, order, management, customer service, delivery, 

invoicing and payments processing behind the scenes on behalf of 

the pass-through dealer partner; third, the small business performs 

few, if any, commercially useful functions; and then, finally, the 

small business typically receives a commission for its willingness to 

serve as a front for the larger business. 

9

The negative impact is fairly obvious. In the case of the office 

supply industry, independent dealers already are losing tens of millions of dollars annually as a result of this practice just at the Federal level. When you add in public institutions, State government 

contracting and some Fortune 1000 contracting, we are talking 

about hundreds of millions of dollars as well. 

Government is also harmed as competition declines and independent dealers are excluded and the large national chains or their 

small business fronts get the lion’s share of the awards under false 

pretenses. 

GSA and a number of Federal agencies are working to help legitimate small businesses expand business with them, but allowing 

small business fronts defeats this purpose. And we need to have 

the clear intent of Congress and bills like H.R. 1873 restated loud 

and clear. And specific legislation to help us with this problem 

would be helpful. 

What can Congress specifically do to help us with this problem? 

Specifically, we ask that there be stricter bid evaluation review criteria; that, two, all bidders on small business set-aside contracts 

fully disclose and certify their functional roles that they will play 

in the contract’s fulfillment; third, that each Federal agency should 

be reporting annually to Congress, to the relevant Committees, 

about the progress they are making in this area in preventing this 

kind of practice; and then there need to be some meaningful penalties to make sure this doesn’t happen. 

Again, thank you for the opportunity to be here. This is a serious 

and expanding problem, and I hope you will give your full attention 

to it. Thank you. 

[The prepared statement of Mr. Bates may be found in the Appendix on page 36.]

Chairman BRALEY. Thank you. 

Our next witness, I am very proud, is also a constituent of mine 

and a founder of Charles F. Day & Associates in Davenport, Iowa. 

And it is great to have you here, Dr. Day. 

Mr. DAY. Thank you. 

Chairman BRALEY. His firm is an established provider of program management, lifecycle management, logistics and business 

improvement services for the Department of Defense. Dr. Day is a 

Gulf War veteran who retired from active duty in 1995 and started 

his firm. He has taught graduate classes in strategic management, 

management development, organizational development, and program and project management courses. Additionally, he has presented and published nationally and internationally on organizational development and entrepreneurship topics. 

And we welcome you here to the Committee. 

STATEMENT OF MR. CHARLES F. DAY, SENIOR MEMBER, 

CHARLES F. DAY & ASSOCIATIONS, LLC, DAVENPORT, IOWA 

Mr. DAY. Thank you, Chairman Braley and Ranking Member 

Davis, members of the Subcommittee on Technology and Contracting. I am Charles Day, the senior member of Charles F. Day 

& Associates, a small HUBZone SDVOB business headquartered in 

10

Davenport, Iowa. We provide support service primarily to the 

United States Army and Marine Corps. 

I am happy to share my small business views of the technology 

challenges that may not be visible in the business environment but 

may impact entry opportunities. I would also like to discuss two 

core challenges I see in dealing with the Department of Defense, 

namely winning contracts and getting paid. 

The emerging technological requirements in the business environment are as important as the functions of human resource management, operations, finance and accounting, and marketing. Our 

business, like so many others now, is Net-centric, which means we 

are also Net-dependent. Increased Net dependency leaves us more 

vulnerable to threats of hackers, viruses, spoofing and similar activities. 

We all recognize that we have to continually update our intranet 

and Internet security measures. However, we are completely dependent on two or three security providers, and, personally, I am 

not confident that we are able to keep up with the threats. Where 

new and small businesses really need help is in defining the risks 

and the threats of information security and information assurance 

to the business environment. 

Another challenge is application of quality initiatives to the digital environment or how to take action to take action to continuously improve quality status in this environment. I personally don’t 

know how to keep abreast of quality and innovation in this environment. We don’t know what best practice is or where to find best 

practice. The cost of research is restrictive. I think small businesses need a helpful source, such as a small business technology 

community of practice and technology assistance centers. 

In the specifics of working with the Department of Defense, the 

two critical challenges are winning contracts and getting paid. 

Brand identity is a critical component to winning contracts with 

the Department of Defense. I think it consists of three elements: 

social capital and networks, status within the networks, and past 

performance. For new companies with no brand identity, there is 

minimal chance of entering the DOD market. In my experience, 

contracting officers generally do not allow personal experience to be 

submitted in lieu of corporate experience. Without an individual’s 

past performance being permitted, a new company has limited 

chance of entering into the market. 

Now, the GSA schedule should be a good vehicle for contracting 

with the Federal Government. However, a GSA schedule award is 

based on past performance. Further, the GSA schedule is not necessarily good for growing small businesses because the prices negotiated for award are based on better than your current best prices. 

We are told there are no allowances for forward rates to support 

companies’ growth. The GSA contracting office also tells us the initial negotiation locks you into a rate structure for 10 years. That 

is not good for a small business. 

The second issue is being paid and managing your cash flows. In 

my written testimony, I stated 90 percent of our payments were 

late. I would like to clarify that and say 90 percent of our invoices, 

from the time that we created them to when they were paid, were 

late. We have data that shows that 29 percent, based on DFAS 

11

measures, were late. When you look at the measure from when it 

was submitted to the Government and were accepted by the Contracting Officer’s Representative (COR) to when it was paid, 42 

percent were late. There is a gap of when you create an invoice and 

when there is action by the COR and put into the system that eats 

anywhere from 1 to 21 days, in our experience. 

The net result was that we were not able to execute our projected 

cash flow sources and uses because of the fluctuations in the DFAS 

payment schedule. When we went into the electronic system, we 

eliminated a lot of the variability, but most small businesses have 

not migrated. 

Thank you for your time, and I would be happy to answer any 

questions. 

[The prepared statement of Mr. Day may be found in the Appendix on page 47.]

Chairman BRALEY. Thank you. 

Our next witness will be introduced by the ranking member, but 

I just want to personally welcome her to the Committee hearing, 

and we look forward to your testimony. 

Mr. DAVIS. Our next witness will be Ms. Aundrea Wilcox. Ms. 

Wilcox holds a master’s degree from Brenau University, located in 

Gainesville, Georgia. Currently, she is executive director of the 

Kingsport Office for Small Businesses Development and Entrepreneurship at Kingsport Area Chamber of Commerce in Kingsport, 

Tennessee, also known as KOSBE. 

In her role as business advisor, she helps navigate startups and 

existing businesses through the maze of small business ownership 

and management. She helps small businesses with, one, providing 

technical guidance, finding sources of capital, identifying the available State resources, and outlining Small Business Administration 

programs. 

Before coming to her present position, she had more than 15 

years of corporate marketing and sales support experience in various industries. Ms. Wilcox is also actively involved in community 

service. At the present time, she is a board member of the Holston 

Business Development Center, a small-business incubator, and a 

board member of the Symphony of the Mountains Orchestra. 

Ms. Wilcox, welcome. 

STATEMENT OF MS. AUNDREA WILCOX, EXECUTIVE DIRECTOR, KINGSPORT OFFICE OF SMALL BUSINESS DEVELOPMENT AND ENTREPRENEURSHIP (KOSBE), KINGSPORT, TENNESSEE 

Ms. WILCOX. Thank you. Pleasure to be here. Thanks for having 

me. My name, again, is Aundrea Wilcox. I am the executive director at KOSBE in Kingsport. And, as you know, Congressman, 

Kingsport is a different place. And so, what I would like to do 

today is talk about my experience in Kingsport, and it may be certainly a different experience for others in the same position. 

As was mentioned earlier, we are engaged in helping our clients 

write their business plans, find capital for their business, find a location for their business. So the mission of KOSBE is to not only 

help them start up, so it is not just for startups, but for also for 

12

existing businesses, seasoned businesses as well. KOSBE is a partnership between the city of Kingsport and the Kingsport Area 

Chamber of Commerce. And KOSBE has actually been around, out 

there, since 2004. I joined KOSBE in 2006, and been having a good 

time. There is a lot to do. 

So we already know what the statistics are for the contracting 

and small business. So, again, I just want to share with you my 

experience with SBA and also some of the service providers that 

have helped me help my clients with the Government contracting. 

In preparation for this visit, I did look at the CCR database and 

found, actually, that there are 95 companies in Kingsport, Tennessee, that are registered in the CCR that are active. And of those 

active registrants, 14 of them were clients that I have actually 

dealt with. 

I felt that it was important to look at the different certification 

programs that SBA has in place and just do a quick analysis to see 

what had been done. 

And as far as SBA small disadvantaged business being certified, 

there were none of the 95 that were actually certified SBA businesses. Twelve of those were veteran-owned businesses in the system. And of those 12, three of them were KOSBE clients. 

Many of the clients that had registered in the CCR went a bit 

further than just the step one in the CCR; they had to have additional help. And so what I am trying to say here is that most small 

businesses, in my experience, most of the clients that I have dealt 

with find the system a little complicated for them, a little complex, 

and they are easily overwhelmed. But it is not a difficult process. 

I think that the steps are there. There is a system in place, and 

we just need to follow through with our clients and get them 

through the process, because the process—there is a system in 

place. 

Ms. WILCOX. The relationship with SBA is a new relationship. 

We recently, on March 28th, signed a strategic alliance with SBA. 

Our Mayor, Dennis Phillips, Miles Burdine, the President and CEO 

of the Kingsport Chamber of Commerce, myself and Clint Smith, 

who is the district director at SBA, did sign a SAM agreement, a 

strategic alliance, so that we could look at ways to collaborate, 

share information and help our clients in a greater way by having 

the partnership. 

Now the partnership would not have been possible so soon without the help from BERO, the State of Tennessee. Ronald Wade is 

the East Tennessee BERO specialist, and he has introduced me to 

a number of folks and made KOSBE’s success possible, made it 

possible for us to forge the relationship with SBA and get the additional help and resources for our clients. 

He has also introduced me to the lending specialist, Maria Lloyd 

at SBA, TDOT contract administrator, Carol Crawley at SBA. They 

came to Kingsport in 2007 and put on an SBA certification workshop, which was very well attended; and we did have a lot of participation from the region. 

So it was not just the Kingsport area. This type of workshop and 

this type of help coming to Kingsport was a draw for KOSBE. And 

whenever we do an event with SBA we get that type of draw, because there is a need for education on the part of the small busiVerDate 0ct 09 2002 15:29 May 22, 2008 Jkt 033615 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 G:\CLERK SB-LD\HEARINGS\TRANSCRIPTS\40864.TXT LEANN
13

ness and also on my part, on the part of the technical service provider. I feel like the more information that is made available to us, 

of course, the better we are able to help our clients this is number 

one. 

Mr. Wade also introduced me to Mr. Paul Middlebrooks, who is 

with the Procurement Technical Assistance Center, and they are 

actually in Chattanooga, and that is a bit far. The Women’s Business Center is also in Chattanooga, and that’s a bit far. And, unfortunately, we do not have a SCORE chapter that is existing in 

Kingsport. But, despite all of that, Mr. Wade, through introducing 

me to the various persons that I mentioned earlier, made it possible for us to make it happen in Kingsport and get our clients the 

help that they are needing in the contracting. 

The biggest area that I feel that SBA could help us and continue 

to concentrate and must work on is just the face to face, you know, 

getting out there, coming out to Kingsport and training the customer or the client and also training the technical service provider. 

That has been happening in Kingsport. 

As I said earlier, Kingsport is a different place. We have had a 

lot of contact with SBA, and we have been able to work with them 

and help our clients get a step further ahead. What I find again 

in the certification process I think, it is overwhelming, although it 

is on line and it is streamlined and supposed to be a little bit easier 

for them to work with. But if they are not aware of the resources 

that are out there, if I am not aware of the resources that are out 

there, it is going to be underutilized. So mainly from SBA, we are 

just looking at some additional training, getting out there, getting 

face to face and just a regular communication, letting us know 

what services and resources are available. 

In Tennessee, again, in Kingsport, I feel the relationship with 

SBA has been positive. There is a lot of information, a lot of people 

still to meet; and, again, I think those things are there. We need 

the help to discover them. 

So I am just asking the Committee to please assure that the 

small businesses will have an equal chance for these contracts, and 

the way to do that is through training and communication with the 

client, as well as the technical service provider such as KOSBE, 

and I hope they keep it up. I am very pleased with the relationship, 

and it is a pleasure to be here today. 

If there are any questions, I will be happy to have them. Thank 

you. 

Chairman BRALEY. Thank you. 

[The prepared statement of Ms. Wilcox may be found in the Appendix on page 55.]

Chairman BRALEY. Mrs. Ott, let me begin with you. One of the 

focal points of not just this Subcommittee but also the Committee 

as a whole has been on the implementation of the Women’s Procurement Program, and I am not going to go back over all of the 

ground we have covered this year on that. But the SBA’s proposed 

rule for implementing the Women’s Procurement Program was 

issued in December of last year, 7 years after the program passed 

Congress; and the comment period, after being extended, was 

14

closed on March 31st. Can you tell us when we can expect to see 

the program up and running by the administration? 

Mrs. OTT. Well, we did extend the comment period, and we received over 1,600 comments that we are currently going through 

and we are cataloging and analyzing at this point. We are happy 

that we received so many. We extended the deadline so that we 

could get more comments in, and we are going to take the time and 

go through and do that analysis. Once we have completed that 

analysis, we will move forward. 

Chairman BRALEY. And given the volume of comments that the 

agency received, you consider that to be a reflection of the interest 

in this particular rule? Is it an abnormal amount of comments? A 

typical amount of comments? How would you characterize that? 

Mrs. OTT. I think this rule has generated a tremendous amount 

of interest, and we welcome the public’s comments, and we are 

looking forward to going through and analyzing the comments and 

moving forward. 

Chairman BRALEY. Now one of the goals that I have as Chair of 

this contracting Subcommittee is to try to encourage a more equitable distribution of contract opportunities outside the Beltway, 

and we have heard a little bit from some of the other witnesses 

about that concern. I know in June the SBA will be working with 

me on a contracting forum in Waterloo—or back in my district in 

Iowa. 

But my question for you is, does the agency have a specific program or programs in place to help businesses in those areas that 

normally are not as familiar with contracting opportunities in the 

Federal marketplace as those located in and around the metro D.C. 

area? 

Mrs. OTT. We have a number of initiatives. As I mentioned the 

PCRs in my opening statement, we found that our PCRs were 

spending a lot of time training and counseling small businesses. 

What we tried to do was get the PCRs to focus more on the buying 

activities and to push training and counseling out to our district offices as well as our resource partners. So we have really broadened 

the scope of resources available to small businesses, and we have 

given our district offices and our resource partners the tools that 

they need to educate and train small businesses. 

We have developed an on-line course. We have developed a brochure on how to contract with the Federal Government. As a matter of fact, the on-line course, we just went live with it in February. 

Already 5,000 people have taken the on-line course on how to contract with the Federal Government. Over 40 percent of those that 

have taken the course—or 45 percent, I believe—are women that 

have taken the on-line course; and we have a number of initiatives 

in place to reach out to more small businesses and provide them 

with the opportunity to register in CCR and learn about contracting with the Federal Government. 

Chairman BRALEY. One of my passions is pushing Federal agencies to use plain language in communicating with their intended 

audience; and on Monday we passed with an overwhelming bipartisan vote, 376 to 1, my Plain Language in Government Communications Act that is going to require Federal agencies, if passed 

15

into law, to use plain language in communicating in Federal brochures, documents and other communications. 

Has the SBA done anything to implement plain language guidelines as part of its outreach effort? And I ask this question because 

of Ms. Wilcox’s comment earlier, which is consistent with my perception, is that many small business owners are struggling to incorporate a lot of new information and sometimes new technologies; 

and I am interested in what the SBA is doing to try to communicate with that intended audience in a manner that they can 

clearly understand and respond to. 

Mrs. OTT. Absolutely. One of the big concerns that we had was 

everybody kept saying that it was so difficult to contract with the 

Federal Government, which is why we came up with the on-line 

course. The on-line course is a step-by-step guide in plain language; 

and a brochure that goes along with it is very comprehensive, and 

it is plain language. We also have workshops that we are putting 

together with plain language that go through the steps that are 

necessary for small businesses to participate. 

So we have really focused on that, and we have looked at all our 

small business programs. The administrator has been very focused 

on making our programs more accessible to small businesses and 

asked us to consult with small businesses as we look at business 

process reengineering. So we take that very seriously, and we are 

constantly looking at ways to improve. 

Chairman BRALEY. So if this bill becomes law, the President 

signs it, it is passed in the Senate, your belief is that the SBA 

would be well-prepared to implement those practices as part of its 

overall day-to-day operations? 

Mrs. OTT. Yes, I believe we would. 

Chairman BRALEY. Dr. Day, the GSA schedule offers many opportunities for small businesses, but it also creates some long-term 

challenges. In your testimony, you touched upon how the 10-year 

pricing mechanisms can limit small business’ ability to grow. Could 

you elaborate for us on those concerns and these GSA contracts 

and how they present smaller entities challenges; and, as part of 

that, how do the rising costs of energy and other inputs exacerbate 

that problem? 

Mr. DAY. First of all, I have to tell you that being told something 

by GSA doesn’t mean that it is correct. So the function of overhead 

as a business grows is actually a step function. You can establish 

the overhead that will sustain you through a certain percent 

growth. At that point, you take a new step up in your cost structure and in your overhead to be able to continue fueling the growth 

and maintaining the growth. 

If you go into a GSA schedule and they require that you provide 

them a better than your best cost and it is a 10-year instrument 

where they tell you you can’t use forward rate, what you are doing 

is you are being pinned to where you are in your current cost structure as a function of your growth status. You are getting pinned 

to that; and, in fact, if you are getting ready to take the next step 

up in growth, that cost structure will not be supported by GSA 

schedule. 

So when you talk about the increasing cost of energy and so on, 

that is a variable that has significant impact on an overhead exVerDate 0ct 09 2002 15:29 May 22, 2008 Jkt 033615 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 G:\CLERK SB-LD\HEARINGS\TRANSCRIPTS\40864.TXT LEANN
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pense; and depending on what industry you are operating in, that 

may be a key driver on your success or failure within that industry. 

There is a serious risk to the small business in getting into the 

GSA schedule if they don’t have a very firm understanding of how 

that cost structure will affect their future growth and what variables, what risks they are carrying along with getting into that 

schedule, with that kind of duration. 

Chairman BRALEY. It has been my experience that one of the 

challenges facing many small business owners is that frequently, 

especially if they are in their start-up phase, they are operating 

under smaller margins to begin with. When you add these longterm variable costs, it really can be a detriment to their success as 

they move forward. Is that a fair characterization? 

Mr. DAY. That is absolutely correct. When you are young and 

small and you have tightened your belt and you are getting by and 

everybody is wearing multiple hats, at that point your rate structure will not support you through 10 years of growth; and that is 

a real challenge. 

Chairman BRALEY. One of the obstacles small businesses face in 

breaking into the Federal marketplace is quantifying their private 

business experience as it competes against larger competitors that 

have performed government contracts, and I think you touched on 

this in your opening statement and you noted that contracting officers tend to favor those companies with prior experience. What 

ways do you think procurement methods could be changed to account for private business experience and success? 

Mr. DAY. Well, the issue isn’t actually private business experiences. It is personal experience that I am referring to. Obviously, 

a lot of the folks who are doing work in the Department of Defense 

have had defense experience; and they understand the lay of the 

land. If someone wants to start a small business and contract for 

the Department of Defense, when they initially try to gain contracts, whatever they have personally done—let’s say they established a sole proprietorship. Their personal experience prior to establishing that sole proprietorship has no bearing on past performance when they are competing. Only past performance on government contracts or commercial contracts do that. 

If you have someone who is highly qualified and has done something in the military that they now want to do as a contractor because they have retired, in most cases they don’t have the past performance to be able to compete for the contract. They are driven 

to belong to someone else. 

Chairman BRALEY. Thank you. 

At this time, I would yield to the ranking member for questions 

that he might have. 

Mr. DAVIS. Thank you, Mr. Chairman. 

I know time is short. Again, they have called votes, so I will be 

very brief. 

Ms. Wilcox, could you tell me how the SBA could enhance their 

outreach efforts to make it easier for small businesses to do business with the government? 

Ms. WILCOX. Yes. I think, again going back to my testimony, it 

is about visibility, actually getting out there and meeting with operations such as KOSBE, the other technical assistance providers. 

17

For example, my relationship, as I mentioned, with SBA is a new 

relationship; and I have been with KOSBE since 2006. But really 

it was not until last year actually that I started to have contact 

with SBA. And, as I mentioned, that contact was brought about 

through Ronald Wade with the State of Tennessee economic development, BERO, Business Enterprise Resource Office, who introduced me to SBA representatives. So it wasn’t the SBA coming out 

on their own to make the introduction. So thank goodness for the 

State of Tennessee and BERO for making that introduction. 

But since we have met, it has been a wonderful relationship. We 

do see representative from SBA frequently. 

And again, as I mentioned, to just answer that question, it is just 

getting out there, being visible, making the personal contact. Regularly. 

Mr. DAVIS. Could you tell me if the Web site is working? 

Ms. WILCOX. Yes, it is. 

Mr. DAVIS. Is that a good outreach program? 

Ms. WILCOX. It is if the recipient of the education is open to that. 

Everybody is not a distance learning subject. Everybody doesn’t 

learn the same way, as we know, especially when we deal with our 

clients. Every client is different, and so the way they learn is going 

to be different. So that is effective up to a point, but, of course, it 

is not going to satisfy everyone. 

I think it is a good product, especially the contracting piece. I 

went through that one myself. It is very simple, and it is easily understood, and I think that the matter there is just letting people 

know that that is out there, letting me know that that is out there 

so that I can tell my clients that is there. But it is a good product. 

I think it is effective. 

Mr. DAVIS. Thank you. 

I yield back. 

Chairman BRALEY. Well, I want to just apologize to our panel. 

I know that Dr. Day has a plane to catch; and these votes are very 

challenging, require us to do a lot of multitasking. I am committed 

to making sure that our other witnesses get an opportunity answer 

some questions. So I am going to run over and vote and then come 

back. 

Mr. Davis, if you are willing and able to, that would be fine. But 

I just want to make sure that the witnesses who have made the 

effort to come here get an opportunity to talk a little bit more 

about the issues that brought them here. And then we are probably 

going to adjourn after this first vote, because it looks like it is 

going to be about an hour of votes. So I really appreciate your indulgence, and the hearing is adjourned until we return. 

[Recess.] 

Chairman BRALEY. I call the Committee back to order. 

And, Mr. Bates, let me ask you some questions. One of my favorite TV shows is The Office, which admittedly is a comedy about the 

business that you represent. But there is also some important lessons about what is going on in the office product industry in that 

show, and one of the things that I think is significant is how the 

industry has changed in the last 10 or 15 years. One of the things 

that we know is it has faced many issues recently, some of which 

relate to the administration policies, rather than to SBA programs. 

18

In your opinion, what can Congress and the SBA do, without 

micromanaging, to help small businesses that suffer when the government changes its buying procedures? 

Mr. BATES. Well, I think education is a critical component. I 

mean, we heard a story here earlier where getting the word out in 

a quick, easy-to-understand way is important. But I do think that 

the choice of purchasing vehicle has a big impact on the act of any 

small business to participate; and our general approach is there 

ought to be more competition, not less. So excessive contract bundling, things that limit the number of competitors on any given 

contract really in the long run doesn’t help the government. You 

get higher prices, less choice, less effective service to the end customer. And there is always a big disconnect if you talk to any of 

our members between what the people in the field say and what 

the people who let the contract say at headquarters. So there is a 

lot of goodwill here, but getting it connected through more competition is really the solution at the end of the day. 

Chairman BRALEY. And I know I am going to lose people who 

aren’t fans of the show, but my kids and I, this is one of my favorite things that we do together. There is a great episode where 

Dwight and Jim go out on a call to a customer who has placed most 

of their business with somebody where price is the primary objective, and they make a call to that competitor and leave the phone 

on the desk while they are having the conversation with the potential customer just to demonstrate the point that sometimes customer service is an important component in addition to pricing. 

For your members, you know, what types of challenges do you 

face in a government procurement system where price is such a 

high priority in breaking through and talking about the total contract performance and what your members can provide to be competitive in that type of an environment? 

Mr. BATES. Well, I think one of the disturbing things is past performance has not been really adequately factored into the equation. 

A large number of our members at one point in time over the last 

2, 3, 4, 5 years have had more significant government businesses 

in many cases than they have today. And that whole positive history has been, I think, left by the wayside in a lot of cases. 

Also, again, I will come back to the end user. There is a disconnect between the value that is actually provided when the product is ordered and delivered versus the people who are just responsible for making the purchase order, so to speak. There are also a 

lot of the shenanigans, frankly, about pricing. In our industry, a 

large number of products, difficult to audit and track. You have a 

lot of product substitutions. You know, private label for branded 

product, different units of measure. All sorts of things that can go 

wrong to really change from what was actually bid to what is actually priced when it is delivered. 

Chairman BRALEY. So what are some of the solutions to address 

those problems? 

Mr. BATES. I think the solutions are, one, that we do need to 

have legislation that focuses in on this and makes it clear that past 

performance is something that ought to be taken into effect. We obviously have to do a better job of getting the message out to the 

people who are involved in the procurement as well about what 

19

that value is. But they have to be empowered to recognize and take 

that into account. 

I think the other key issue here is that the whole shift toward 

sole sourcing contract, bundling, and even—forgive me, the Small 

Business Administration is not at the top of the list in terms of 

their purchasing from small business, and there needs to be more 

of walk the talk. If there is a goal, let’s get good data in place 

which your bill and other bills have started to do. Let’s measure 

that information, let’s get it out where it is visible, and then I 

think people will perform. 

The other thing that hasn’t come up today is there are fewer and 

fewer contracting officers government-wide who are out there. So 

part of the lack of oversight or insufficient oversight is really related to the problem that there just aren’t enough qualified people 

who are able to look into the details of a contract as they are reviewing bids before them. 

Chairman BRALEY. Thank you. 

Ms. Dorfman, it is great to have you back, and we have had an 

opportunity to talk a little bit today about some of the issues and 

concerns historically with the Women’s Procurement Program. We 

do know the government is falling short of its goal for contracting 

with women-owned businesses, and the SBA recently released the 

proposed rule I mentioned earlier for implementing the Women’s 

Procurement Program which will allow for set-asides. Allowing setasides for small businesses as a whole has nearly doubled agency 

achievements. However, the rule will only allow for women-owned 

set-asides effectively in three very narrow industries, for example, 

kitchen cabinet manufacturing. 

Apart from set-asides, what can the SBA do to help womenowned businesses that are small businesses enter and compete in 

the Federal marketplace? 

Ms. DORFMAN. Well, thank you. 

First of all, I would say that the SBA needs an attitude adjustment. I really would hope that the SBA would start to go back to 

its core mission and assist small businesses, whether it is implementing a program that was passed by Congress as Congress had 

intended or providing the funding needed to the regional offices 

which are struggling to provide the real resources that are needed. 

We do need to also see them working hand in hand with the 

small business committees so that we can work together as a team. 

I should include it to include small businesses to get to the next 

level. 

I spoke a lot about transparency and the numbers, which also 

would be part of the accountability process. I believe that very 

strongly. Also, the number of PCRs, 66. Well, back when the spending wasn’t so great, it was about 125 PCRs; and, obviously, we 

need to increase the PCRs. 

I am very glad to hear today that now we are not having them 

train small businesses, but they are actually going back to do the 

job they should be doing, which is making sure that contracts, as 

they come forward, do provide for small businesses to be able to access part of those contracts, and I would like to see more and more 

of that. 

20

And then, also, access to capital is huge for women. We still are 

finding it challenging to get the amount of funding we need to grow 

our businesses. And even with the SBA, if we get a loan, it is generally not to the amount of money that we need for the small business owner to grow at the rate that she needs to grow. 

Chairman BRALEY. Two of the concerns you mentioned in your 

opening statement, I wanted you to follow up on and amplify if you 

would. One has to do with the problem we talked about frequently, 

and that is false contracting data and how that impacts small 

women-owned businesses who are trying to get their foot in the 

door of the Federal procurement opportunities. 

And the other thing you mentioned was the need for regional 

breakouts of data showing what successes are being achieved. And 

this is similar to the concern I raised earlier about this circle that 

has been drawn around the District of Columbia and where the 

concentration of Federal contracting dollars goes and then the 

other circle that goes around the large corporations that have the 

lion’s share of these Federal procurement dollars. If you would, if 

you could just elaborate a little bit on those two concerns, false contracting data and the need for requested regional breakouts. 

Ms. DORFMAN. Sure. When we take a look at the measurements 

and the top 50 firms, for instance, that I mentioned, what we see 

is there is over—there is about a third of the contracts with the top 

50 firms that are claiming to be women owned, but they are not. 

And there is about $5 billion is what we are looking at when you 

look at the 100 firms that is in question of the dollars. 

So giving some examples of some of the issues, approximately 

half of the 50 firms listed in the top 50 have male CEOs, approximately 21 of the 50 firms listed at the top 50 are not designated 

as women-owned and CCR, and then 17 of the firms that we found 

in the top 50 are not shown as small in the codes in CCR that they 

have the contracts in. And so there are a number of those issues. 

And what happens, especially when we get the women’s contracting program up and running—there are two portions of that. 

One is how this will impact that, making sure that women-owned 

firms are really accessing it. But then also from this side of it, 

where we don’t have that program yet, we are reflecting data that 

is out there and the agencies are claiming to make their numbers 

and yet they are not. So women, I believe, are being locked out of 

more contracts than what the SBA is showing right now. 

So that is the first part. And I forget the second part. I apologize. 

Chairman BRALEY. The second part had to do with the regional 

breakouts and why that is important. 

Ms. DORFMAN. Right. I think it is important to show where the 

contracts are going so that you can see the impact in the communities. When you take a look at right now the companies that are 

in D.C. and are able to get to D.C. that are servicing most of the 

contracts and when you get—well, there might be agencies that 

have buying capabilities in the various regions. We need to make 

sure that those businesses in their regions have access to those dollars. 

Chairman BRALEY. I spent part of Friday afternoon in the small 

community of Oelwein, Iowa, in my district with five women who 

own their own businesses and are really having an enormous imVerDate 0ct 09 2002 15:29 May 22, 2008 Jkt 033615 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 G:\CLERK SB-LD\HEARINGS\TRANSCRIPTS\40864.TXT LEANN
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pact on revitalizing a downtown area. My sense is that a lot of your 

members really feed on this synergy that develops when one successful women-owned business is providing opportunities for networking and connection with other women. Is that why expanding 

regional access to procurement opportunities is so critical to the 

people in your membership? 

Ms. DORFMAN. I think that is a part of it and certainly what we 

see in general for small business, whether it be woman or not, that 

when you bring the buying back into the community—and I think 

Hurricane Katrina speaks very closely to this, where the contracts 

were actually awarded to corporations that were not based in the 

region and the region is still suffering how many years later, going 

on 3. Whereas if we could make sure that in the communities that 

there are—whether it be this disaster and helping to rebuild or 

there is other economic impact within the community, that is how 

we are going to make sure that the community itself will be growing. If we can provide access to contracts into the community, then 

the money will come in. We can further businesses, hire more employees in the community. The money goes back into the community, and that is very good for the economy. 

Chairman BRALEY. Thank you. 

Ms. Wilcox, the SBA Certification Workshop you described in 

Kingsport sounded like a great opportunity to help bridge some of 

this knowledge gap that many small business owners experience. 

Can you just share with us some of the observations or lessons you 

learned from being part of that and what things you think the 

Committee could benefit from knowing about that particular workshop? 

Ms. WILCOX. The workshop that I mentioned earlier was the SBA 

Certification Workshop, and also Carol Crawley came out and did 

the certification for TDOT. And whenever we do an event like that 

on certification or anything money related, capital related, we do 

tend to draw a larger participation. And it is not just Kingsport 

participation, but it is a regional draw. So the need for that—it just 

demonstrates to me that there is a tremendous need for that type 

of workshop to go on. 

In 2007, we did about five SBA events in Kingsport; and I think 

that, of course, put us in the position that we are in today having 

that strategic partnership. But there is definitely a need for it. 

There is a draw. People come out for it, and people actually register in the CCR after doing that. 

And I was talking to a panelist during one of our breaks, but I 

found that, after a workshop like that, the client will go in, they 

will register themselves in the CCR, but then I think it stops at 

that point because it can be a little bit overwhelming for them. 

They don’t know where to go next. So it is a good start, but I think 

we need to help them get further with it. 

The 95 clients that I mentioned or businesses in Kingsport that 

are there, how many are really still interested in doing Federal 

Government work? How many have been awarded a contract? And 

how many are just going to stay right there on that step one? I am 

in the CCR system. But they haven’t gone that step further to say, 

I am a small disadvantaged business. I am a HUBZone business. 

They don’t go the extra steps. They seem to stop. 

22

Chairman BRALEY. My perception is it is a lot like fishing. If you 

haul out a trophy fish and take it around and show it to your 

friends and family, they are more likely to go fish in that lake or 

pond. 

I think with SBA programs, if you can document some of the successes that businesses in your region are having in participating in 

these procurement opportunities, it creates more enthusiasm for 

further participation. But if people don’t see result, they don’t have 

the incentive to continue to explore the opportunities. Is that what 

you are seeing? 

Ms. WILCOX. That is exactly what I am seeing, and I can give 

you a great example, great example. 

Keith Joy with Oak Ridge National Laboratories has been to 

Kingsport a number of times last year to support KOSBE. And he 

came out one time, he did a breakfast meeting for us and spoke to 

about 50 small businesses at that breakfast meeting. On another 

occasion, he came out and we set him up with individual appointments with clients that we had prescreened and prequalified. 

So that means they were already in the CCR. They were already 

in the Oak Ridge database; and Keith sat down with them and 

talked about marketing strategies, et cetera. That client, that 

KOSBE client, has actually been contacted. At least he is getting 

a little bit further. He is the one that was HUBZone certified. He 

is a veteran. So there is a good story there. 

Now he has an opportunity to bid on something. Now did he respond to it? I don’t know. I will have to verify that. But there is 

a good story, and it is contagious. 

Chairman BRALEY. Great. Thank you. 

I want to thank all of our witnesses for coming here today. 

Mrs. Ott, it is not always fun to be the SBA representative at 

these hearing, but it is a very important function for the work of 

the Subcommittee. We appreciate your willingness to come and 

share your candid assessment of some of these issues. It is very important to the small business owners of this country. So thank you 

for joining us today. 

To all the other witnesses, I know this is an imposition on your 

time; and we really do appreciate the stories you have shared, the 

experiences that you have learned. It makes the work of this Committee more vital and gives us a human face that we can apply to 

these important decisions we are making here. So thank you all. 

I ask unanimous consent that members have 5 legislative days 

to enter statements into the record. Without objection, so ordered. 

This hearing is now adjourned. 

[Whereupon, at 4:45 p.m., the Subcommittee was adjourned.]

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