U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

45–291 PDF 2008

MILITARY BASE REALIGNMENT: CONTRACTING

OPPORTUNITIES FOR IMPACTED COMMUNITIES

HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

ORGANIZATION, AND PROCUREMENT

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

FEBRUARY 8, 2008

Serial No. 110–93

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.oversight.house.gov

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

HENRY A. WAXMAN, California, Chairman

TOM LANTOS, California

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

BRIAN HIGGINS, New York

JOHN A. YARMUTH, Kentucky

BRUCE L. BRALEY, Iowa

ELEANOR HOLMES NORTON, District of

Columbia

BETTY MCCOLLUM, Minnesota

JIM COOPER, Tennessee

CHRIS VAN HOLLEN, Maryland

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

JOHN P. SARBANES, Maryland

PETER WELCH, Vermont

TOM DAVIS, Virginia

DAN BURTON, Indiana

CHRISTOPHER SHAYS, Connecticut

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

VIRGINIA FOXX, North Carolina

BRIAN P. BILBRAY, California

BILL SALI, Idaho

JIM JORDAN, Ohio

PHIL SCHILIRO, Chief of Staff

PHIL BARNETT, Staff Director

EARLEY GREEN, Chief Clerk

DAVID MARIN, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, ORGANIZATION, AND PROCUREMENT

EDOLPHUS TOWNS, New York, Chairman

PAUL E. KANJORSKI, Pennsylvania

CHRISTOPHER S. MURPHY, Connecticut

PETER WELCH, Vermont

CAROLYN B. MALONEY, New York

BRIAN P. BILBRAY, California

TODD RUSSELL PLATTS, Pennsylvania,

JOHN J. DUNCAN, JR., Tennessee

MICHAEL MCCARTHY, Staff Director

(III)

C O N T E N T S

Page

Hearing held on February 8, 2008 ......................................................................... 1

Statement of:

Jenkins, Luwanda W., special secretary, State of Maryland; Hubert

Green, president, Prince George’s Back Chamber of Commerce; John

Watkins, president, Ingenium Corp.; and Rick Weidman, executive director, Policy and Government Affairs, Vietnam Veterans of America .... 5

Green, Hubert ............................................................................................ 14

Jenkins, Luwanda W. ............................................................................... 5

Watkins, John ............................................................................................ 22

Weidman, Rick ........................................................................................... 29

Pinson, Tracey, Director, Secretary of Army, Office of Small and Disadvantaged Business Utilization; and Timothy Foreman, Director, Secretary of the Navy, Office of Small and Disadvantaged Business Utilization ............................................................................................................. 53

Foreman, Timothy ..................................................................................... 71

Pinson, Tracey ........................................................................................... 53

Letters, statements, etc., submitted for the record by:

Foreman, Timothy, Director, Secretary of the Navy, Office of Small and

Disadvantaged Business Utilization, prepared statement of .................... 73

Green, Hubert, president, Prince George’s Back Chamber of Commerce,

prepared statement of ................................................................................... 17

Jenkins, Luwanda W., special secretary, State of Maryland, prepared

statement of ................................................................................................... 8

Pinson, Tracey, Director, Secretary of Army, Office of Small and Disadvantaged Business Utilization, prepared statement of .......................... 56

Towns, Hon. Edolphus, a Representative in Congress from the State

of New York, prepared statement of ........................................................... 3

Watkins, John, president, Ingenium Corp., prepared statement of ............. 24

Weidman, Rick, executive director, Policy and Government Affairs, Vietnam Veterans of America, prepared statement of ..................................... 32

(1)

MILITARY BASE REALIGNMENT: CONTRACTING OPPORTUNITIES FOR IMPACTED COMMUNITIES

FRIDAY, FEBRUARY 8, 2008

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

ORGANIZATION, AND PROCUREMENT,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 10:13 a.m., in room

2154, Rayburn House Office Building, Hon. Edolphus Towns (chairman of the subcommittee) presiding.

Present: Representative Towns.

Also present: Representatives Clay and Cummings.

Staff present: Mike McCarthy, staff director; Velvet Johnson,

counsel; William Jusino, professional staff member; Kwane Drabo,

clerk; and Benjamin Chance, minority professional staff member.

Mr. TOWNS. The hearing will come to order.

Today’s hearing is a followup to a hearing that we did last year

in which we examined the barriers that restrict small and disadvantaged businesses from actively participating in the Federal

workplace. In that hearing, business owners testified about their

difficulty in getting contracts from the Government and how more

needs to be done to hold Federal agencies accountable for meeting

their contracting goals.

Today’s hearing is about accountability. I want to tie up some

loose ends from last year and followup on promises made by the

Department of Defense to take action by examining DOD’s contracting relating to military base property.

DOD is currently implementing a new round of base realignments and closures [BRAC]. This round is the largest round ever

undertaken by the Department of Defense. DOD plans to execute

over 800 closures and realignment actions, which is double the

number of actions completed in the prior four rounds. DOD will

spend billions of dollars on construction, service, and product procurement contracts. However, it remains unclear whether the benefits of these contract opportunities will extend to businesses in the

affected communities in a systematic manner.

BRAC presents the Federal Government with the opportunity to

change and redefine the way it deals with small, local, minority,

and service-disabled veteran-owned businesses. All too often, Federal agencies become overly reliant on a handful of companies that

command the lion’s share of work. This dependence will only worsVerDate 11-MAY-2000 11:59 Nov 21, 2008 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\DOCS\45291.TXT KATIE PsN: KATIE
2

en if the Government does not take necessary and fair steps to increase the size and diversity of its vendor pool.

In addition to BRAC, I am troubled by the lack of contracting opportunities at DOD facilities for service disabled veterans, people

who have served our country honorably. The Federal Government

does more than $415 billion in purchasing in 2006 alone, and veterans only get crumbs, and service-disabled get even less than

crumbs. The Federal Government has a goal of 3 percent contracting with service-disabled veterans, but they got less than 1 percent,

really, in 2006. That is up from the prior year, and I am glad to

see progress, but what is so hard about doing business with men

and women who have sacrificed so much for our country? I don’t

understand.

Today we will hear from government and business officials in

Maryland about contracts for expansion at Fort Meade and Aberdeen. Maryland has a rich base of successful small and minorityowned businesses to draw from, and DOD should take advantage

of that resource. We will also hear from veterans groups about

their difficulties receiving contracts at places like Arlington National Cemetery and Walter Reed Medical Center, where I would

hope there would be a preference for veterans-owned businesses. If

that is not the case, that may be something for us to pursue in legislation, because I want you to know I am very interested in that,

and I am not going to go away.

We have been talking about these issues for a long time, and

now is the time for us to do something about them. It is my hope

that we can work together to come up with a strategy to open up

the door of opportunity and allow these businesses in.

[The prepared statement of Hon. Edolphus Towns follows:]

3

4

5

Mr. TOWNS. We are going to move right along. I understand we

will be joined by some members from the Maryland delegation a little later on, which is fine.

Let me ask that the first panel come forward. Why don’t you just

continue standing, because we swear our witnesses in. So why

don’t you just continue standing. Would you raise your right

hands?

[Witnesses sworn.]

Mr. TOWNS. Thank you very much.

Let the record reflect that they all answered in the affirmative.

Let me introduce the panel.

Luwanda Jenkins is special secretary of the Governor’s Office of

Minority Affairs for the O’Malley-Brown administration. Ms. Jenkins is responsible for working with the business community to expand minority and women-owned firms in the State of Maryland to

fulfill commitments in State contract spending. Welcome.

Hubert Green is president of the Prince George’s Black Chamber

of Commerce, where he is dedicated to assisting small, local, and

minority-owned businesses in Prince George’s County in their development and growth. Welcome, Mr. Green.

We also have with us John Watkins, president of Ingenium

Corp., and, of course, a minority-owned information technology

management firm that provides services to both government and

private industry. As a former Army general, Mr. Watkins was the

deputy director of the Defense Information Systems Agency. Welcome to the committee.

Rick Weidman served as the director of government relations for

the Vietnam Veterans of America. He is a strong advocate on a full

range of issues important to Vietnam veterans, including the expansion of Federal business opportunities for service-disabled veterans-owned-by businesses.

Your entire statement will be placed in the record, so I ask each

witness to summarize their testimony within the time we have established for each of you. The yellow light means your time is

about to run out; the red light means that your time is out. So

please try to summarize within that period. So we will begin with

you, Ms. Jenkins.

STATEMENTS OF LUWANDA W. JENKINS, SPECIAL SECRETARY,

STATE OF MARYLAND; HUBERT GREEN, PRESIDENT, PRINCE

GEORGE’S BACK CHAMBER OF COMMERCE; JOHN WATKINS,

PRESIDENT, INGENIUM CORP.; AND RICK WEIDMAN, EXECUTIVE DIRECTOR, POLICY AND GOVERNMENT AFFAIRS, VIETNAM VETERANS OF AMERICA

STATEMENT OF LUWANDA W. JENKINS

Ms. JENKINS. [Inaudible.]

Mr. TOWNS. Is your mic on? Push the button.

Ms. JENKINS. [Inaudible.]

Mr. TOWNS. I see we are having some mic problems.

Ms. JENKINS. [Inaudible.]

Mr. TOWNS. No, no, no, no. In a case like that, we will give you

additional time. That is staff’s fault.

6

Ms. JENKINS. [Inaudible]—improvements and public school con- struction. For example, in transportation, $1.7 billion will be spent

in roughly 31 BRAC-related projects. These projects are primarily

focused on intersection improvements near Aberdeen Proving

Ground, Fort Meade, and Bethesda Naval Medical Center. Our Department of Transportation has also requested $200 million for

MARC train growth throughout the region, which is critical to commuter transportation throughout the Maryland-D.C. area.

In the area of environmental improvements, Maryland must

maintain its water treatment plants. Five hundred million dollars

in fiscal year 2009 will be used to support water treatment activities in nine Maryland jurisdictions, which are anticipating the

greater amount of BRAC growth, and that is primarily our Central

Maryland area.

In the area of school construction, in order to support the 28,000

new households scheduled to transfer into Maryland, we will spend

approximately $400 million for new school construction in Maryland during fiscal year 2008, and we are anticipating spending another $300 million for school construction beyond 2008, primarily

in those jurisdictions that will be BRAC-impacted.

Having said all of that, what are some of the BRAC challenges

facing Maryland’s minority business community? I am going to

summarize these into three high priority challenges, the first of

which is a challenge that is universal to small and minority businesses regardless of whether or not you are looking at private sector or public sector activity, and that has to do with access to capital, having adequate capital for working capital, bid bonds, performance bonds. And in the case of BRAC activity, since so much

of the initial work will be in the area of construction, having access

to capital is critical for minority firms who are looking to take advantage of construction-related activities.

The other two challenges are really challenges that are unique

to the Federal space. Security clearances. Security clearances, as

you all know—the whole process for security clearances can take

up to 2 years. It is a costly process, and a process that creates a

burden particularly to smaller businesses. Costs for security clearances can range anywhere from $60,000 to $150,000 per employee.

However, the higher issue with security clearances is that security clearances oftentimes are the first barrier to accessing procurement opportunities. In other words, if you don’t have a security

clearance for Federal work, you are not allowed to even have opportunities to look at the RFPs and to review those RFPs. So, security

clearances and helping firms to expedite and navigate that process

is a clear challenge for our small and minority business community.

And then, last, you have heard us mention, and we will continue

to talk about, enhanced use leases. EUL is a tool that facilities use

to leverage Federal assets to address unfunded needs on military

installations, several of which are underway in the Maryland area.

And, while these projects may not be directly tied to BRAC, each

serves to support the growth and development that is scheduled to

arrive in Maryland in the coming years. So, indirectly they are tied

to BRAC. The concern in Maryland is that federally negotiated

EULs do not require the adherence to Federal or State procureVerDate 11-MAY-2000 11:59 Nov 21, 2008 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 C:\DOCS\45291.TXT KATIE PsN: KATIE
7

ment laws, and this is where our laws would encompass minority

business friendly goals, either DBE goals or MBE goals.

So having stated those challenges, what are we in the State of

Maryland doing to assist businesses to become BRAC ready and to

take advantage of these business and contracting opportunities?

My office, along with a number of individuals and programs

throughout the State of Maryland,—you will hear testimony from

some of the other panelists—we are coming together to do a variety

of actions to help small and minority businesses become BRAC

ready.

First and foremost, we are in the process of conducting a BRAC

opportunity study. This is a study to help us identify public procurement opportunities along with those small and minority businesses, which have the opportunity and are best positioned to take

advantage of these opportunities: firms that may already have security clearances, firms that may have high capital opportunities.

We are also working on information dissemination, so that we get

information out to the minority business community, and we are

looking to establish business development offices in close proximity

to the bases so that firms have access.

So, in conclusion, we are very fortunate in Maryland to have

BRAC, that we are a winning BRAC State. We thank our Federal

delegation for your support and continued opportunity to help us

be ready for these opportunities, and we are looking for additional

support to help us address some of the challenges.

With that, I want to thank you, members of the committee, members of the Maryland delegation. We look forward to your continued

partnership and support in this endeavor. Thank you.

[The prepared statement of Ms. Jenkins follows:]

8

9

10

11

12

13

14

Mr. TOWNS. Thank you very much, Ms. Jenkins.

Thank you, Mr. Green. You may start.

STATEMENT OF HUBERT GREEN

Mr. GREEN. Good morning, Mr. Chairman and members of the

committee. My name is Hubert Green, and I am president of the

Prince George’s Black Chamber of Commerce, with offices located

at 6009 Oxon Hill Road, Oxon Hill, MD. It is an honor and a privilege to appear before you today and share my views and those of

the Prince George’s Black Chamber in the areas of contracting opportunities for impacted communities as the result of military base

realignment and closing.

Incorporated in February 2001, Prince George’s Black Chamber

of Commerce is a Maryland-based business association representing small, local, and minority-owned businesses as an advocate and

an educator. We promote and enhance the visibility of our business

opportunity, address institutional barriers that impede business

progress, and provide support and resources that empower our

members to grow their businesses and enrich their lives.

Since the BRAC decision of November 2005, the small business

community has been in waiting, anticipating and preparing for an

opportunity to participate in one of America’s largest procurement

opportunities ever. The BRAC decision will generate the single

largest job growth in the great State of Maryland since the end of

World War II, making Maryland the largest beneficiary of employment growth of any State affected by the 2005 BRAC process.

You have heard about our diversity, and we are very proud of

being the most diverse county in the States. We are proud of the

numbers and the distinction they bring, but we are not satisfied because there could and should be more.

Since the decision of 2005, planning should have been underway

to accommodate the possible results. That has not been the case at

the Federal or at the State level until recently. For whatever reason, significant development contracting opportunities that BRAC

brings will not have government-mandated opportunities. Federal

guidelines that govern a certain type of partnership between the

military and private developers allow for minority businesses participation quotas to be omitted sometimes in the interest of expediting the projects. This could mean that small and minority-owned

businesses could be skipped over in favor of ones with more resources or that have an experienced association with the bases in

question. Institutional barriers must be broken down.

Inasmuch as BRAC is a Federal mandate, the Federal Government must take the lead in addressing the immediate needs and

requirements that arise from BRAC decisions. It must create an

environment in which people are willing to take risks, to risk capital and personal property to achieve the American dream of success and prosperity. You can accomplish this through a variety of

financial, technical, and procurement assistance programs, as well

as counseling and training partnerships. You focused on customer

satisfaction by streamlining services to the small businesses. The

Government must find a way to help the small, local, and minorityowned businesses overcome the challenges and reap the rewards

that BRAC presents.

15

There are a number of steps to take to remedy the situation in

order to achieve the goals, but first we must level the playing field.

Where disparities exist, we must remove the barriers. Traditionally, financial barriers often impede the progress of small and minority-owned businesses. With BRAC, access to market is just as

important as access to capital.

Just as access to capital and market are important, it is also important that regulatory barriers be addressed. Tearing down those

barriers will aid immeasurably, and your requirements to develop

relationships and short and long-term communication programs

will expand the opportunities for small, local, and minority-owned

businesses. The Federal Government has a unique responsibility to

assure that minority, disadvantaged, and women owned businesses

are an integral part of the communication process as it relates to

the promotion of access to capital, small business assistance, and

minority certification procurement opportunities.

Your commitment must be one that is shared by the State governments impacted by BRAC decisions. Your partnership efforts

should be outreach and procurement fairs, recruitment training

programs, and connection with organizations that have small, local,

minority, and women-owned businesses as their members.

The SBA certification is one of the most important remedies to

open doors to small businesses. It allows the reciprocity for State

certifications and for Federal certification. Multiple certifications

are costly, and small businesses just can’t absorb that cost. So,

there must be some kind of effort on the part of the Federal Government and the States to have those certification requirements

have reciprocity between them, and the SBA should open all of its

doors to offer assistance to small businesses in achieving that requirement.

Given the multitude of opportunities that BRAC will present, if

we are to ensure full participation of small, local, and minorityowned businesses in the process, every effort must be taken to

unbundle contracts. Contract bundling occurs when requirements

that previously were or could have been performed by small businesses are combined into a single procurement, resulting in an acquisition that is unsuitable for award to small businesses. It may

be unsuitable for award for a number of reasons; it could be due

to dollar value, technical diversity, size, or any combination thereof. We all know that DOD discourages the practice of bundling, but

the practice still exists. The Defense Department must take broad

steps to eliminate this unfortunate practice.

In addition to unbundling contracts, every effort must be made

to ensure prime contractors put forth their best effort to achieve

subcontracting goals. There are various techniques to encourage

prime contractors to subcontract and team with small business entities, with the most preferred being contractual incentives. In

short, providing maximum opportunities for small and minorityowned businesses has to be the primary consideration in any acquisition strategy that has been developed to fulfill BRAC requirements.

I would like to leave today confident that you will take the necessary action to enforce Federal regulations that guarantee a good

faith effort is put forth by government agencies to ensure small,

16

local, and minority-owned businesses have a fair and equitable

chance at contracts and subcontracts that will emanate from BRAC

decisions. Government must prove its commitment to small, local,

and minority-owned businesses by ensuring steps are taken to remove the disadvantages and increase the opportunities to access

the marketplace.

Today, I shared with you the thoughts of the small, local, and

minority-owned businesses served by Prince George’s Black Chamber of Commerce. Mr. Chairman and members of the committee, I

thank you for the opportunity to present my views and those of the

Black Chamber, and we stand ready to assist you or the States in

any effort to achieve parity and to serve in any way that we can

to make a difference in the lives of small, local, and minorityowned businesses. Thank you.

[The prepared statement of Mr. Green follows:]

17

18

19

20

21

22

Mr. TOWNS. Thank you so much, Mr. Green.

Now we will hear from you, General Watkins.

STATEMENT OF JOHN WATKINS

Mr. WATKINS. Good morning, Mr. Chairman, committee members. Thank you very much for having the honor of participating

here this morning.

As you know, my name is John Watkins, president of Ingenium

Corp., a local owned company in Upper Marlboro, MD, and founded

in 1992 by an African-American long-time citizen of the State of

Maryland. You know my background; I spent most of my adult life

in the Armed Services. In fact, my last tour of duty was the completion and implementation of BRAC 88, where we actually created

one of the activities that we will co-locate at Fort Meade. So, I have

fond memories of having worked those issues.

I don’t come today to criticize where we are. Having been there,

I know the daunting challenge that is in front of all of us. And, Mr.

Chairman, I will tell you, in preparation for coming to talk to you

today, I have actually been around to some of the installations,

talking to the DOD representatives, or going up to Baltimore to

meet with the district Corps of Engineers there. They all are ready

to help move this along.

Having said that, however, we have some challenges in front of

us, and I would like to spend my time today—and I think I am

going to parrot and support what you just heard here about contracting—and I say it in a way to help us all deal with the issue

that is in front of us, large, omnibus contracts I call them.

And, I am going to spank one out here for all of us, and I do it,

again, not to criticize the process, but to talk about what I think

we have to do. There is a one large contract I want to talk about

that is called ITES–2. It is a large omnibus contract for which the

DOD, the Army, and other services procure information technology

services. It has been out there. It has a $20 billion ceiling. It is already in existence.

So why is that contract there? It is much like other omnibus contracts. It permits the streamlining of acquisition, and, indeed, it

might help, given the compressed timeframe that we have to implement BRAC 2005. But, there are some issues associated with those

kinds of contracts when it comes to a place like the State of Maryland, where you have heard there is a rich heritage here of minority small businesses.

What I think we need to do, to my colleagues here from DOD,

I think we need to go back and take a look at those large omnibus

contracts, see if we can’t open them up for small and minorityowned businesses. If we look at ITES–2, for example, there are a

total of three minority-owned businesses on that contract, two of

which, if memory serves me well, are in the State of Virginia, although they have offices in Maryland.

One is actually in the State of Maryland. If you look at the thousands and thousands of small and minority-owned businesses in

the State of Maryland that will be competing for the BRAC 2005

work, and just use that contract alone. If you are going to do a

large portion of business, you can see that we are going to preclude

a large portion of the Maryland minority business community from

23

participating. So, I urge you and DOD to take a look at those kinds

of contracts. Again, when you go and talk to the impacted communities that are going to implement it, they are aware of the issues.

The other thing I would say, you heard it from the Black Chamber here, and that is goals, setting goals. I absolutely believe that

we need to have goals that are monitored throughout this process.

It needs to start with the DOD, and let me give you one example

of what I hear sometimes as a Black business owner: ‘‘Not qualified.’’ Well, I don’t think that is the case at all. If you look at the

kinds of work that Ingenium does for the DOD, I think there are

well qualified companies here. What we need to do is make sure

that there are absolutely no barriers in this compressed timeframe

for which we are going to be dealing with here. Let me give you

an example of what I am talking about.

Before I started working with the State, my ideas of how I

thought the State could help the impacted communities—those that

are coming into Maryland as well as the places like Fort Monmouth—we started thinking about discussing technology, telework,

for example. What do I mean by telework and how could it impact

the Armed Forces? Telework is a capability, technology where we

could go to places like Fort Monmouth—small entrepreneur businesses go to places like Fort Monmouth, help them prepare to lose

that work force, many of which will not move to the Washington

area, as we all well know. The numbers I have seen said 30 to 50

percent of the people will not relocate for various reasons.

Well, we can use technologies such as telework to help places like

Fort Monmouth minimize the impact of losing that work force and,

in fact, losing the work force at inopportune times. What do I mean

by that? We can go into the offices, emulate how workflow occurs

in the office, put the technology in place so that as people think

about leaving places like Fort Monmouth—as opposed to moving to

Aberdeen. They don’t have to leave; we can put them into their

homes and have them work using the technology.

Also, we can go down to places like Fort Aberdeen, where Fort

Monmouth is going to move to, put the technology there. Monmouth is probably going to hire people at Aberdeen even before

they move down, connect them back to Fort Monmouth, and it is

just as though they are working at Fort Monmouth.

I use this as an example to say to all of us the entrepreneurial

spirit in minority small businesses are here, prepared to support

BRAC. and I close by saying as I have gone around and talked to

all of the DOD locations—the only one I have not spent time with

is Meade; I am going to there I think it is Thursday of next week—

they are more than ready to work with us as we now try and provision Maryland to accommodate this huge inflow of manpower that

is going to occur here in the next 2 or 3 years.

Mr. Chairman, those are my comments, and I look forward to

questions. Thank you very much.

[The prepared statement of Mr. Watkins follows:]

24

25

26

27

28

29

Mr. TOWNS. Thank you very much, General Watkins.

Mr. Weidman.

STATEMENT OF RICK WEIDMAN

Mr. WEIDMAN. Mr. Chairman, thank you for the privilege of joining you here today to present the views not just of Vietnam Veterans of America, but of the Veterans Entrepreneurship Task Force,

which includes most of the large military and service organizations.

It was eight and one-half years ago that the Congress unanimously passed on both sides of the Hill Public Law 106–50, the

Veterans Entrepreneurship and Small Business Act of 1999. Contained therein was a requirement that not less than 3 percent of

all Federal contracts and not less than 3 percent of all subcontracts

go to service-disabled veteran business owners.

We are 81⁄2 years down the line to implement this law correctly,

and several statutes and an Executive order since that time, and,

yet, many of the Federal agencies have not responded. Unfortunately, Department of Defense is one of those.

Being a son of the city, I entered the military at 79 Whitehall

Street in New York City and served in Vietnam as a medic with

the Americal Division, and am proud of my service in the U.S.

Army. My father was a two-war veteran of the U.S. Army, fighting

in both Korea and in World War II.

And, I am proud of the Army, but I am not proud of what the

Army is doing today in terms of reaching back and giving opportunities to earn their piece of the American dream to service-disabled

veteran business owners. What is a little bit different about service-disabled veteran business owners and veteran business owners

is we are the groups that include everybody else: We are Black. We

are White. We are Latino. We are men. We are women. We are Native American. We are everything, and we all fought under the

same flag of the white, red, and blue, and that is what unites us.

So, the groupings include the National Association for Black Veterans in VET-Force, the American GI Forum, the nation’s largest

Hispanic organization, and many of our most active members are

in fact women business owners.

We are all in favor of—and think it is a good thing—all of the

other so-called special categories, when it comes to Federal contracting and subcontracting. However, you cannot cast those who

have been injured in service to country—lessened by virtue of that

military service to country—aside as if it didn’t matter, and, unfortunately, that too often happens. Let’s take the BRAC as an example and DOD.

DOD should be one of the leaders, along with the Department of

Veterans Affairs. Department of Veterans Affairs is the leader,

along with the State Department—thanks to General Powell when

he was Secretary of State—in actually achieving the minimum goal

of 3 percent for service-disabled veteran businesses in contracting

and subcontracting. DOD, however, is near the bottom. It is really

hard to reach your goal if you set the goal less than the legal minimum. So, there are elements of DOD that have set their goal, particularly on construction, at one-tenth of 1 percent, 1.2, 0.2 percent,

and you are never going to get to the 3 percent if you have that.

30

The military axiom applies here: ‘‘A unit does well that which a

commander checks well.’’ Let me say that again, ‘‘A unit does well

that which a commander checks well,’’ and we have asked the

President’s people on the Domestic Policy Council and at the Office

of Federal Procurement Policy ‘‘how can you issue an order and

have agencies basically say we don’t care what the commander-inchief or the chief executive of the United States of America says in

a direct order to you to all those folks in the agencies, and particularly within DOD, and let it go by the board?’’ If it had taken 81⁄2

years for our military to respond in Afghanistan or Iraq, or to any

other threat to our Nation, we would be in deep trouble indeed.

When you said do it, the attitude is can do and you make it happen, which is why veterans make such good employees and why

veterans make good contractors.

The two instances that you cited, Mr. Chairman—my time is almost up, so I can’t get to it in great detail. I will say this, as part

of trying to move down the line with DOD, we met extensively last

spring with Dr. James Findley, who is the Deputy Under Secretary

for Acquisition and Technology at DOD, and came up with seven

points—that I will submit separately for the record from my statement—about things that we could agree on to try and move forward on in order to move DOD in the direction of at least achieving

the bare minimum. It is not a goal; it is a minimum. That is what

the statute says, a minimum of 3 percent, and of these things, a

number of these things have been done.

We were working on an eight-point, which was a memorandum

of understanding to do a setaside for SDVOBs, service-disabled veteran businesses for all contracts at Arlington National Cemetery

and at Walter Reed as a first step in the direction of jump-starting

things within the Army in particular and within DOD in general.

And, unbeknownst to the OSDBU Office or to the Assistant Secretary’s Office for Acquisition and Technology, the Army turned

around and issued all of the work that would be available for the

next 3 to 5 years at Arlington National Cemetery and at Walter

Reed to Alaska Native Corps.

Now, Alaska Native Corporations are in fact an important part

of the law, but you can’t even question whether or not this was an

appropriate activity. So, as a result, we felt that there hasn’t been

any significant effort. I come back to, ‘‘a unit does well that which

a commander checks well,’’ and if there is a will, we can change

it without any more statutes. We will continue to press for additional statutes, such as changing the ‘‘may do a setaside for service-disabled vets’’ to ‘‘shall do a setaside,’’ but basically it is a question of will, of political will on the part of the administration, both

at the DOD and in the executive branch in general.

I see I am out of time, Mr. Chairman. I would be more than

pleased to answer any questions and to get into greater detail on

some of the recommendations about how this can help.

The one last thing I would have to say is that it is not a zero

sum game. All small groupings—whether women, minority groups,

and service-disabled veterans—can rise together and get a greater

share of the American dream and of the economic pie in the BRAC

if, in fact, we work together and people stop trying to play us off

31

against one another. And, this hearing today is a good first step toward that kind of cooperation that will benefit us all.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Weidman follows:]

32

33

34

35

36

37

38

39

40

41

42

43

44

45

Mr. TOWNS. Thank you.

Let me thank all of you for your testimony and to say that we

are doing something here today that is a little different from the

normal pattern of hearings around here: we are having the stakeholders go first. Generally, we have the agency people go first. But

the problem is they leave and they don’t hear you, and I purposely

arranged it this way because I want them to hear you. I want to

be able to come up with a fix to this problem, and I think that,

working together, we can. I think it is as you pointed out, Mr.

Weidman, it is the will, of course, and the proper attitude, and if

we have that, General, I think that you are right, that we can

move this forward.

And, I know that in situations like this we don’t like to beat up

on anybody. I understand that, and I recognize that, but sometimes, in order to fix something, certain things have to be said. So,

what I am saying to the agency people, don’t be too sensitive about

this, because we are concerned, and I do believe that you are concerned. And, I think that we have to listen and to work together

and to hear each other in order to be able to fix it.

I do believe that this needs to be fixed. We are talking about a

lot of money; we are talking about a lot of people; and, we are talking about people who have served our country well and should be

at the table, and they should be able to benefit from this.

And, I want to begin by first saying to you, General Watkins—

and then I guess others who want to comment on it—what more

can be done now, without any additional laws or anything? What

can we do to sort of move things? I know we have a problem with

clearance. I know we have all these issues, but what do you think

we can do to sort of put people at the table and to be able to benefit

from this tremendous amount of money that is going to be spent

here?

Mr. WATKINS. Mr. Chairman, as I indicated in my summary comments, I have no doubt that the DOD will work with us, and our

comments were not contrived before we came here—I didn’t hear

that—but we all saying basically the same thing. I think fundamentally we have to work with DOD in this very comprised

timeframe we call BRAC—and it is not just BRAC Maryland and

BRAC USA; we happen to be focusing on Maryland today—to make

sure that everyone understands that the will of Congress and the

administration has to be upheld, that when we say we want to

make sure that the playing field is level and that qualified businesses can in fact get in and participate—and that doesn’t mean

that you give business to anyone; you make it available— that is

exactly what we mean. So, I would start by addressing with the

subsequent panel here how will the DOD go about making sure

that those minimal goals that have been set and are expected to

be met are in fact fulfilled?

Now, I think what the State of Maryland is doing, I think is the

right thing to do. What the State of Maryland is doing by putting

together an advisory panel to the lieutenant Governor to serve as

a conduit between the DOD and the Maryland business community

is the absolute right thing to do. What I see ensuing there is the

fact that this panel will work with the DOD and the agencies to

46

make sure that we are connecting the small minority, veteran-disabled businesses to those business opportunities.

It is absolutely the correct thing to do and, as I said before, I

don’t think we have to beat people over the head to get it done.

What I do think, though—and I go back to the comment that says

people tend to do well those things that are out there in terms of

goal posts—I think we need to set some goal posts. DOD needs to

set some goal posts, and we all should understand that they are

not arbitrary. They are there to be met, and, by God, we are going

to be checking to make sure they are met.

So I would say goals. I would say the other thing is—and I know

the DOD will take a look at those large omnibus contract, bundled

contracts to see if there are opportunities to open those up again

for companies that did not get a chance to participate, and even if

you don’t open them up, you could go to the primes and make sure

that the primes on those contracts in fact open up business to these

impacted areas. Again, we are talking about a very short timeframe, and we have to find a way to get that logjam opened up.

Ms. JENKINS. As a followup to Mr. Watkins’ comments, from the

State’s perspective, there are some things that can be done using

Federal leverage that are not likely to require new laws. For example—and I want to echo the comments regarding relationship building with DOD—we have had some good experiences initially with

working with DOD, and we would certainly like to continue that.

There may also be other State agencies who have procurements

that are headed toward Maryland related to BRAC beyond DOD

that we would need those same relationships with.

In the area of broad application of Federal procurement laws

across the board and goals across the board, that is an area that,

with just consistency and the application of existing DBE goals,

that would have a humongous impact on work in the State of

Maryland. Also, using political leverage on enhanced use leases

with private developers, this is an area where, in the Stare of

Maryland, we go beyond our laws and oftentimes just use political

will to let developers know who are entering into privatized arrangements with the State of Maryland that this is an expectation,

and oftentimes we are fairly successful with that.

Last, there is a program that exists in Maryland that is jointly

funded by both Federal and State government, but they exist specifically to provide guidance and technical assistance to small and

minority businesses who are pursuing Federal work. It is a program called PTAP, the Procurement Technical Assistance Program.

It runs under the small business development centers. It is funded

by SBA and DOD through Defense Logistics Agency. The State of

Maryland has a match to ensure that those operations are happening within the State of Maryland.

That PTAP program is essential to helping our business community understand how to do business with the Federal Government.

Currently, they are underfunded; they need more resources so that

collectively they can be a resource and a tool in the State of Maryland to work with our office in ensuring that small businesses have

access to security clearances and the other expertise that you need

to do work in the Federal space.

47

Mr. TOWNS. What can DOD do to ensure that small firms aren’t

eliminated by flaws within the security clearance processes, before

even having a fair chance to compete? You are talking about

$60,000 to $150,000 per employee, in addition to the process often

taking 2 years. That, to me, is devastating to many small businesses. What can we do to facilitate this process and move it along?

Mr. WATKINS. I can probably start it and then others can chime in. I would first start out by saying $60,000 to $150,000 to get

someone cleared is pretty expensive even for large companies, but

you are absolutely correct, Mr. Chairman. In small companies it is

sometimes prohibitive, particularly if you are not going to gain lots

of business as a result of getting a minimum number of people

qualified here.

So, one thing that could be done would be some assistance to

these companies who are going to be competing for the classified

work that could be collaborative, resources at the State and the

Federal level. It is a burden. I can tell you that, having worked

with some of the companies that are smaller than I am, when we

do subcontracting with them where classified work is involved, to

spend that kind of money and that amount of time to get people

cleared is in fact a burden.

So some kind of funding arrangement for BRAC kind of work as

it relates to security clearance would be helpful. In fact, it may

very well be a good experiment, again because, for lack of a better

description, you have a pretty good sandbox to play in here in a

defined period of time where you can work with locales such as

Maryland to try to see if we can come up with a way of offloading

that. So, my point would be some collaborative funding to aid the

small companies, once they have been identified as companies who

are capable of doing classified work.

Now, I don’t know the specifics of NSA, but I know NSA has a

great outreach program where they really expedite the process of

getting these small and minority-owned companies cleared. So that

might be something we might want to look at to see if there is any

way of taking that program and moving it along.

Mr. GREEN. Mr. Chairman, from the small business perspective,

we don’t have the money to do all these clearances and to run these

clearances, and it takes an awful lot of time. There has to be some

way that there is some kind of fund established to allow small

businesses to be a part of it to get those clearances.

What happens is, while we are waiting on clearances, we can’t

do the work. The prime contractor, who has the relationship with

the base and has had it for years, all of their people are working

because they know the system, and the system has worked for

them over a period of years. Streamlining the system—I am not

sure what we can do. I know that security has to be at a premium

for us in today’s society, but somehow we must find a way to

streamline the timeframe it takes to get those clearances and have

a pool of money that is available for that kind of activity.

Mr. TOWNS. Thank you.

Any other comments on that?

Mr. WEIDMAN. I was just going to add, Mr. Chairman, there is

no reason why you can’t set up essentially a service center for

small and medium sized enterprises to help people get pre-qualiVerDate 11-MAY-2000 11:59 Nov 21, 2008 Jkt 000000 PO 00000 Frm 00051 Fmt 6633 Sfmt 6633 C:\DOCS\45291.TXT KATIE PsN: KATIE
48

fied. It is actually less a problem for SDVOBs because so many already—particularly of the recently separated veterans—come out of

the military with a TSI clearance, and teaming arrangements and

tradeoffs on consortia can help in that process to shorten it. But,

it comes back to if there is a will to help small and medium sized

enterprises, get people pre-qualified at not such a great expense.

DOD could set that up through the PTAPs very easily, sir.

Incidentally, the PTAPs are one of the greatest resources, and we

and VET-Force and all the major military service organizations

refer people to the PTAPs all the time as the best, most consistently skilled and helpful resource out there across the country.

Mr. TOWNS. Thank you very much.

Let me just ask why are goals mandatory? Can you expound on

that just a little bit? I want to make certain that is clear, in terms

of why we should have mandatory goals.

Mr. GREEN. Goals ensure participation. Everybody wants to

achieve any goals established. And what it does is it opens the

doors for small and minority-owned businesses to participate. If

you don’t have goals, prime contractors, unless there is State reform or Federal reform of the minority practices—Maryland did a

great job a few years back. They require their prime contractors to

name their subcontractors in the contract. If he or she is not a certified minority, they kick that person out.

So, if you have those kinds of tools available or working for you,

small businesses can get work, and it increases the opportunity for

them to achieve all the goals, but if we don’t have some of the

things that Maryland has undertaken, the rest of these States are

never going to achieve the contracting goals that we want. And, we

want to have those, because if we have them, then we all can pat

ourselves on the back that we ensure that minorities receive 40, 35,

whatever percent,age of it it may be.

And I think that they should be directed to small businesses primarily based on where we are. In the Washington, DC, area, we

have—Maryland; I am talking about Maryland—we have a strong

small business community in Prince George’s County. The percentages of participation should be higher in Prince George’s County

than it may be in Decatur, AL or Fort Benning, GA, or someplace

like that. But we don’t see those numbers tracking that way, so,

I believe that we have to have goals in order to ensure everybody

gets a fair and equitable chance at participation.

Mr. TOWNS. Well, I thank you. Thank you very much.

At this time, I will now yield to Congressman Clay from the

great State of Missouri.

Mr. CLAY. Thank you, Mr. Chairman.

Ms. Jenkins, as you are aware, enhanced use leases have become

a very popular tool to accommodate realignment of military functions under BRAC. The problem with enhanced use leases is that

they do not require private developers to adhere to either Federal

or State procurement laws, including minority business participation goals. Instead, the arrangements allow for voluntary compliance on the part of the private developer with Federal and State

contracting laws. What impact will this have on small and minority

business participation in BRAC contracting activity?

49

Ms. JENKINS. Thank you for that question. It will have a huge

impact on the ability for small and minority businesses to participate by virtue of the fact that history has shown that voluntary efforts oftentimes don’t net results that are meaningful.

And, to the question that we just answered in terms of why

goals, goals really do ensure participation, and without a goal, the

likelihood the developers are going to do the right thing just because it is good business, you will find that inconsistently. Some

will, because they have a good track record of doing public sector

work. So, they will carry that behavior out on the private sector

side, but many will not. So, having some type of broad-based required goal placed on EULs is the way to ensure that small and

minority businesses have an entry to that work.

Mr. CLAY. It sounds like——

Ms. JENKINS. That work that is occurring on federally owned,

publicly owned land. That is really the critical factor for why it is

justified to have some type of goal on an EUL project.

Mr. CLAY. It sounds like you are referring that a Federal law

need to be in place.

Ms. JENKINS. Yes.

Mr. CLAY. In my community, in St. Louis County, in the last

round of BRAC we lost the personnel record center to Fort Knox,

KY, and St. Louis County has to deal with the loss of 2,000 jobs

along with a considerable amount of land that will have to be redeveloped.

Maybe Mr. Watkins or Mr. Weidman would like to contribute to

what Ms. Jenkins said, but I would love to hear what we should

look for in the process as we redevelop this land and as we try to

replace the loss of jobs. Mr. Watkins.

Mr. WATKINS. Let me chime in. Let’s go back to the question that

the chairman asked, because I think it will dovetail in to where

you are going as well, and that is why do you set goals. You set

goals because there is something out there that you believe worthy

of striving for. So the fact that the DOD, Congress, and succeeding

administrations have set goals out there, it says that there is something that we want to achieve.

Now, I also say that if you are going to set goals, mandatory

goals, and you don’t achieve them year after year after year, you

have to ask yourself how serious are you. And, that is why I say

goals with verifiable track records, so we can measure progress is

absolutely key.

Mr. Clay, back to your comment again, I remember—and it is in

my submitted testimony—working with the late Senator Strom

Thurmond from South Carolina, dealing with the kind of issue you

are dealing with, where I was closing down facilities in his State—

in this case Charleston, SC—and moving them to other locations.

Well, we were sensitive—it didn’t have to be on the DOD side—but

it was the right thing to do, and that is to work with that representative—in this case Senator—to look at other things that we

could help him work with to offset that loss of work.

We did things like guaranteeing those people if they wanted to

move any place in the country where we had an opening, they

would be guaranteed an opening. We did what we called storefronts

in Charleston, SC, where we would create entities down there

50

where those people could continue working until such time as they

could find work. Now, it wasn’t make work; it was reaching out to

that affected community to see how we could help them.

I would say the same thing with land development. One of the

things that I would be looking for is how do you backfill that loss

of jobs and be sensitive to it. And, again, if my experience is what

I think you will see—and I think it is, and the DOD still is—people

will certainly be willing to work with you to see how it is that we

can help minimize the impact of what is happening in communities

because, after all, we are doing it for the betterment of the country,

and it is in our best interest as a DOD, as concerned citizens, to

make sure that we do the best we can to take care of those impacted communities.

Mr. WEIDMAN. Mr. Clay, the—I am sorry.

Mr. CLAY. Let me followup on what Mr. Watkins—and then I

will come to you, Mr. Weidman. But let me tell you about the St.

Louis community’s experience with BRAC going back to the 1990

round, where we lost even more jobs, and I felt like there was a

lack of sensitivity on the part of DOD, because, when I got here

in 2001, I had a meeting with DOD about the devastation they had

left in the St. Louis community, and they had left a facility that

used to be an Army ammunitionsite, where they just boarded it up

and left the facility there with all kinds of PCBs in it, all kinds of

other contaminants, and they didn’t feel like they needed to do anything about it. Of course, we changed that tune, and they came

back and had to clean it up. But initially they told me, ‘‘we don’t

have to do anything for your community and don’t care about your

community,’’ and we quickly sensitized them to what they had to

do for that community. I don’t know if other communities have experienced that, but we have.

Mr. WATKINS. I would certainly hope that initial experience is

not what one would expect in the Defense Department; it certainly

is not what I found. On the other hand, I don’t want to mislead

the committee. We have to make some tough decisions sometimes,

and there was very little that we could do. But, to the extent that

you went out of your way to work with the affected community and

looked for solutions went a long ways in making sure that we had

the right relationship as we continue, because you are right. You

have long memories, and chances are we will have to come back

to you again in the future for support.

Mr. CLAY. Thank you.

Mr. Weidman.

Ms. JENKINS. Can I add one final thought before we leave the

topic of EULs? Because I think this is rather significant. The State

of Maryland is looking at introducing legislation to deal with the

impacts of EULs, and it essentially allows the State of Maryland

to enter into negotiations with DOD on the payment in lieu of

taxes, to negotiate taxing authority, to help cover the other infrastructure costs associated with EULs. As part of this legislation, we

do intend to move forward on goals that would be placed for minority participation on EUL projects in Maryland. To the extent that

the Federal level could look at something on your end, that might

be a way that we can legislate a solution on BRACs to small and

minority businesses.

51

Mr. CLAY. Thank you.

Mr. WEIDMAN. Just to followup on that, we can use the word

goals, but all too often, when the Congress says goals, that means,

‘‘this is what you will do.’’ If you say goals often within the executive branch, to those who are actually doing it, and they regard it

as a cute idea advanced by the Congress, as opposed to something

that they have to do, that they better take seriously as a heartbeat.

And, I will use as an example that the word goal doesn’t appear

anywhere in any of the laws pertaining to service-disabled veteranowned small businesses, but people keep using the goals within the

bureaucracy. We keep pointing out that the law says: ‘‘a minimum

of.’’

And, to followup on that if I could, Mr. Clay, it is the VA was

not leading the way until such time as we went to the deputy secretary of VA, who is the chief operating officer, and asked him to

put it in key people’s, managers’ evaluation that they had to

achieve the 3 percent, otherwise they wouldn’t get a bonus. And,

it took off like a skyrocket, and VA is now 4.5 percent.

We have recommended to DOD that they do the same thing, that

they put it not just in contract officers, but in decisionmakers—who

often aren’t the contract officers themselves—in their performance

evaluation. You want a superior or an outstanding rating in order

to be able to get a bonus? Then you better make this happen, not

just for service-disabled vets, but for minority-owned businesses

and for women-owned businesses and for hub zones.

Mr. CLAY. And it has made a difference in the service-disabled

community, the veteran business community and service-disabled

veteran business community, as far as putting those incentives into

the law or into an agreement. You have seen the participation

shoot up.

Mr. WEIDMAN. It would shoot up, and we are having problems.

To talk about your district, we have a women-owned/service-disabled veteran-owned, a service-disabled veteran herself, architect

and design firm and design and engineering firm, and it is just not

getting any work from DOD or the Army Corps of Engineers right

there in St. Louis County. And, I would be glad to talk with you

or your staff about it afterwards, sir. Perhaps you can start the ball

rolling right there.

Mr. CLAY. Please share that with us. Yes. Thank you.

Mr. Chairman, I yield back.

Mr. TOWNS. Thank you very much. I just want to go into one

other thing, Mr. Green. You mentioned a level playing field. You

mentioned it three times, so it would seem to be pretty important.

And, of course, you talked about access to capital you said was one

thing, but access to the market was something else. So could you

sort of expound on that before we close out?

Mr. GREEN. Yes, sir. I think what I am trying to say to you is

this: It is not the Federal Government’s job to make us rich, to

make anybody rich, but it is your responsibility to create opportunities for us. As a minority, there are so many barriers that we have

to overcome. If we can remove some of the barriers, then we level

the playing field. If you have goals, you increase the opportunity,

and I think that is what small businesses and African-American

52

businesses and minority businesses are talking about. Remove

those institutional barriers that keep me from advancing.

And, God knows the bureaucracy within the SBA itself is too

much to overcome for a small business. If we need to have a certification, we have to hire somebody to do it for us. We don’t have anybody to—there is no person that we can reach out to help us with

that, we have to go and hire someone to do that. Well, we can’t

bear all these costs, so we don’t get them.

We can’t get work because agencies have a certification requirement, and there is no reciprocity. We believe that there should be

a single source certification whereby, if I have an SBA certification,

I should not have to have a State certification, I should not have

to have an Airport Authority certification. We should be able to

apply for any work or do any work wherever there are some Federal dollars if we have a single source certification. That would

open up doors, level the playing field, and increase opportunities,

and that is what we are talking about, Mr. Chairman.

Mr. TOWNS. Thank you.

Thank you very, very much. We really appreciate your coming

and testifying. Of course, as indicated, we switched it around today

because I wanted the agencies to hear you, and, of course, now we

will move into hearing the agencies. And, I am hoping that some

of the things, some of the concerns that you have and some of the

problems that you have, they might be able to give us some answers, and I think that is the reason why we did it this way.

I just wanted to say to you that I am really concerned that when

you have veterans, people that have served this country, who in

many instances have been wounded, to come and not to have the

opportunity to have a seat at the table, that really bothers me, and

I think it is wrong, and I think that we have an obligation and responsibility on this side of the aisle to correct it. And, I want to

let you know that I am committed to correcting it. We are not going

to go away. We are going to continue to deal with this and push

it, because it is broken, and it needs to be fixed. When I look at

the people that are being left out, I recognize that we have to do

something.

So I want to thank you so much for your commitment and your

coming today and testifying, and I look forward to working with

you and trying to level the playing field. Thank you so much.

Our second panel. Before you take your seat, let me swear you

in. We swear everybody in here. Raise your right hands.

[Witnesses sworn.]

Mr. TOWNS. Thank you. You may be seated.

Let the record reflect that they answered in the affirmative.

Let me introduce our witnesses. We have today Tracey Pinson,

who serves as the Director of the Army’s Office of Small and Disadvantaged Business Utilization. Ms. Pinson advises the Secretary

of the Army and Army staff on all small business procurement

issues.

We have with us Timothy Foreman, the Director of the Navy’s

small business programs. Mr. Foreman is responsible for the implementation of the Federal acquisition programs designed to assist

small businesses.

53

Let me just say to both of you that your entire statement will

be placed in the record, and I ask all witnesses to summarize their

testimony within the time we have established. Now, I am sure you

know the procedure: the green light means start, the yellow light

means think about stopping, and the red light means stop.

So let me begin with you, Ms. Pinson. Let me thank you so much

for coming to testify.

STATEMENTS OF TRACEY PINSON, DIRECTOR, SECRETARY OF

ARMY, OFFICE OF SMALL AND DISADVANTAGED BUSINESS

UTILIZATION; AND TIMOTHY FOREMAN, DIRECTOR, SECRETARY OF THE NAVY, OFFICE OF SMALL AND DISADVANTAGED BUSINESS UTILIZATION

STATEMENT OF TRACEY PINSON

Ms. PINSON. Thank you, Mr. Chairman and Mr. Clay and other

members of the subcommittee. It is a pleasure to appear before you

to discuss the implementation of the Army’s 2005 Base Realignment and Closure Program and its impact on local communities

and, in particular, small businesses. My name is Tracey Pinson,

and I am the Director of the Army Small Business Program Office,

and I report directly to the Secretary of the Army.

The Army has an aggressive, carefully synchronized BRAC implementation plan to meet the September 2011 deadline while supporting our national security priorities. The budget for the entire

6 year implementation period is approximately $17 billion. About

two-thirds, or $13 billion, will be spent on military construction.

Under BRAC, the Army will close 13 Active Component installations, 387 Reserve Component installations, and 8 leased facilities.

BRAC realignments 53 installations and/or functions and establishes Training Centers of Excellence and Joint Technical and Research facilities. To accommodate the units relocating from the

closing Reserve Component installations, BRAC 2005 creates 125

multi-component Armed Forces Reserve Centers and realigns the

Army Reserve Command and control structure.

In total, over 55,000 soldiers and civilian employees will relocate

as BRAC is implemented. The actions required for the Army to successfully implement BRAC 2005 are far more extensive than all

four previous BRAC rounds combined. Twenty-five percent of all

required construction projects are planned for award by the end of

fiscal year 2009 and 100 percent by the end of fiscal year 2010.

We perceive BRAC as an expanded opportunity for small business participation. Historically, the Army has led the Federal Government in awards to small businesses. In fiscal year 2007, of the

$93 billion in total awards to U.S. firms made by the Army, small

businesses received 25 percent, or $23 billion. The charts attached

to my written testimony illustrate growth the Army has experienced in all small business programmatic areas.

While there will be a tremendous amount of money spent on

BRAC and BRAC-related projects, the process for allocating that

money will not change. Some of our existing contracting officers

have assumed responsibility to award these projects. The Army has

a very qualified and dedicated cadre of small business advisors who

work side-by-side with contracting officials to conduct market reVerDate 11-MAY-2000 11:59 Nov 21, 2008 Jkt 000000 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 C:\DOCS\45291.TXT KATIE PsN: KATIE
54

search for all requirements. All requirements are published in the

Federal business opportunity publication.

Once this research has been done, each requirement will be reviewed for performance by the small business community. This includes potential setasides for small businesses, HUBZone companies, or service-disabled veterans. Additionally, analyses will be

done for suitability for award under the 8(a) program. If the award

is not suitable for performance by a small business as a prime contractor, substantive provisions will be put into the contract to

maximize small business participation as subcontractors.

I visited Ft. Bliss several months ago and witnessed firsthand

the great work that the Corps of Engineers is doing there in support of BRAC. This expansion program is one of our largest BRAC

projects. To date, the Corps has awarded over $200 million directly

to small businesses. An additional $350 million has been awarded

to small business subcontracting. Unfortunately, the ability to obtain performance bonds continues to plague the ability of small

businesses to access construction projects as prime contractors.

Many of our projects for the construction of buildings are valued

such that small businesses cannot bond them. Aggressive small

business subcontracting goals are established under these circumstances. We are also restricted from using small business setaside procedures in the construction arena as a result of the small

business competitiveness demonstration program, a statutorily

mandated program.

We anticipate that a significant amount of military construction

funding will be spent during this fiscal year and fiscal year 2009

and 2010. The Corps has put very good projections in place for the

utilization of small businesses. For example, the North Atlantic Division has projected that approximately 22 percent of their BRAC

dollars will be spent with small business primes. The Corps’ overall

goal for subcontracting with small businesses is 70 percent. We anticipate that the subcontracting opportunities under BRAC will enable them to meet this goal.

I would like to mention what the Army is doing to support the

program for companies owned by service-disabled veterans. On

January 9th of this year, the Secretary of the Army signed a memo

to all Army contracting commands urging them to maximize opportunities for service-disabled veteran-owned businesses and to reemphasize the importance of this program. We have experienced exponential growth in our dollars awarded to service-disabled veterans,

from $750 million in fiscal year 2006 to over $900 million in fiscal

year 2007. Additionally, we have posted on our Web site projections

of over $2 billion in proposed service-disabled veteran-owned

setasides.

While there is no statutory goal for veteran-owned businesses,

we believe them to be important to us as well, and we have awarded over $2 billion in contracts to those entities. The Army commitment to this program is unwavering.

In summary, the Army has a carefully coordinated and synchronized plan for implementing BRAC mandates, while continuing

to conduct critical missions in support of the global war on terrorism and homeland defense. We believe that the small business

community has a critical role to play in this mission and are comVerDate 11-MAY-2000 11:59 Nov 21, 2008 Jkt 000000 PO 00000 Frm 00058 Fmt 6633 Sfmt 6633 C:\DOCS\45291.TXT KATIE PsN: KATIE
55

mitted to ensuring that they have the maximum practicable opportunity to participate in BRAC as prime contractors and subcontractors.

Thank you again for the opportunity to appear before you today,

and thank you for your continued support of America’s Army.

[The prepared statement of Ms. Pinson follows:]

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

Mr. TOWNS. Thank you very much, Ms. Pinson.

Mr. Foreman.

STATEMENT OF TIMOTHY FOREMAN

Mr. FOREMAN. Thank you, Chairman Towns and Congressman

Clay and staff of this subcommittee. I appreciate the opportunity

to be here today and talk to you about this important topic, the

BRAC, and how it is affected by small business and how small

businesses can affect that.

First off, I would like to tell you that I too report to the Secretary

of the Navy directly, so it is my pleasure to work with the Honorable Donald C. Winter. I would like to initially thank you, Congress, for giving us so many tools that we can use that effectively

help us in our efforts to achieve the various goals.

Let me just briefly list them. One is just the small business program in general, the small business setaside program, the small

disadvantaged business program, the 8(a) program, which is a subset of that program, the women-owned business program, the historically under-utilized business zone program, which really plays

an interesting role in BRAC, and the long-overdue service-disabled

veteran own small business program.

We, additionally, have two other programs that we utilize: the

Small Business Innovative Research Program and the Small Business Technology Transfer Program. Those are designed to bring

technologies that are in the early stages into the war-fighter hands

earlier, and we also use them as a way to commercialize. It used

to be the Department of Defense was a major buyer or, actually,

a major, if you will, procurer of research and development. I mean,

now you found—I think it was 1976—the commercial marketplace

has more research and development than the whole Federal Government, and it continues to increasingly have larger and larger

chunks, so we have to utilize that.

I do thank you for all those programs you have provided.

The small business program does provide an opportunity to help

the Navy accomplish our mission, and, more importantly, through

those lower priced products and through the improved technologies,

they are going to help us build the Navy and Marine Corps of tomorrow, and that is kind of a key logo that we would like to carry

out as we look today for our missions and tomorrow for our growth.

The long pull and I think our intent in the Navy—and I believe

it is true for the Department of Defense—is the health, safety, welfare, and the quality of life that these programs can bring to our

sailors and our Marines. I think we need to always look to them

because they are the ones who serve this country and put themselves in harm’s way. So, we look at it as it is an obligation that

we do the best job, so we don’t have service-disabled veterans coming back. We want to see safety. One of our most recent—what we

call mentor-protege programs—is designed to reduce hearing loss

on aircraft carriers. So, we are looking at various things like that.

The HUBZone program is an interesting program in that it actually addresses—it came out of a legislative initiative out of a field

activity in the Air Force, up through OSD, and has actually been

put into place. What it does—the HUBZone program is where you

have an economically distressed area, and in this distressed area,

72

firms that apply—and are certified by SBA and who has a membership of 35 percent of their employees—can receive certain preferences, and those preferences are basically three that are straight

up, one that is kind of a little bit off to the side.

The three are sole source, the setaside provisions, and also a

price evaluation preference provision, and it has a unique—which,

by the way, the service-disabled veterans folks picked up—a unique

subcontracting limitation ability. Historically, the subcontracting

limitation said, ‘‘you, the business, have to perform 51 percent.’’

What this says is,m the HUBZone—historically under-utilized business sonar, the service-disabled—you and other firms of your like

have to perform that 51 percent. That encourages partnering. That

encourages joint ventures, which are really necessary for today’s

environment in which a lot of the contract awards are getting larger and larger.

The service-disabled veterans have an additional advantage.

They can literally claim everybody in their joint venture as a service-disabled veteran, so they can actually go to other small businesses and actually push that a little bit forward. So, that is an

interesting twist which is available to the service-disabled veteran

community.

In terms of the programs that I mentioned earlier, there are also

subcontracting programs, and—oh, by the way, I was delighted to

sit here and listen to the group before, because it started the juices

flowing and I think we will have some good things coming out of

just sitting here listening. So that was an excellent idea—I like

that—and I hope we do it again next time.

Access to working capital, I agree. That is an absolutely crucial

program for small businesses. As we move into these tough economic times—oh, I am over. I am sorry. As we move into these

tough economic times, it should be noted that the DOD does have,

in FAR 32, Part 32, what we call progress payment rates. Small

disadvantaged businesses get 95 percent, small businesses get 85,

and large businesses get 80. And, the idea is that we do have one

group that does have a better progress payment. And, I think even

more important than access to capital is its cash-flow, and that is

absolutely critical in manufacturing.

With that, I will stop and be happy to take any of your questions.

Thank you.

[The prepared statement of Mr. Foreman follows:]

73

74

75

76

77

78

79

80

Mr. TOWNS. I am happy you like this process, because we will

continue this until we fix it. We will continue this way.

Let me thank both of you for your testimony, and I want you to

know that this is not a beat-up session, it really isn’t. I really want

to see how we can be helpful to solving a problem that I think we

both—and all of us agree—exists. And, we have had some situations, things raised this morning that I think make a lot of sense,

and I just want to start out with—I think it was Mr. Green who

testified that multiple certifications can be extremely costly to

small and minority business owners, and, of course, the Federal

and State agencies have their own requirements, and there is little

or no reciprocity between them.

How can we streamline them? How can we streamline the certification process to ease the burden on small businesses and eliminate the multiple certifications? Because that is expensive.

Ms. PINSON. Sir, if I could, I agree that there are multiple certifications out there, and, in fact, some of those certifications really

don’t get you any preferences, if you will. I can clearly say that on

the Federal level, when you are certified as an 8(a), you get a preference; you are allowed to get sole-source contracts. HUBZone, you

are allowed to get sole-source setasides and things of that nature.

So, I believe in the notion, if you will, that maybe the Federal certification should be the overarching certification process for all

these programs. And, then I know the State and localities, they

may want to require local residents or something like that, but that

should really be all that would be required additionally.

But, I think that the Federal guidelines are tight. They are resistant, I think, to fraud and fronts, and things of that nature so

I would support that the Federal certification process must be the

overarching.

Mr. FOREMAN. I would like to just follow on with that. There has

been some historical progress in this whole area. When I first started with the Federal Government—that was back in 1970-something—we actually had a problem in that small businesses had to

go to every post, camp, and station, fill out paperwork at every

post, camp, and station. It either goes on a 3-by–5 index card or

to a folder. We have gone to what we call single point of entry,

where everybody goes through the CCR, the centralized contractor

registration data base, and that is the point of entry you have to

go through. More importantly, if you are going to get paid, you

have to be registered in that system.

We have also gone to instead of everybody advertising their own

way on the old CBD—we have gone to something called

fedbizopps.gov, where all non-classified contracts are issued. There

are, I think, about four or five exceptions; classified contracts are

one of them. If we have a ship that is on the bottom of the ocean

floor, we need to bring it up, we are not going to advertise. We are

going to fix the problem and go after it. Again, the safety, health,

and welfare of our men and women of the Navy and Marine Corps

are key, but we have taken those steps in the right direction.

When you talk about costs, the Army and the Navy and the Air

Force all get that chip-in money to pay for the SDB certification

process over at the SBA over year, and that we find to be very

painful. Hopefully, that is going to be over with very soon. So, we

81

do pay hundreds of thousands of dollars to SBA, and it really is a

function that is inherently governmental. If you are going to go into

certification, that is an inherently governmental function. I don’t

think it is something you should subcontract out, but I don’t even

like the idea. I like the idea of self-certification, and when we find

a problem, fix the problem.

Mr. TOWNS. And, there is a problem.

Mr. FOREMAN. Well, I don’t know so much if there are many

front problems. I think there is a lot of that accusation, but we always have a challenge system, which is available to any interested

vendor to say, ‘‘I disagree, I don’t think they are service-disabled

or HUBZone or whatever.’’

Mr. TOWNS. OK, let’s move on.

The Department of Defense deploys men and women to protect

our country. It has an obligation to support veterans, especially

service-disabled veterans after they return home. About two-thirds

of Federal procurements is DOD purchasing. Therefore, DOD plays

a critical role in providing contracting opportunities to small businesses, however, the overall Department of Defense numbers for

contracting with SDVOBs remain distant. The Federal Government

has a goal of 3 percent contracting with service-disabled veterans,

but they got less than 1 percent. So my question is why? Why

haven’t your agencies met your goal? What is preventing the agency from attaining this goal? What specific actions will you take

next year not to have the same results as last year?

Ms. PINSON. Sir, from the Army perspective—and clearly we create the bulk of the service-disabled veterans in the veteran community—if you refer to my last chart attached to my statement, you

can see the growth that the Army has experienced and the dollars

that have been allocated to this program. Unfortunately, I don’t

have control over the percentages, because the first chart shows

that the total dollars that the Army has obligated has gone up exponentially.

Mr. TOWNS. But it is much lower than the national goal.

Ms. PINSON. I understand, sir. You can see that we went from

$55 billion in 2004 to $93 billion in 2007. We are at 1 percent for

service-disabled veterans. From 2006 we did $785 million with

service-disabled veterans, up to $900 million in 2007. Unfortunately, one-tenth of 1 percent in the Department of the Army is

$100 million, and I don’t have control over that growth, over those

percentages.

DOD was given the authority to do setasides and sole source

awards with service-disabled veterans probably in 2004. The legislation authorizing us to do setasides, which is a tool to get competition just restricted among veterans, which helps get those contracts, was enacted in 2003. So, when you have the regulatory process and comment periods and things of that nature, it took almost

a year to put that regulatory authority for setasides in place. So,

I would say that the tools that we needed to try to get to the goals

just were put in place in 2004. Realistically, I believe it is going

to take time to get to the 3 percent. If we go up $200 million, $300

million, $400 million, $500 million a year, it will still take time for

us to reach the 3 percent, and that is primarily because our base

is so large.

82

I remember when I came into the Army program, we did $29 bil- lion in 1995. We are now doing almost $100 billion, and you know

why, because of the war. So, it is going to take time for us to get

there, but we are doing a tremendous amount of outreach, capability briefings. Our people, they have it, sir. It is just going to take

some time to get there. As I indicated, we have $2 billion in

setasides projected for service-disabled veterans—$2 billion—and

that is posted on our Web site. It is right here, $2 billion, but it

is going to take some time to get to the 3 percent goal.

Mr. TOWNS. What can we do to help you?

Ms. PINSON. What can you do to help me?

Mr. TOWNS. Yes. On this side.

Ms. PINSON. Just work with me, sir. Just have some patience.

That’s all I would say.

Mr. TOWNS. OK. I want you to know, and I need to tell you this:

I am not going away.

Ms. PINSON. I understand.

Mr. TOWNS. I am not going away.

Ms. PINSON. I understand. This is a serious program for us.

Mr. TOWNS. Yes. And I am very concerned about it, and I am not

going away.

Ms. PINSON. I understand.

Mr. TOWNS. And I want you to know that.

At this time, I yield to my colleague, Congressman Clay.

Mr. CLAY. Thank you, Mr. Chairman.

Ms. Pinson and Mr. Foreman, welcome today.

Ms. Pinson, in your testimony you talked about performance

bonds being a hindrance to small businesses. Are there any ways

that we can be creative with performance bonds, as far as

partnering with majority firms or mentoring with majority firms?

Do you have any examples of that?

Ms. PINSON. Yes, we do have a very robust mentoring program.

I mean, the Mentor Protege Program within DOD is assigned to assist there. SBA has a surety bond guarantee program, but I think

the limits are very, very low on that program. So, I would ask that

you take another look at that program to see if that program could

be adjusted to assist.

Unfortunately, the projects that we are building are upwards of $50 million, $100 million, $200 million, $300 million in the Corps

of Engineers, because they are hospitals, they are barracks, they

are dining facilities, operation and maintenance, things of that nature. So, they are very big projects, but I do believe that the

partnering will help. But, the surety bond industry I think needs

to come on as a partner.

Mr. CLAY. Wait a minute, now.

Ms. PINSON. Yes, sir.

Mr. CLAY. I mean, in all due respect, what about breaking these

projects up? They do them in other areas now? I mean, you have

set up some real barriers here that don’t help small business.

Where does the sensitivity come in on your part to realize that we

have to tackle this in a way that is not conventional with the way

maybe you all do business, but actually attack this and say, ‘‘let’s

be creative, let’s do this a different way so we get more involvement.’’ When does that occur?

83

Ms. PINSON. That is definitely under consideration, but, unfortu- nately, you can’t break a hospital up. We are spending $600 million

to build a new hospital at Fort Meade, so that is one building that

is costing $600 million. However, the infrastructure surrounding

the building, the parking, things of that nature, that can be broken

out, but the large structure itself cannot. But, there are tremendous subcontracting opportunities that are afforded, substantial

goals, 70 percent in some instances, for small businesses, and then

it is broken out by minority—women, HUBZone, things of that nature.

But, there are some projects that just cannot be broken out, but

I fight every day to unbundle, to unconsolidate. Every day I fight

for that, and I do make progress. But, there are some instances

where the economies of scale just say we need to consolidate, because we don’t have the administrative resources to administer

multiple contracts.

I am just telling you what they tell me.

Mr. CLAY. Mr. Foreman, anything to add?

Mr. FOREMAN. Within the Department of the Navy, BRAC really

isn’t a bundling issue, even when you do the reallocation, because

these aren’t things that we bought before. These are one-time

things commanded by Congress in compliance. The example that

we have, and the only one that really is local, is the Bethesda

build-out of their hospital, where we are adding 800,000 square

feet or, if you will, revamping that hospital.

There are two phases to that. It is $800 million for phase one,

$300 million for phase two. There is probably going to be—we have

both solicitations on the street. We looked at local firms first, as

is required by DEFARs Part 26, and it looks like they are going

to go out unrestricted for the baseline.

The problem you have in Bethesda is that the hospital is surrounded by a huge community, a wealthy community—by the way,

that doesn’t help you when you go to do stuff; they want it done

quickly with the least amount of disruption. We understand that,

and we concur with that. We are very sensitive to it, and we are

very sensitive to the things they are bringing to that hospital, all

the neurological things that they are bringing. And, I have it in my

statement, all the various things. I should have added on. I didn’t

know about the phase two, but the phase two is a huge parking

lot they are going to put in. But, it is like an orchestra; you have

to have somebody there who orchestrates everything so that things

happen on time so that you can get in and get out.

Mr. CLAY. OK, let me ask my final question. My time is running

out.

Mr. Weidman, he talked about a woman-owned disabled veteran

in St. Louis that cannot get any work. Could I get both of you all

to look at her situation?

Ms. PINSON. Sure.

Mr. FOREMAN. Yes. We would be happy to.

Mr. CLAY. The St. Louis community has been hit hard by BRAC,

and I am sure you are about to give out some contracts in that region, probably both of you. Would you all take a look at that situation for us and report back?

Ms. PINSON. Absolutely.

84

Mr. FOREMAN. Be happy to.

Ms. PINSON. Sir, can I just mention one thing?

Mr. CLAY. Sure.

Ms. PINSON. You asked me what can we do, and this is very critical. There is a law called the Comprehensive Demonstration Program, and it precludes DOD from setting aside contracts for construction for small businesses if DOD does 40 percent or more.

Now, DOD is below 40 percent right now, so we are looking at

turning on the ability of Army, in particular, but DOD to do

setasides in construction. That has tied our hands for probably over

15 years now. We cannot do small business setasides for construction by law.

Mr. CLAY. OK.

Mr. TOWNS. Thank you very much.

We have been joined by Congressman Elijah Cummings from the

State of Maryland. At this time we will recognize him.

Mr. CUMMINGS. Thank you very much, Mr. Chairman. I thank

you for holding this hearing.

To our witnesses, Maryland is the home to one of the country’s

most diverse business communities. According to the Department

of Commerce, of the nearly half million firms in Maryland. 140,000

are women-owned, African-American firms are at 70,000, Hispanic

firms 15,000, and Asian-owned stand at about 26,000. More importantly, due to the State’s close proximity to Washington, DC, the

majority of these firms already do business with the Federal Government. As such, these firms are better prepared for the work involved in the BRAC-related business. They are more involved than

perhaps their counterparts—better prepared, rather.

I just want to know what steps has the agency taken to actively

seek out these local businesses to inform them of the BRAC contracting opportunities and what have been the results to date?

And, I want to make sure that whatever efforts are taking place,

that they are effective and efficient, and not just some window

dressing. And, I am not trying to accuse you of window dressing.

It is just that I have been in this business a long time, and I have

seen a lot of motion, commotion, and emotion, and no results in

many instances.

And, as I tell my contractors, when I meet with them every

month, I have been around long enough now to see minority and

women-owned business, people who work hard, give it their very

best, bang on the doors, go to conferences, submit proposals, respond to proposals, give their blood, sweat, and tears get very little

of anything. Now that I have lived long enough, I see them die on

the battlefield, so I am trying to figure out exactly what we are

doing to reach out to them, and what we are doing that is meaningful.

A lot of times, what they find is that they meet with people at

these events, and then when they call, they have to go through

about 73 different numbers with answering machines. And, these

are small businesses, they don’t have that kind of time.

I think the thing that upsets me is—my mom, who was a former

sharecropper, used to say that a lot of people, when they are just

on the verge of victory, they give up. In this instance, I think a lot

of them are not on the verge of victory, and they give up. So, the

85

opportunities are supposed to be there, the brochures look good,

but that is not bringing any money into the firm. I am just wondering what you all have to say about that?

Ms. PINSON. Well, if I could tell you about our outreach efforts. The Army did about $7.5 billion with minority businesses in fiscal

year 2007, and I encourage the acquisition community to do substantive market research. That is really the only way we can ascertain capability out there, to decide if we should put something

under the 8(a) program or we should do a HUBZone setaside or

service-disabled veteran. So, we go out with what we call a sources

sought, saying, ‘‘we are looking for sources to do this work. Please

come back and respond to us and tell us if you can do the work.’’

Now, I think we are getting more and more responses back. People realize we are serious, because the results of that market research are going to determine what the acquisition strategy will be.

So, we encourage—because we do a lot of sources sought—we encourage companies to go out.

In addition to that, we do a number of outreach events. We have

the one in Upper Marlboro, which you have been at, I believe, before.

Mr. CUMMINGS. Yes.

Ms. PINSON. The OSDBU directors, we participate in that. There

was a BRAC conference just this week. Mr. Foreman and I just decided that we are going to do a specific BRAC outreach initiative

for Maryland and Virginia. We think that is necessary. Outreach

is key and, yes, people may not get a call back right away. Unfortunately, our staffs are very slim and we get a lot of companies that

come in, but we just have to beef up the market research and beef

up the outreach, in my mind.

Mr. FOREMAN. From the Navy’s standpoint, I spent more time in

Maryland than I have in any other State. I will be on my third trip.

Now we have NAVAIR, which is located at Pax River in Maryland,

and I will be going to Upper Marlboro too. I have done one conference down at Pax River. I have another one, a service-disabled

veteran-owned program. They are our service-disabled veteranowned small business champion and, of course, we push these

things on to various commands not because they are fully capable.

They have a product mix that is not very good. Buying aircraft is

a lousy product mix, but they have a lot of technology that is fascinating, and I think one of the ways you buildup the small businesses is give them a bite at the apple in those little areas. And,

they can work their way in, so we have the Marine Corps, which

does a lot of supply stuff. They are also a champion.

But, I have been to Congressman Bartlett’s conference. This will

be my second one down at NAVAIR this month. I plan to go to the

one in Upper Marlboro, and my office is very small. I am one of

four staff members, and I have taken the lead role as being the advocate for service-disabled veterans. I get the phone calls. I talk to

the people. I walk them through the process.

Mr. CUMMINGS. Thank you, Mr. Chairman.

Mr. TOWNS. Thank you, Congressman Cummings.

We get a lot of complaints from contractors, people who are trying to do business with the Government. However, there are currently few protections in place for small firms working on subVerDate 11-MAY-2000 11:59 Nov 21, 2008 Jkt 000000 PO 00000 Frm 00089 Fmt 6633 Sfmt 6633 C:\DOCS\45291.TXT KATIE PsN: KATIE
86

contracts. More often than not, subcontractors only play a role in

helping the prime contractor to actually attain the contract, and

they never end up seeing the work at the end of the day. There are

no enforcements in place that require prime contractors to actually

give the work to the subcontractor once the contract has been

awarded.

What procedures are used by your individual departments for reviewing subcontractor compliances? And, how are they dealt with

when you know that they are violated, they are not following

through?

Ms. PINSON. Well, we monitor the performance of the primes.

They are required to submit reports on a quarterly basis in terms

of how they are meeting their goals, and if they are not meeting

their goals, we do have the ability to issue cure notices, which

means tell us why we shouldn’t terminate this contract. And, then

we——

Mr. TOWNS. How often do you do that?

Ms. PINSON. Sir, I couldn’t tell you how often we do it, but we

probably don’t do it as much as we should. I am not in the contracting process, so I am not a contracting officer. That would be

issued by a contracting officer.

Mr. TOWNS. I understand that, but you have access to the material. You are in a very responsible position. Let’s face it, now, you

two can do a lot of good, and I need to further add that you can

do a lot of harm. So, that is the reason why we are really having

this discussion here this morning.

I want to work with you. If it is more staff, we want to work with

you to get more staff. Whatever is needed to fix this, we want you

to sort of share with us. I understand government. I have been in

it 40 some years, so I definitely understand. So, the point I am saying to you is, we want to have a sort of open dialog here, and we

want to fix this. Some people need help, and I think you are in a

position to do some good, a lot of good, both of you.

Ms. PINSON. Right. We have an agency that is dedicated to subcontracting compliance, the Defense Contract Management Agency.

That is all they do, is monitor the compliance of our major primes,

and I think they do a good job. I mean, they work with SBA. They

rate these companies. They monitor these companies. That is one

area that companies do not complain to me about, and that is I

didn’t get any work from the prime. If I knew about it, then I could

go and take a look at that particular prime to see what is going

on. But, we have compliance processes in place, but I don’t hear a

lot of complaints.

Mr. FOREMAN. One of the most interesting things, people who

come to work directly with anybody in the Department of Defense—within the Navy specifically, but it applies to everybody—

generally, we find they come through the subcontracting arena. I

mean, that is how they get their introduction into posts, camps,

and stations, and various procurement opportunities.

One of the unique things that the Navy has done in Bethesda,

we went out, we said, ‘‘here are the minimum goals required in

your solicitation.’’ That is one of the areas we rate you in order to

get the award, so the major prime who gets it, they have to do 35

percent with small, 15 percent with small disadvantaged business,

87

9 percent for HUBZone, 10 for women-owned business, 3 for service-disabled, and 3 for just veterans.

Mr. TOWNS. And if they don’t, Mr. Foreman? If they don’t?

Mr. FOREMAN. If they don’t, then they are subject to what we call

liquidated damages, the most horrendous one, which is hardly ever

used, but it will go into past performance. We now have an automatic system on past performance, and that would grade them

down. We are no longer going to say you provide us your past performance evaluations, and we will go back and check them. And,

they only give you the good ones, of course. This will give us a system. It is starting to be in place now, and that should be a real

nice tool in the future. So, you can see it and I can see it. We can

both see who the non-performers are.

Mr. TOWNS. I raise this because we are getting complaints, and

I am afraid that if something is not done, people stop complaining,

and that is my concern. I mean, I can point out all kinds of situations and circumstances where that has occurred, where, if nobody

is doing anything, why would I say anything? And, people get to

that point, and I am just sort of concerned that this is not happening here.

At this point, let me yield to my colleague for his last round.

Congressman Cummings, do you have anything further?

Mr. CUMMINGS. Yes, just one question. Just a few questions.

Sometimes we sit here and we ask you questions, and a lot of

times, the people that we ask questions to don’t have the power.

And, it is a dilemma because, on the one hand, you don’t want to

say things that, if somebody saw you on C–SPAN, you would get

fired, but, on the other hand, it creates a problem for us, because

if you can’t get things done, that is a problem. Do you all feel like

you have the authority that you need to do what you need to do?

I just throw you the lemon, and then I set you up to fall in it. I

am sorry.

Ms. PINSON. I think, based on the role that we play, we are

facilitators. Our job is to ensure that the Army is a favorable climate for doing business with small business, and I think we are.

Mr. CUMMINGS. OK.

Ms. PINSON. We awarded $23 billion to small businesses, 24 percent. I don’t have the power to award a contract. No, I do not. I

don’t have the power to put liquidated damages on a prime. I don’t

have that authority. I do not, but I think I have substantial influence over the process to make our acquisition community respond

to the mandates of the law and the regulations.

Mr. CUMMINGS. You, Mr. Foreman, mentioned the liquidated

damages, and you said it is rarely used. That is supposed to be, I

guess, the tool for enforcement, is that right?

Mr. FOREMAN. It is one of the tools, sir, but some of the problems

they go—I should say challenges. In order to utilize the way it was

written in statute—and, basically, I worked the FAR case that developed this—and we cop out a lot. We just use congressional language when in fact we are not quite sure where we are going with

this—you have a requirement and you are supposed to do X, and

you are trying to frustrate that plan. You have a small business

liaison officer who has been dead for 10 years. We will just use that

as an example.

88

And, we issue a show cause letter. We say, ‘‘you have a problem.

Fix this problem; you are not making your goals. We are going to

come back at you.’’ Well, they can either do nothing, which the

show cause letter is good, or they can answer stupidly like, ‘‘well,

we have now brought in this new anal trainer who is going to take

over this program,’’ something crazy or they will respond correctly.

Generally, they take care of some of those issues. If they miss the

goal, you can only assess that at the very end of the contract, so

the contract is over. So, the reward for the contracting officer to

pursue liquidated damages—and he can do it unilaterally—he will

be in court for a long while.

Mr. CUMMINGS. I get the point. I get the point. In other words,

it is a toothless tiger.

Mr. FOREMAN. You got it.

Mr. CUMMINGS. OK. So are there any other tools?

Mr. FOREMAN. Any other? I’m sorry.

Mr. CUMMINGS. Tools, tools. In other words, enforcement tools.

Mr. FOREMAN. With the subcontracting thing, we do a lot of

things, even though we don’t maybe utilize liquidated damages.

Sometimes we twist the arm and say, ‘‘why don’t you hold a conference, Mr. Contractor, and I want you to bring in all these service-disabled veterans and sit down with your engineering folks.’’

And, that has been somewhat successful as an understated tool,

but it is one that can be utilized.

The best tool we have is leadership, to bring energy to the process, to identify those challenges. I sent out a memorandum recently

to our acquisition folks and service-disabled veterans, and I went

through what the Assistant Secretary of Navy, RD&A, research,

development and acquisition, to the procurement community saying, ‘‘this is very important to us.’’ Another thing we have to constantly do is teach——

Mr. CUMMINGS. OK, I am going to have to cut you off, unfortunately, because I am running out of time, because I want to get to

this. Talk about the enhanced use leases, because I am very concerned about them. It seems to me that one way to get these businesses in the process and give them an opportunity is to give them

opportunities to these leases, and I am just wondering, what are

we doing with regard to making sure that these disadvantaged

businesses get these opportunities?

I know other businesses are getting them, and it gives them a

leg up to accomplish a lot of things, and it just seems to me—I

wonder, do we have any provisions anywhere to make sure that

they get their share? Do we have a document that tracks those enhanced use leases? What is the deal there? And it seems to be everincreasing.

Ms. PINSON. Sir, I can speak to my colleague that we are really

not that familiar with that process.

Mr. CUMMINGS. Oh, OK.

Ms. PINSON. But it sounds similar to what we did with the privatization program, military housing privatization, where we got a

developer to come in. We did not pay them a contract price; they

put all their money up front. And that was not your traditional

Federal acquisition regulation contract, which this sounds like it is

not.

89

Notwithstanding, under the Residential Community Initiative

Program, we still required that developer to develop goals for doing

business with the local communities and with small businesses. So

it sounds somewhat analogous to that, but I think Tim and I both

will go back and take a look at that, because if we have a partnership with a developer to build something on a military property,

then they should have some goals.

Mr. CUMMINGS. Well, what I will do is I will submit some written

questions, and if you will followup on them, I would really appreciate it.

Ms. PINSON. Yes, we will.

Mr. CUMMINGS. Mr. Chairman, again, I thank you.

Mr. TOWNS. Thank you very much.

Ms. PINSON. May I just add, too? We need to incentivize the

primes. Unfortunately, you get more flies with honey than you do

with vinegar. And, a lot of times, when we put incentives, monetary incentives, on the contract to have them exceed their goals, it

happens, and we are using those incentives more and more.

Mr. TOWNS. First of all, let me thank both of you for coming and

testifying. I know the question was asked about your power, but I

am not going to deal with that. But, I would like for you to let

whomever that you should let know that Congressman Towns is a

nice person, but we are about to wear out his patience. I think you

should let them know that.

In many instances, we are dealing with veterans, people who

served this country honorably, and they are being disrespected.

That, to me, is wrong, and I want you to know that I am going to

stay here. I am going to stay on this. I am not going to go away,

and the last time I got 90 percent of the vote, so I might get reelected, OK? [Laughter.]

So I want to let you know that. Thank you very much for coming

today.

[Whereupon, at 12:10 p.m., the subcommittee was adjourned.]

Æ