Leveling the Playing Field: The State of Small Business Contracting (House Small Business subcommittee hearing, May 11, 2023)

Summary

Transcript of a May 11, 2023 hearing of the House Small Business Subcommittee on Contracting and Infrastructure, Small Business Committee Document Number 118-012, on the state of small business contracting. Chairman Nick LaLota presided from 2:00 p.m. to 3:15 p.m., with Hillary Scholten as ranking member. Witnesses were Robert Schroder of SteerBridge, Jackie Ferrari of American Fashion Network and Jacqueline K. Lopez of Premier Enterprise Solutions. Added material came from GovEvolve, GovSmart, Inc., Ho-Chunk Incorporated, the HUBZone Contractors National Council and the Montgomery County Chamber of Commerce. A witness urged ending self-certification for veteran-owned firms.

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“Leveling the Playing Field: The State of Small Business Contracting (House Small Business subcommittee hearing, May 11, 2023).” Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/leveling-the-playing-field-the-state-of-small-business-contracting-hou-4d65f7be01/, SHA-256 b76dd25b0bdf536234fe316e96a48e3e887420fd1282fe5a16a817c303b97fea.

Full text

LEVELING THE PLAYING FIELD: THE STATE OF
SMALL BUSINESS CONTRACTING

HEARING
BEFORE THE

SUBCOMMITTEE ON CONTRACTING AND
INNOVATION
OF THE

COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION

HEARING HELD
MAY 11, 2023

Small Business Committee Document Number 118–012
Available via the GPO Website: www.govinfo.gov

U.S. GOVERNMENT PUBLISHING OFFICE
52–169 WASHINGTON : 2023
HOUSE COMMITTEE ON SMALL BUSINESS
ROGER WILLIAMS, Texas, Chairman
BLAINE LUETKEMEYER, Missouri
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
BETH VAN DUYNE, Texas
MARIA SALAZAR, Florida
TRACEY MANN, Kansas
JAKE ELLZEY, Texas
MARC MOLINARO, New York
MARK ALFORD, Missouri
ELI CRANE, Arizona
AARON BEAN, Florida
WESLEY HUNT, Texas
NICK LALOTA, New York
NYDIA VELÁZQUEZ, New York, Ranking Member
JARED GOLDEN, Maine
KWEISI MFUME, Maryland
DEAN PHILLIPS, Minnesota
GREG LANDSMAN, Ohio
MORGAN MCGARVEY, Kentucky
MARIE GLUESENKAMP PEREZ, Washington
HILLARY SCHOLTEN, Michigan
SHRI THANEDAR, Michigan
JUDY CHU, California
SHARICE DAVIDS, Kansas
CHRIS PAPPAS, New Hampshire

BEN JOHNSON, Majority Staff Director
MELISSA JUNG, Minority Staff Director

(II)
CONTENTS
OPENING STATEMENTS
Page
Hon. Nick Lalota ...................................................................................................... 1
Hon. Hillary Scholten .............................................................................................. 2

WITNESSES
Mr. Robert Schroder, Founder and Managing Partner, SteerBridge, Vienna,
VA .......................................................................................................................... 5
Ms. Jackie Ferrari, Founder and Chief Executive Officer, American Fashion
Network, East Syracuse, NY ............................................................................... 7
Ms. Jacqueline K. Lopez, President, Premier Enterprise Solutions, Upper
Marlboro, MD ....................................................................................................... 8

APPENDIX
Prepared Statements:
Mr. Robert Schroder, Founder and Managing Partner, SteerBridge, Vi-
enna, VA ........................................................................................................ 24
Ms. Jackie Ferrari, Founder and Chief Executive Officer, American Fash-
ion Network, East Syracuse, NY ................................................................. 29
Ms. Jacqueline K. Lopez, President, Premier Enterprise Solutions, Upper
Marlboro, MD ................................................................................................ 34
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
GovEvolve .......................................................................................................... 38
GovSmart, Inc. .................................................................................................. 46
Ho-Chunk Incorporated ................................................................................... 51
HUBZone Contractors National Council ........................................................ 55
The Montgomery County Chamber of Commerce (MCCC) ........................... 60

(III)
LEVELING THE PLAYING FIELD: THE STATE
OF SMALL BUSINESS CONTRACTING

THURSDAY, MAY 11, 2023

HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
SUBCOMMITTEE ON CONTRACTING AND INFRASTRUCTURE,
Washington, DC.
The Subcommittee met, pursuant to call, at 2:00 p.m., in Room
2360 of the Rayburn House Office Building, Hon. Nick LaLota
[chairman of the Subcommittee] presiding.
Present: Representatives LaLota, Molinaro, Bean, McGarvey,
Scholten, and Thanedar.
Also Present: Representative Williams.
Chairman LALOTA. Good afternoon, everyone. I now call the
Subcommittee on Contracting and Infrastructure to order.
Without objection, the Chair is authorized to declare a recess of
the Committee at any time.
The Committee is here today to hear testimony from three small
business owners engaged in federal procurement. And
I now recognize myself for my opening statement.
Good afternoon, again, and welcome to today’s hearing. First, I
want to thank our witnesses for being here today and joining us.
Your time here is very much appreciated and I look forward to
hearing your testimonies.
Today, the Subcommittee on Contracting and Infrastructure will
focus on several critical issues facing Main Street America. We
must address the alarming decline in small business federal pro-
curement. Small businesses eligible to contract with the federal
government declined by nearly 40 percent from 2010 to 2019 and
new businesses entering the procurement marketplace declined by
79 percent from 2005 through 2019. Members of this Committee
from both sides of the aisle understand the crucial role small busi-
nesses play in increasing competition, innovation, and stimulating
our economy, and yet, they have been systematically squeezed out
of our federal contracting for decades.
This decline is exacerbated by the Biden administration steering
our economy and national security in the wrong direction. At a
time when the country needs a robust defense industrial base,
small businesses are getting pushed out of government contracts in
this space.
It is also crucial that we ensure small business contracting goals
are accurately reported by the government. As we have seen in
countless cases, the government does not have a true representa-
tion of small businesses in contracting. For example, contracting
(1)
2

methods like the SBA’s SCORE card portray inaccurate assess-
ments by allowing things like double counting which leads to in-
flated numbers.
Finally, we must examine the effects of ineligible firms by re-
evaluating issues such as self-certification. Just like any small
business program across the federal government, we must ensure
structure and guidance is in place to ensure firms are accurately
represented. Fraud is rampant in these self-certification problems,
and yet, the Biden administration seeks to expand rather than cor-
rect these actions. Our goal on this Committee is to create a path-
way for small businesses to succeed. We understand the value and
substance that make up each of these businesses in our hometowns
and vow to continue to advocate for their successes.
In my district, Long Island is home to so many incredible small
businesses and hardworking entrepreneurs who serve our commu-
nity and provide exceptional goods and services. When traveling
around the district, I hear each of these small businesses about the
issues they are facing and the actions we can take in Congress to
provide a better future for main street.
Small business contractors play a vital role in America’s indus-
trial base and national security apparatus. Your real world experi-
ences will help the Committee work to make meaningful improve-
ments to ensure small businesses are fully utilized in the federal
procurement marketplace. It is my fear that the decline of small
business contracting will continue until steps are taken to improve
competition and accuracy, and accurately report on the true status
of the state of small businesses in federal procurement.
Thanks again for joining us today. And I am looking forward to
the conversation ahead.
With that, I yield to my distinguished colleague, the Ranking
Member from Michigan, Ms. Scholten for her opening remarks.
Ms. SCHOLTEN. Thank you, Mr. Chairman, for holding today’s
important hearing. Thank you so much to our witnesses for taking
time out of your busy days to come and share your experience.
The federal government is spending almost half a trillion dollars
annually on the purchase of goods and services for its needed daily
operation. In Fiscal Year 2021, 6.5 billion in defense contracting
dollars were spent in Michigan alone. At least 359 million of those
dollars were spent in my district. This money brings well-paying
jobs to West Michigan and stimulates local economies.
The U.S. Government remains a consistent and reliable client.
Yet, the federal marketplace is a hard space to break into, espe-
cially for small businesses. Recognizing the need for a diverse mar-
ket, Congress included goals for small business participation in fed-
eral procurement and created a variety of contracting programs to
help small firms compete in that marketplace. The SBA plays a
vital role in this process.
The SBA works with agencies to help them meet the small busi-
ness goals. It also implements and oversees programs used by
many small firms to start contracting with the federal government,
and they have been successful in these tasks.
In recent years, the government has consistently surpassed the
small business goal, allowing the government to receive quality
goods and services at competitive prices and strengthen its indus-
3

trial base. The SBA also plays an important role in ensuring that
small businesses owned by women, veterans, and economically dis-
advantaged individuals are able to compete in the federal procure-
ment space.
However, there is always room for improvement, and it is the
role of this Committee to make sure that the SBA is doing the best
it can. Oversight is a critical component of this and the hearing
today will help us to help the SBA do the best job that it can.
The government as a whole and some agencies have failed to
meet all of the small business participation and several individual
goals, such as women-owned small business. These failures de-
prived small businesses of billions in contracting dollars. Addition-
ally, the Committee has seen the average contract size increasing.
On first take, this appears to be promising as larger contracts may
be more profitable for small business companies. However, it might
suggest that more contracts are being consolidated, resulting in
fewer opportunities for small businesses.
I am particularly interested in the witnesses’ perspective today
on this issue. The ability of small businesses to compete in the fed-
eral marketplace has also been adversely affected by the lack of
staff in critical roles.
Sadly, there are openings in the roles of procuring center rep-
resentatives and commercial marketplace representatives over-
seeing millions of contracting actions. Small businesses cannot be
adequately advocated for with such few Members promoting their
use and ensuring that agencies are following the small business
set-side procedures.
Lastly, the government steps, such as developing and imple-
menting category management to deliver savings to federal agen-
cies and eliminating unnecessary redundancies. Yet, the approach
has also contributed to a decrease in the small business industrial
base. I welcome discussion like today so we can identify the many
factors challenging our small business contractors and develop
thoughtful actions together.
What is important for this Committee to keep in mind is that
these developments are part of a bigger picture, which is that the
federal procurement marketplace is always evolving. Small firms
bring new ideas to the table which in turn generate new jobs and
even new industries. We must take steps to ensure that they can
access the federal marketplace. I thank all of the witnesses for
being here today, and I yield back the remainder of my time.
Chairman LALOTA. Thank you.
I now yield to the Chairman of the Full Committee, the gen-
tleman from Texas, Mr. Williams, for his brief opening remarks.
Mr. WILLIAMS. Thank you very much. And you heard him say
brief, so they will be brief, Chairman.
I want to say again thanks to our witnesses. It is good to be able
to say hello to you and visit with you. And I want to thank my col-
league, Chairman LaLota for holding today’s Subcommittee hearing
that will highlight the current state of small business contracting,
and as I have said earlier, I am a small business also and very fa-
miliar with some of these problems.
Small business plays a vital role in America’s industrial base and
national security apparatus. As we saw during the pandemic, it is
4

detrimental when our country is too relied on other nations to
source goods that keep America moving. The government con-
tracting system helps solve this problem. The sides for the small
businesses keep key opportunities available to build out our indus-
trial base and diversify our supply chains. Unfortunately, the num-
ber of small businesses contracting with the federal government
has been decreasing for the last decade, and this is not a missed
opportunity for small businesses to expand their business oper-
ations but also weakening the overall economy. I hope that this
hearing will begin to shine light on these problems and will help
guide us to find solutions to strengthen or solve business contrac-
tors.
So with that, Mr. Chairman, I appreciate, again, you calling this
hearing and I yield back.
Chairman LALOTA. Thank you, Chairman. I will now introduce
our witnesses.
Our first witness here today with us is Mr. Rob Schroder. Mr.
Schroder is a 1993 graduate of the finest of our nation’s service
academies, the Naval Academy in Annapolis and he is a retired
Marine Corps harrier pilot. After the Marines, Mr. Schroder found-
ed SteerBridge, a veteran-run company that provides technological
and professional run services to the U.S. Government and private
entities. Mr. Schroder prides himself on having a special emphasis
on elevating the stature of veterans in the private sector by inte-
grating their experience into federal projects. Rob lends his oper-
ational, congressional, and acquisition expertise developed in the
Marine Corps with his management success while at the U.S.
Chamber of Commerce to deliver effective results for SteerBridge
customers. Mr. Schroder also holds master’s degrees from the In-
dustrial College of the Armed Forces, the Marine Corps University,
and the Indiana University Kelly School of Business. Mr. Schroder,
sir, thank you for your service to our country and for being here
today. We look forward to the conversation ahead.
Our next witness is Ms. Jackie Ferrari. Ms. Ferrari is the found-
er and CEO of American Fashion Network located in Syracuse,
New York. In 2005, Ms. Ferrari built AFN to be a trusted apparel
supplier to major retail brands and small businesses across the
country. AFN serves their partners with trend right apparel from
manufacturers across the globe and prides themselves on being a
reliable federal contractor. Ms. Ferrari graduated from the Univer-
sity of Arizona where she studied journalism and then went into
apparel design and manufacturing. Ms. Ferrari, thank you for
being here today and we look forward to the conversation ahead.
I now recognize my colleague, Representative Scholten to briefly
introduce their constituent who is before us today.
Ms. SCHOLTEN. Sadly, not a constituent though. I wish that we
could claim her. We are happy to have our witness, Ms. Jackie
Lopez with us here today. Thank you, Mr. Chairman.
It is my pleasure to introduce our final witness, Jackie Lopez.
Ms. Lopez is the president of Premier Enterprise Solutions, a com-
pany specializing in cybersecurity, information technology, and pro-
gram management. Premier is a service-disabled, veteran-owned,
and women-owned small business participating in the SBA 8(a) de-
velopment program. She cofounded Premier in 2012 after serving
5

in the Air Force. And we thank you for your service. Prior to her
time in the military, Ms. Lopez served as the director of Defense
Department programs at the GSA Federal Systems and Integration
Center where she oversaw the acquisition and management of
large-scale enterprise information technology contracts. Jackie re-
ceived her BS from the University of Southern Missouri and stud-
ied business administration as a post-graduate at Embry Riddle
Aeronautical University. She is a graduate of the VA Women, Vet-
eran-Owned Small Business Initiative, an ACTIAC fellow, and an
active Member of the Women Impacting Public Policy. Ms. Lopez
is also a graduate of the Veterans Institute for Procurement, Grow,
and VIP Advanced Programs and he SBA’s Emerging Leaders pro-
gram. I am thrilled to have you here today, Ms. Lopez, and look
forward to your testimony. Thank you so much for being here.
Chairman LALOTA. And once again, thank you to all of our wit-
nesses for being here today.
I now recognize Mr. Rob Schroder for his 5-minute opening re-
marks.

STATEMENTS OF ROB SCHRODER, FOUNDER AND MANAGING
PARTNER, STEERBRIDGE; JACKIE FERRARI, FOUNDER &
CEO, AMERICAN FASHION NETWORK; JACQUELINE K.
LOPEZ; PRESIDENT,PREMIER ENTERPRISE SOLUTIONS.

STATEMENT OF ROB SCHRODER
Mr. SCHRODER. Chairman LaLota, Ranking Member Scholten,
Chairman Williams who recently just left, and distinguished Mem-
bers of the Subcommittee. Thank you for inviting me to appear be-
fore you to discuss the importance of small business in the federal
procurement, a system and how this legislative body can help to se-
cure government agencies are fully engaging and utilizing these
vital partners.
My name is Rob Schroder. As mentioned, I am the founder of
SteerBridge, a government services provider and a Service-Dis-
abled, Veteran-Owned Small Business. Our company specializes in
delivering best in class solutions to the federal government.
As mentioned, I graduated from the Naval Academy. I had a ca-
reer with the Marine Corps, where I also served not only as a har-
rier pilot but as an acquisition professional. So I got to see this
from the government side.
Following that career, I spent time at the U.S. Chamber of Com-
merce as the vice president of International where it is there that
I learned the true value that the private sector can provide to the
federal government.
I launched SteerBridge with two goals in mind. One, supporting
the veteran community, while providing top tier technology solu-
tions for the federal government. I knew from my career that the
best and most underutilized talent in the country can be found
right here in our veteran community. I wanted to showcase and le-
verage that talent, acknowledge, and expertise that is largely un-
derutilized.
Secondly, I had a deep personal knowledge of the critical need to
modernize and make private sector solutions available for the fed-
6

eral government. Being part of the solution to these issues for the
government is the focus of SteerBridge.
Currently, I am very proud of our work to help modernize the GI
bill at the VA.
Alongside our VA partners and as a subcontractor to Accenture,
we have taken a 30-day GI bill approval process and turned it into
a 3 second button click. This has been a huge win for the VA, but
more importantly it has been a big win for our veterans. And more
importantly, it also shows what a small business is able to do
working alongside our government partners. Speed, agility, and
mission focuses, our advantages of not just SteerBridge but our
small business peers in the industry.
We recently are working on an innovative solution and
groundbreaking work utilizing artificial intelligence and machine
learning for the Marine Corps. This shows the vital advantages
that we can provide to one of our best customers. We are applying
these advanced techniques to better supply the F35 on deploy-
ments. We have been successful in this contract because we are
agile, we are flexible, and we are innovative at a speed only a com-
pany of our size, absent a big bureaucracy can accomplish.
While the federal government, including Congress, has spent a
lot of time advocating or small businesses, those efforts many times
come up short. Even though Congress sets well-intentioned goals
for agencies to hire small businesses, the fact is that it has not re-
sulted in more small businesses winning the government’s busi-
nesses. For goals and good intentions to be effective, they must
have teeth to them.
Instead of the government creating small business goals, I would
implore this Subcommittee to consider legislation that outlines spe-
cific requirements for small business contracting. Taking this route
will be more effective than advocacy and ultimately, less costly for
the government.
SteerBridge deep values the partnerships we have cultivated
with large businesses and the expertise we have gained by working
as subcontractors is invaluable. And let’s be clear; there is an abso-
lute need for the value that big business brings to the federal gov-
ernment. But as I look forward to discussing with you further
today, it is in the best interest of the United States Government
and the industrial base to have more small businesses engaging
with the government and delivering be spoke and ‘‘best in class’’ so-
lutions that are difficult to find at a large company.
For Congress to truly level the playing field I would implore you
to consider the following:
Completely eliminate the Mentor-Protégé Joint Ventures (MPJV)
program. The program was created with all the best intentions but
has been warped into simply being a path for big business to drive
revenue under a small business banner. Additionally, MPJVs result
in never-ending protests, confusion, and hampering the govern-
ment’s ability to modernize.
Second, require a specific certification process for subcontracting.
While eliminating self-certification for SBA set-aside programs, but
not reporting, was addressed in the most recent NDAA. There con-
tinue to be loopholes and delays that allow companies to misrepre-
sent their ownership.
7

Third, clean up SBA’s government-wide contract reporting. Con-
gress should consider passing a policy that allows agencies to only
count their contract spending against one category for a small busi-
ness.
By bringing smaller and innovative companies further into the
federal government, we will ensure the United States is leveraging
the best of what small businesses have to offer. While increasing
competition for contracts, which will lead to better prices for the
American taxpayer.
Thank you, and I look forward to taking your questions and dis-
cussing the importance of small business in the federal govern-
ment.
Chairman LALOTA. Thank you.
I now recognize Ms. Jackie Ferrari for her 5-minute opening re-
marks.
STATEMENT OF JACKIE FERRARI
Ms. FERRARI. Chair LaLota, Ranking Member Scholten, and
Members of the Subcommittee, it is an honor to appear before you
today.
My name is Jackie Ferrari, and I am the founder and CEO of
American Fashion Network, a women-owned small business based
in Syracuse, New York. I am also a Member of the Women’s Pro-
curement Circle, which advocates for policies that strengthen
women-owned companies that do business with the federal govern-
ment.
Over the last decade, I have seen first-hand how congressional
and presidential attention to domestic manufacturing policies can
significantly benefit small businesses like mine. I am particularly
pleased that this seems to be, at least from where I am sitting, a
bipartisan effort.
It has always been my goal to keep manufacturing in the United
States. Born and raised in Los Angeles County, California, I was
able to experience the glory of American made products in the
1970s and 1980s before many of the jobs moved overseas.
Together with the U.S. Government, I believe we can keep Amer-
ican manufacturing alive. I founded AFN in 2005 and we have
since grown into a full manufacturing enterprise providing cloth-
ing, fabric, and promotional specialty products to the world’s most
prestigious retailers, corporations, and now the federal government,
which happens to be my favorite customer.
At the beginning of the COVID-19 pandemic, AFN made the de-
cision to pursue federal work as we watched the retail industry suf-
fer under economic strain of lockdowns. When millions of dollars in
sales were canceled, I knew I had to pivot to keep my business and
employees afloat. We began producing masks, COVID-19 protection
from design to shipping in just 5 days.
Policies like Buy American encouraged domestic preferences and
small business participation that allow my business to thrive. Fed-
eral contracting opportunities give small businesses the prospect
for security and long-term stability which is important in the ap-
parel industry where there is a constant ebb and flow of business.
In 2021, AFN won a $52 million contract to produce a new line
of fitness training uniforms for service members. I cannot express
8

enough how grateful and proud I am for the opportunity to provide
garments for the U.S. military personnel. This gave me the ability
to hire five additional employees at our headquarters, keep 70
workers in California and 56 workers in Mississippi employed with
a workforce of 76 women waiting to work there if we have the busi-
ness to give them, largely single mothers.
This contract does not come without its challenges. We anxiously
wait for the contract to kick in after 2 years of delays. Speaking
to my peers across industry, I know delays are commonplace. As
a small business, they are also difficult to manage. To date, we
have provided two wear tests and a total of 300 samples, all using
AFN’s resources. For apparel designers and manufacturers, delays
disrupt our supply chain because we cannot hire or keep employees
without a promise of work.
For example, a 5-year IDIQ contract like the one I won provides
greater opportunity, but since there are no guaranteed orders or
ship dates, it is challenging to finance. When we receive an order
typically with a 6 month lead time delivery issue, it is difficult to
find a financial partner that can accommodate the need for such
significant capital in such a short amount of time. Since you do not
know what to expect from delivery to delivery, it makes planning
capital and employee retention challenging.
From my point of view, there are a number of changes Congress
can make that would help small companies thrive in the federal
market. Better utilization of all small business federal contracting
programs is top of our list. According to the SBA, the government
has only met its women-owned contracting goals which was estab-
lished in 1996 two times and has never met its HUBZone goals.
If the government is serious about doing business with small
companies, firms should no longer be allowed to self-certify their
socioeconomic status, instead, requiring an SBA certification. Addi-
tionally, the overall small business goals should be increased as
well as the goals for SBA’s contracting assistance programs. And
finally, sole source thresholds must be raised and SBA’s procure-
ment resources for small businesses adequately funded.
Broad bipartisan support for increasing small business participa-
tion dictates changes are needed to bolster these businesses. I ap-
plaud the Committee’s effort to address these issues and look for-
ward to providing further input on ways Congress can support
small manufacturers.
Thank you, and I look forward to answering your questions.
Chairman LALOTA. Thank you.
I now recognize Ms. Jacqueline Lopez for her 5-minute opening
statement.
STATEMENT OF JACQUELINE K. LOPEZ
Ms. LOPEZ. Thank you, Chairman LaLota, Ranking Member
Scholten, and distinguished Members of the House Small Business
Committee on Contracting and Infrastructure. Thank you for the
opportunity to testify today on federal contracting programs impor-
tant to the small business ecosystem and strategies to improve
those programs.
I am Jacqueline Lopez, president and owner of Premier Enter-
prise Solutions, a company specializing in cybersecurity, informa-
9

tion technology, and program management services in the federal
sector. Premier is a service-disabled veteran and women-owned
small business participating in the SBA 8(a) development program.
Premier has grown into a successful firm employing personnel in
six states and the District of Columbia. Much of my success is di-
rected attributable to the 8(a) women-owned small business and
service-disabled, veteran-owned small business programs, as well
as many of the free resources for socioeconomic programs, the gov-
ernment owns or supports.
These programs are not perfect but crucial to removing barriers,
creating growth opportunities, and bringing together stakeholders
with private sector innovators. I believe there are challenges to the
socioeconomic programs. One of the challenges is category manage-
ment which conflicts with the government’s goal to increase the in-
dustrial base. While well-intended, the net effect has been a
shrinking of the small business industrial base.
Best in class vehicles (BICs) play a key part in category manage-
ment but it is very difficult for small businesses generating less
than $10 million annually and new entrants to win an award on
many the BICs. Very few small businesses can compete for an
award on several of the BICs without a large or mid-size joint ven-
ture partner. As BICs are recompeted or new vehicles created, they
should take into account businesses that have $10 million in rev-
enue or less and new entrants. We need more vehicles, especially
GWACs, like 8(a) Stars which has a simple and inclusive bid proc-
ess and the criteria is designed to get more businesses on the vehi-
cle rather than keep them off. We also need more vehicles to in-
clude a GWAC available for women-owned small businesses. The
8(a) and service-disabled, veteran-owned programs have access to
GWACs. Having such a vehicle for the women-owned small busi-
ness program would help more women-owned small businesses pur-
sue larger contracts and help federal agencies achieve their con-
tracting goals.
The 8(a) development program has been the catalyst for many
small businesses entering the federal market. However, anecdotal
data has shown it takes several years for 8(a) firms to actually gain
traction and win contracts. An extension of the 8(a) program from
9 to 12 years would allow 8(a)s more time to understand the com-
plexities of the federal procurement process, increase their working
capital, and sharpen competitive skills, ensuring a sustainable
business upon exiting the program.
Lastly, the whole source threshold for 8(a) firms currently stands
at 4.5 million except for Native American tribes and Hawaiians in
which case the sole source threshold for civilian agencies is $25
million without justification, and DoD, $100 million without jus-
tification. Ideally, the threshold would be equal across all 8(a)s. But
even a modest increase to the threshold for non-Native and Hawai-
ian firms, 10 to 12 million or more would be impactful. An increase
to the threshold would promote larger awards which means more
revenue for the company and subsequent job creation.
Despite these barriers, success is attainable. With these pro-
grams, my business has been successful. Without them, my ability
to grow and create jobs would have been significantly decreased.
These programs provide invaluable opportunities for the businesses
10

that are able to successfully navigate them and can be significantly
more impactful with improvements. I want to see small businesses
have an opportunity to be engines of job creation and economic
growth.
Once again, I wish to express my deepest gratitude to this Sub-
committee and the Full House Small Business Committee for its
continued efforts to support America’s women-owned businesses
and for inviting me to share my story and thoughts.
Chairman LALOTA. Thank you. And thank you to all of our wit-
nesses for your opening remarks.
We will now move to the Member questions under the 5-minute
rule, and I recognize myself for 5 minutes.
Mr. Schroder, the first question is going to be for you, sir. Small
businesses are vital to America’s industrial base, especially when
it comes to providing goods and services for our military. Unfortu-
nately, fewer small businesses are choosing to do business with the
government, resulting in a 79 percent decline in new businesses en-
tering the federal procurement space from 2005 through 2019.
My question is, what did you do that helped prepare you for the
federal government contracting space knowing that fewer entre-
preneurs were getting involved?
Mr. SCHRODER. Thank you, Mr. Chairman.
I did it by small steps. And that would be my advice to any en-
trepreneur or small business that is looking to start work with the
federal government. The barriers are so high and the process is so
lengthy that you cannot go full into it in one step. It is an incre-
mental approach.
And, so, that would be my advice is that you start slowly, pick
any customer that you have some expertise with and go at it that
way in terms of your initial start.
Chairman LALOTA. Were there dialogues that you had with the
SBA, websites that you referenced, other ways that you learned
tricks of the trade to get you off the ground the right way?
Mr. SCHRODER. So I did not find the SBA particularly helpful.
I went straight to the agencies and started working directly with
the programs as opposed to an advocacy. Every time I went to a
particular advocacy group or, you know, a vendor management or
any sort of, you know, technology path or innovation path or ven-
dor path, none of those proved useful at all. The only thing that
mattered was the program entity, the end user, the customer, if
you will, and what they needed and what their requirements were.
It was not that it could be pushed on to them.
Chairman LALOTA. Thanks. And if any of the witnesses want
to add in some of their experiences I think we have a moment or
two for that.
Ms. FERRARI. Sure. I would love to. Thank you.
We read a book. We decided during COVID to jump into the con-
tracting space because we were a women-owned business and we
knew that in the federal contracting arena that that was impor-
tant. So we actually read a book called Government Contracts
Made Easy and took a 15-minute consultation with the woman who
wrote it. So we did a lot of homework and we looked at the land-
scape. And then we went to the DOD and presented some product
11

that we thought that they would like and that really started our
path. So we aggressively pursued the process.
Chairman LALOTA. Thank you.
And Ms. Lopez, did you want to add anything?
Ms. LOPEZ. Absolutely. I was fortunate enough to have an un-
derstanding, some understanding of government contracting so
that was very helpful. But quite frankly, what I learned even
though I was a very experienced government contractor. If you are
a new entrant into the government space there is still a lot you
have to do. For instance, you have no access to ‘‘vehicles,’’ right?
Because you do not have past performance, though I could run
$100 million projects, it did not matter to the government when it
comes to actually doing them because I did not have that past ex-
perience, past performance.
One of the things though that honestly I have seen—I mentor a
lot—in government contracting is that a lot of individuals cannot
get started because the government is a very complex thing to
navigate. I know CIOs, individuals who have been CIOs in indus-
try, they tried and they said ‘‘forget it’’; right? Because of all the
procurement rules.
So one of the things that really worked for me and works for oth-
ers is having programs, like the Veterans Institute of Procurement,
Emerging Leaders, things like that that give significant, sub-
stantive information for free. Those programs are free but they give
you every detail you need to really begin to understand and grow
in the federal space.
Chairman LALOTA. Thank you.
I want to change gears for a second about self-certification and
Ms. Ferrari, I want to direct the initial question to you.
The Committee is concerned about self-certification of firms and
the potential for fraud or misrepresentation. And I would like for
you to take a first shot at this. But what are your views on self-
certification of firms?
Ms. FERRARI. Thank you, Chairman.
I think that it needs to go away. There is rampant fraud across
so many areas of contracting in general, but to self-certify, there
are so many companies that, you know, will list their wife as the
owner of the company and that person not being involved in the
day-to-day business. It happens full stop so much. So we really
think that that would be a very big step in helping small busi-
nesses to actually thrive in this space by having the program
where you have to be certified by the SBA with a stringent certifi-
cation process. That really is a critical move.
Chairman LALOTA. Thank you. And if the Ranking Member will
indulge me for 30 more seconds, Mr. Schroder, if you would not
mind, the same question.
Mr. SCHRODER. Sure. And thank you for the question.
I would say that there are two reasons not to certify. Number
one, you are not capable of certifying because you do not have the
ownership structure and so you should be ineligible.
The second reason, you are just lazy. You do not want to go
through the process. And I would say either one of those reasons
are enough to require the certification process. We have encoun-
12

tered it multiple times and, you know, there is nothing worse than
losing to someone that is misrepresenting themselves.
Chairman LALOTA. Thank you. I appreciate your feedback. My
time is well expired.
I recognize Ranking Member Scholten from Michigan for 5 min-
utes.
Ms. SCHOLTEN. Thank you so much, Mr. Chair. And thanks
again to our witnesses.
As you all know, last week was National Small Business Week,
and I had the opportunity to be out and about in the district vis-
iting a number of small businesses, one of them was R&R Mechan-
ical, a Latino-owned HVAC business. R&R Mechanical started like
so many other small businesses that grow into great businesses in
Grand Rapids in a garage. It has now grown to a thriving 42 em-
ployee operation and is continuing to grow. As they grow, they
have expressed interest in breaking into the federal contract’s
space.
As the Ranking Member of this Subcommittee, it is a top priority
of mine to ensure that minority-owned businesses like R&R Me-
chanical are able to enter and navigate the federal contracting
marketplace. As such, I am committed to protecting and strength-
ening the 8(a) program.
Ms. Lopez, you participate in the 8(a) program, as well as the
women-owned small business program. Have these contracting pro-
grams helped your small business compete in the federal procure-
ment space?
Ms. LOPEZ. They have. One of the things that is really good
about the 8(a) program is because, again, even though you do not
have significant past performance, if you can convince the cus-
tomers that you can do the work you can get sole source awards.
So my first multimillion dollar sole source award was critical in
providing me capital that helped me to compete. So, I mean, I am
proud to say most of my work is not 8(a), it is not direct, it is com-
peted, but yes, it was very valuable.
Women-owned small business, honestly, I do have some women-
owned small business work, but I would really like to see more ve-
hicles and more efforts for sole sources for women-owned small
businesses.
Ms. SCHOLTEN. Thank you.
And in your view, what would you say if there is anything miss-
ing or additional elements that could help the program, what would
those be?
Ms. LOPEZ. For 8(a), I think you really need to raise the ceiling
on 8(a) programs and you need to extend the number of years. Un-
fortunately, because there is, it takes a while to really get to know
the federal sector begin to ramp up. And a program, even like my-
self, you know, I have done pretty well in it but I am really just
at a place where I could do exceptionally well. With women-owned
small business, again, I think a GWAC would be amazing. That is
missing for us, a vehicle that is dedicated to women-owned small
business for women-owned small businesses.
Ms. SCHOLTEN. Thank you.
Another issue that I consistently hear about as an impediment
to small business contracting is category management which is a
13

procurement initiative, as we know, led by the Office of Manage-
ment and Budget. Category management poses a barrier for many
small businesses in making federal contracts too big for a small
business to handle.
Ms. Ferrari, if you could talk a little bit more about how consoli-
dation and bundling of contracts through category management
has impacted your business, and talk just a little bit more in detail
about what you found in terms of the lack of women-owned busi-
ness small set-asides in your industry.
Ms. FERRARI. Well, thank you for the opportunity to talk about
it.
A vehicle like that, category management, I am frightened to
death of this coming. And when you talk about the manufacturing
base shrinking, that might send me running the other direction
when I have spent the last 2-1/2 years of my life advocating for
small business and federal contracting. I do not believe that it
works in the apparel industry because there are so many different
things that our warfighters need for their safety and their security
and their comfort, and I just do not think it works, number one,
from a high level.
From not so high a level in so many of the agencies under these
contract vehicles, they are not meeting the set-asides. They have
lists and lists of set-asides that they are supposed to meet, and I
do not believe that there is any governance to make sure that they
are meeting those. So it really knocks the small business out of the
loop. We do not get the opportunity to compete because it is owned
by this large vehicle. And I can tell you it will absolutely decimate
small business when it comes to apparel.
Ms. SCHOLTEN. Thank you so much. And just at time. Perfect
timing.
Chairman LALOTA. The best Ranking Member.
I now recognize Mr. Bean from Florida, the home to so many
former New Yorkers, for 5 minutes.
Mr. BEAN. Mr. Chairman, thank you very much.
Good afternoon, Small Business Committee. Chairman, you do
look very stately in the Chairman’s chair. So well done. Congratu-
lations. And Ranking Member Scholten, you, too. Of all the Rank-
ing Members in this Committee you are one of them.
I want to welcome our panelists to Washington, D.C. I read your
bios. They are very impressive. What you have built is amazing
and that is why you are here. You will be able to add you testified
before Congress, which is impressive, too.
We have heard today the declining number of small businesses
that are doing business with the federal government. It is getting
harder to do it, especially when government is competing and gov-
ernment launches its own business to handle that whatever it
needs, procures it itself.
What if there was a law that said before the federal government
could enter this marketplace it should bid out to see if there is
some small business or an entrepreneur that could do that service
or procure that goods cheaper or more effectively? Would that be
a good idea or a great idea? Mr. Schroder?
Mr. SCHRODER. Congressman, thank you for that question.
14

I would offer the VA as an example. So there is a law, a decision
that was handed down a few years ago that required the VA Rule
of Twos. So the VA is required to seek out service-disabled, vet-
eran-owned small business. I would say its effect is mixed. And so,
I would look to that to a guide. In theory, yes, absolutely agree it
would not be good; it would be great. It would be awesome.
Mr. BEAN. It would be great. Very well said. Thank you so
much.
Ms. Ferrari, what say you? Would that be a good idea or a great
idea?
Ms. FERRARI. A great idea.
Mr. BEAN. That is the correct answer. Thank you so much. You
nailed it.
Ms. LOPEZ. Well, I do not have any other choice. So you are say-
ing actually putting it out to socioeconomics first?
Mr. BEAN. That is exactly right, Ms. Lopez.
Ms. LOPEZ. Well, I think that is absolutely fantastic. I love it.
Mr. BEAN. I will accept fantastic to the idea, too. It just so hap-
pens I have filed that bill. How about that to say to the federal gov-
ernment before we put our toe in that water, let’s see what small
business, see what Ms. Lopez’s business can do. Let’s see what Ms.
Ferrari is up to. Maybe she could procure or provide that good or
service cheaper, more effectively, and you are hiring people. All of
you are hiring people. So I say that not only for you but I am plug-
ging, shamelessly plugging my own bill for our Committee Mem-
bers to jump onboard. There is lots of room to co-sponsor this bill.
But seriously, we want to know, and you have already hit on a
handful of things, the barriers, what barriers do we need removed?
What pathways do we need to clear? I know the VA, Mr. Schroder,
you have already had some experience and we want to make sure
this bill does not run into the same trap that is currently out there.
We really want them to focus on it because small business, the en-
trepreneurship of small business is the heartbeat of America. It is
what makes America great. I throw that out there as a tossup
question. Anybody want to jump in? Barriers to remove or path-
ways to clear to make it easier for small business to do business
with the federal government?
Ms. Ferrari, jump in.
Ms. FERRARI. I am going to jump in for a second.
I just want to say, you know, there are so many barriers to entry.
We are talking about them here where we can have Rule of Two.
So same thing in my industry. The Rule of Two is exceptional, and
if it were being adhered to it would create the pathway that you
are trying to create.
Mr. BEAN. Now, everybody knows what the Rule of Two is but
for those that might not know what it is, tell us about the Rule of
Two.
Ms. FERRARI. They have to go out, Procurement has to go out
and find two—if they can find two companies that can manufac-
ture, let’s just say it is a physical training uniform. Two companies
that can do it that are small business, it has to go to small busi-
ness. So it cannot go to a large vehicle. It cannot even go to prison
industries because there are two small companies who can do this.
15

So that is critical, and I love your great idea. And if I could be
here to vote for you I would.
I believe when there are these large contract vehicles, we have
had several through our industry come out and say the large con-
tract vehicle company is saying this cannot be made in America.
Can this be made in America.
And by the year, here is the number you should call at DHS and
tell them. And we have had four of these things in the last 2
months where we come back and say absolutely. And I will make
a sample. It will be on your desk by Friday.
In the fabric, with the yarns that are barrier amendment. It is
doable. But the agencies just do not know.
And I had an opportunity to attend an industry days at HHS 2
weeks ago for 2 weeks ago for PPE. You know, there is a law now
that says—I am getting the light—there is a law that says you
have to make——
Mr. BEAN. We both are getting the light but finish that one sen-
tence and hopefully they will not know. Hopefully they will not
know that we are over.
Chairman LALOTA. Finish that objection. You have another 90
seconds.
Ms. FERRARI. They have to make it in America so it has been
passed. But we sat in front of a panel of all these people from the
VA to HHS to DHS. They do not even know how to go about it.
So I think there has to be something that says, something from the
SBA, maybe it is a trade show where we all go and we say, hey,
we exist. Here is what we do. Like, it is here and we just need to
let people know we are here.
Mr. BEAN. Thank you very much.
Last thing. I was going to call this the Yellow Page bill. If it is
offered it is in the Yellow Pages. But people under 30 do not know
what the Yellow Pages are.
Mr. Chairman, I yield back.
Chairman LALOTA. Thank you. I now recognize Mr. McGarvey
from Kentucky for 5 minutes.
Mr. MCGARVEY. Thank you, Mr. Chairman. Thank you, every-
one, for being here today. I really appreciate it, especially those of
you who served. Thank you for your service to our country. We ap-
preciate that as well.
I am going to continue on some things that Mr. Bean was talking
about, in fact, and you could tell he used to be an auctioneer before
he came up here. He might still be available to birthdays and bar
mitzvahs if you all want to.
But he was talking about some good things and how we continue
to get more small businesses involved in subcontracting. I think
that is something we are all interested and something we all want
to see. We also all serve on other Committees. I serve on the Vet-
erans Committee. One of the things I am working on right now in
the Veterans Committee is ways to find more training opportuni-
ties for companies so that we can get more veteran-owned busi-
nesses opportunities in the space.
So Mr. Schroder, I will just start with you. You talked about the
Rule of Twos already. We have heard the great idea from Mr.
Bean. Give us a little bit more right now. What are some ways that
16

we can create more contracting opportunities particularly for vet-
eran-owned businesses and for service-disabled veterans and their
businesses.
Mr. SCHRODER. Congressman, thank you for the question and
the opportunity.
I would say I would focus less on training companies and I would
focus more on training contracting officers because that is where
the rubber meets the road. And there are two ways that goes
about. Number one is how they put the procurement out, because
they construct it. They can follow multiple paths. The second is
that they hold the big businesses accountable to the small business
goals in each contract. They are considered goals but if you make
the contracting officers hold them accountable contractually, that is
when you will see a difference there because there are two areas
where small businesses play both as sub and as prime. And I
would offer it is more of training and holding contracting officers
accountable for that. And then there is a whole laundry list of
things, you know, specific barriers. We mentioned best in class. I
mentioned the Mentor-Protégé program. There are several things,
you know, mechanically and structurally that can be changed to
help bring in businesses. That would be my suggestion as opposed
to training the businesses.
Mr. MCGARVEY. What is an example that comes to mind of
ways to hold contracting officers accountable to you?
Mr. SCHRODER. Number one, I would have them report their
small business set-asides, and then I would force them to ensure
that they are reporting accurately as to why different contracts did
not come out. Congressman, there are so many ways that you can
put a contract out. The myriad of ways is just astronomical and
every consultant advisor that you go to, they all come back with
the same answer. The federal government will do whatever the fed-
eral government wants to do. Not necessarily what they should be
doing. And so there is all sorts of different ways you can get around
the different small set-aside programs in order to contract.
Mr. MCGARVEY. Thank you very much.
And I will ask Ms. Lopez sort of the same thoughts on the same
topics.
Ms. LOPEZ. I have to say that I agree that contracting officers,
they need a lot of training. But I honestly also agree with you in
that small businesses also need training because one of the things
that happened is they do not know how to navigate the market. My
business partner and spouse here is a former contracting officer. I
cannot tell you how many times that helps us when it comes to ne-
gotiating with the government or speaking to what our rights are.
We truly understand them. The procurement laws and the acquisi-
tion regs are the heart of how we do business with the government.
To help educate small businesses on that would be to give them a
very powerful tool.
Mr. MCGARVEY. Thank you very much.
And just in the quick time we have left for both Ms. Ferrari and
Ms. Lopez, describe some of the challenges that women-owned busi-
nesses face in this space, and how can we create more contracting
opportunities for companies like yours?
17

Ms. FERRARI. I would like to give a shout out to the DLA. I
think they have done a really good job with awarding awards to
small business. And we have been the recipient of four of them. So
I really think that they are taking the general, you know, senti-
ment in the country to do that. But that is for small business. So
I won four awards as a small business; not one single award as a
women-owned small business. So like I said in my opening re-
marks, since 1996, when that was put in place, they have only met
the set-aside twice, met their goals twice. So I would like to see
more effort be put toward women-owned small business but not
double counting it. So putting the award out as small business but
then not being able to say, oh, since it is a woman we will check
that box, too. So I think not only women-owned small business but
service-disabled, women-owned small business, just hit those goals
would help us tremendous.
Mr. MCGARVEY. Mr. Chairman, I know I am past time. Would
Ms. Lopez be able to answer that question quickly? Thank you.
Ms. LOPEZ. What she said. I absolutely agree with her and I
think also partnering with other agencies. Even outside of the gov-
ernment. I have to say organizations like WIPP really have helped
me understand more about procurement. They help us navigate the
government more, so partnering with those agencies which SBA
does has been very helpful to me as well.
Mr. MCGARVEY. Thank you, all.
And I yield back, Mr. Chairman.
Chairman LALOTA. Thank you.
We are having a good productive dialogue so I want to open it
up to a second round if the Members would like.
Ms. Ferrari, especially, I was interested in your opening state-
ment where you discussed making uniforms for our military. And
I wanted to ask you about some of the sourcing that you have expe-
rienced over the last couple of years, especially post-COVID with
supply chain issues. How has that sourcing been? You are making
uniforms for our men and women in uniform who are fighting for
our country for the flags that are behind us right now. Are you still
able to source those materials from the United States? And can you
describe any challenge you have had along the way?
Ms. FERRARI. Yes. Thank you for the question.
We have had no supply chain issues whatsoever because it is
made domestically. So from every component that goes into it, it
is made domestically for Barry Amendment compliance and it has
been great. And I can go back and say like look what happened
during PPE and this is the value of the small business. During
COVID, and we needed PPE and companies were standing in line
waiting to get Chinese masks that were being sold out of ware-
houses for cash, you know, it boggled my mind. Why would we even
want to be buying these? And I can tell you every single aspect of
our domestic supply chain kicked it into gear and started shipping
masks to everybody that needed them. It is such a long story but
we did it. T-shirt factors turned upside down to become hospital
gown factories and, you know, woven dress uniform factories were
making masks and boot covers and all of these things. So with the
resiliency of Americans and the resilience of small business in this
country, we answered the call. And what we need to continue to
18

do is keep these companies in business so that we can answer this
call. But from yarn to thread to every aspect of a uniform, we are
able to get it when the government needs it. We just need the gov-
ernment to need it more and more consistently so we can keep our
factories going.
Chairman LALOTA. And it sounds like it is productive for you
to source inside the United States and from our perspective we ap-
preciate that as well.
Ms. FERRARI. One thousand percent.
Chairman LALOTA. That ends my questioning and I yield to Ms.
Scholten for some questions as well.
Ms. SCHOLTEN. Yeah, thank you so much. Thank you for your
additional time.
Ms. Lopez, you mentioned raising the sole source threshold level
to the playing field. I would like to give you an opportunity to
elaborate on how increased thresholds can help not only your busi-
ness but other small businesses and any examples that you can
give would be welcome.
Ms. LOPEZ. Absolutely. Thank you.
I will give you an example. When I first came into the federal
space, there was a cybersecurity program. I knew it inside and out.
Right? There was no one, honestly, who could do a better job than
us just because of the expertise I had in that the work I had done
in the agency. But that project was $7.5 million, which meant it
cannot be sole sourced to me. As a matter of fact, it was sole
sourced to someone else, you know, because it was on a GWAC,
really. And honestly, they did not do the kind of job I would have
done. The client was not as happy. I just think that raising the
threshold also allows 8(a)s as we go along. As we increase in our
ability do work, to do more work for a given agency. A lot of times
quite frankly agencies will give you a $4.5 million this year, $4.5
million next year, right? or $4.5 million for 2 years. Because you
have done a great job they want to do work with you. Why should
we be limited in that threshold? Why could it not be at least 22,
4.5 million a year for 5 years, 22.5, or 25? It only makes sense. I
think the government would get better value out of the 8(a) pro-
grams and the contracting officers would honestly have less work
to do rather than more.
Ms. SCHOLTEN. Thank you. That is very helpful.
I also wondered if you could elaborate on what you learned
through the VIP program and the SBA’s Emerging Leaders pro-
gram.
Ms. LOPEZ. Wow. Both programs are absolutely phenomenal.
VIP is, I have to say, probably the best program I have ever seen
and it is free. I mean, everything about doing business with the
government they teach you and they teach you in stages as you
grow. There is a start. If you are a new entrant, you learn so many
of the things that are barriers here. Right? You learn how to navi-
gate those up front, whether it is financing or contracting,
partnering, all those things. Then there is Grow; right? As you
grow. And then there is Advanced. So, that program was very, very
significant for me because even though I knew about the govern-
ment space it gave me significantly more detail, especially on fi-
nancing. Emerging Leaders was a 6-month program which accumu-
19

lated in a growth plan. By the time you finished, you had gone in-
depth in every single area of your business and I was able at that
point to put together a really sterling growth plan with smart
goals. I use it now all the time. I use it for all my strategic plan-
ning. So many of my fellow businesses, when they see it, they want
to use it. But those programs really gave me a lot of great edu-
cation and information which helped me to not only grow but it
helped me mentor others.
Ms. SCHOLTEN. That is wonderful.
And in the last minute, if you have any thoughts on how we
could better integrate these programs into the contracting process
that would be hugely helpful.
Ms. LOPEZ. Honestly, you could give more funding for both or
either, especially VIP is free. I was actually just at a meeting
where Senator Cardin helped get $2 million more so they could get
1,000 more individuals in the program. So anything you can do to
get funding, those are programs that are already there. It is just
a matter of getting it through.
Creating a program, SBA had begun, I am not sure what hap-
pened to it but it had looked at doing what is called an 8(a) Acad-
emy. I think you can take 8(a) Academy, which was awesome and
VIP, you know, create a baby and almost all socioeconomics should
be able to learn and go through something like that so that new
entrants can understand how to navigate the market and how to
grow quickly.
Ms. SCHOLTEN. Thank you so much. I yield back.
Chairman LALOTA. Thank you.
I now recognize Chairman Williams, small business owner from
the great state of Texas for 5 minutes.
Mr. WILLIAMS. Thank you, Mr. Chairman. Again, I want to
thank all of you for being here. I appreciate you taking the time
to do that.
Recently, I spoke with a small business owner from Texas, my
state, who lost out on a federal contract to a business that was a
subsidiary of a large, multinational corporation. They did not win
the contract and the decision was challenged because the winning
business was part of an international company. The decision still
was upheld.
So Mr. Schroder, is this type of situation common where larger
companies have effective control over small businesses that com-
pete for some of these government set-asides and what can we do
to fix this issue?
Mr. SCHRODER. Mr. Chairman, thank you for the question. And
I would say, yes, we absolutely do run into that and I would em-
phasize my number one recommendation for this Committee would
be the elimination of the Mentor-Protégé program which allows the
large business to take 60 percent ownership and then, thereby,
competing on the small business side with 60 percent ownership of
that joint venture. And so that is an immediate way to address
what is a large problem in the procurement system. It causes a lot
of confusion, a lot of delays, and a lot of unfair practices with the
large taking advantage of the small.
Mr. WILLIAMS. Good. Inflation has been hurting small busi-
nesses across the country, and for contractors I fear that this issue
20

has an even more larger impact. And if you are awarded a contract
that you bid on months and suddenly all your suppliers’ costs have
increased by 10 percent—we have all got this story, don’t we? Your
margins are getting squeezed tighter and tighter and it makes it
harder to stay in business.
So Ms. Ferrari, how has your business been dealing with the in-
flation over the past year?
Ms. FERRARI. Thank you for giving me the chance to talk about
it. We got hit hard with our Air Force contract. It came to us just
at the time inflation hit and we went from being in the black to
being in the red. And rather than putting it out for recompete or
saying to the DLA that we could not do it, you know, in fear that
if we said that we would never get another program again, we just
looked deeply into the whole supply chain and actually went back
to the DLA and asked if we could change the packing and double
the amount of pieces we put in the box. And after a couple of weeks
they vetted it through their sources and when they said yes, it put
us back into the black, slightly. But yes, very much, it has affected
small business, and four contracts that I know of went back into
recompetition because they just could not handle the disparity in
price.
Mr. WILLIAMS. I have talked to many small businesses who
have said the federal contractor is so time consuming and expen-
sive they stopped even trying to even hire people to try to get it
done.
So Mr. Schroder, what advice would you have for these small
businesses? And how can we in Congress simplify the process to
bring more small businesses into the system?
Mr. SCHRODER. Mr. Chairman, I would say the best advice you
can have is for them to start small and then encourage through the
contracting officers with large primes, encourage those contracting
goals to be requirements because then they will be out farming for
the small businesses. And you can start out with just one single
contract gets you up and off your feet and it is a process to get
going. Little contract, by little contract, by little contract, gets to
a bigger one. And so the advice is to start small. But if you are re-
quiring small businesses set asides as opposed to just goals, you set
requirements, that will force the system to be able to encourage
small businesses to join.
Mr. WILLIAMS. Good. I appreciate that.
Mr. Chairman, I yield my time back.
Chairman LALOTA. Thank you, Chairman.
I now recognize Mr. Thanedar from Michigan for 5 minutes.
Mr. THANEDAR. Thank you, Mr. Chairman.
As a former business owner, I believe it is important that the
federal government provides opportunities for small businesses to
thrive and grow. As we all know, they contribute greatly to hiring
and creating jobs and innovation, and certainly, paying taxes.
To that end, we must ensure that contracting opportunities are
available for small business owners in my district and those across
our country. Despite more dollars being awarded to small busi-
nesses, what is concerning really is the overall participation of
small firms in government contracting has declined over the years.
21

Now, in Congress, we remain concerned, Ms. Lopez, especially,
we remain concerned about category management. And the consoli-
dation of requirements into a limited number of government-wide
contracts. And what I am afraid of is consolidation means, what
does this mean for small businesses? And is this going to keep the
new small businesses out of running because the more established
small businesses are going to be able to compete better in this situ-
ation. What does that do to the new small businesses coming in,
especially the Black and Brown community, the small Black-owned
businesses?
Ms. LOPEZ. It does absolutely make it more difficult for new en-
trants. Quite frankly, for those of us who are already in the federal
space, we have seen the shrinkage and so we have to find more re-
sourceful ways to compete. But for new entrants, there are very,
very limited opportunities, which is why with category manage-
ment, again, the keys are BICs; right? Those best in class vehicles
which are tier three. Even though they give you tier two socio-
economic credit, the BICs, the tier three, that is still the highest
level. So why not take those BICs, the best in class vehicles, and
as we put them in place, ensure that there is a way for entrants;
right? New entrants to bring in their past experience rather than
just their government past performance. You can create a vehicle
that allows them to participate. So I would like to see more of that
in addition to thinks being so stringent. The Mentor-Protégé pro-
gram, honestly, and Joint Ventures, has worked well for me and
I think I have utilized it correctly, but some people absolutely have
been taken advantage of. One of the trends we are seeing is that
you have to be very large, almost a Joint Venture to participate in
a lot of these BICs and to get awards. So I really see a large part
of the answer as creating vehicles where everybody has the oppor-
tunity.
Mr. THANEDAR. Thank you.
Now, the Biden administration announced it would increase the
share of federal contracts being awarded to small and disadvan-
taged businesses to 15 percent by 2025. And I certainly applaud
this commitment by the administration. As small business owners
in my district often find it difficult to pursue government con-
tracting. Others on this panel have commented on that difficulty in
obtaining capital and navigating the rules and regulations man-
dated by SBA. And that is a general concern that I hear in my dis-
trict.
But Ms. Lopez, do you think this will expand participation or will
existing businesses receive more contracting opportunity at the ex-
pense of the new small business entrants?
Ms. LOPEZ. I do not know if it at the expense of the new small
business entrants. I can tell you that I have absolutely, positively
seen more opportunity personally. So, I cannot honestly say that I
know or can say definitively that it is at the expense of new en-
trants. Again, I think what limits a lot of new entrants are the ve-
hicles and some of the procurement rules.
Mr. THANEDAR. All right. Thank you, ma’am.
I yield back.
Chairman LALOTA. Thank you.
22

I now recognize Mr. Molinaro, my good friend from New York for
5 minutes.
Mr. MOLINARO. Thank you, Mr. Chairman.
I do not know if there is some rule about having two Members
from New York in the same place at the same time, but I do appre-
ciate your leadership with the Subcommittee, and thank you all for
joining us.
As I know has been noted, we are confronting a real challenge
among small businesses entering the procurement marketplace, if
you will. As was noted, the Biden administration has made several
reforms to contracting policy, including those benchmarks men-
tioned to diversify a small business supplier base. However, with-
out question, our small businesses continue to face both challenges
and obstacles. Finding those opportunities and preparing the bids
and many times lose out to larger businesses. We have covered all
of this.
We know that 70 percent of new jobs are created by existing
small businesses, and so the federal government doing more to
break down those barriers and create opportunities for small busi-
ness access to procurement is critically important.
To narrow my questions I was going to start with Ms. Ferrari,
if you would not mind. We know that some of the major challenges
applicants face, there are significant challenges applicants face
within the economically disadvantaged women-owned small busi-
ness program. Could you speak I hope a little bit to those programs
and how might they be simplified, streamlined, and maybe with
some note in particular rural communities?
Ms. FERRARI. Yes, thank you. Thank you for the question.
You know, small business, that is where innovation comes from.
It is the heartbeat of American and it is the heartbeat of manufac-
turing in America.
The government needs our innovation. They need what we are
bringing to the table. We need to hear the cry. We need uniforms
that data moves through and how can we get there? We hear it and
we develop it. And when we go to the government we just need ac-
cess by adhering to the rules that are there. What could disadvan-
taged businesses and women-owned businesses get? We just need
orders. And we can get those orders if those set asides are met and
they are not.
And you know, quite often I sit and I hear things about, well, you
know, can we give you a grant? What do you need? We do not need
your money; we just need the orders. And it is so convoluted. It is
like the rules are there, the infrastructure is there, but there is
just no oversight and they are not hitting these set-asides so it is
going to other things that my counterparts here are talking about.
So, what can you do? Just hit the set asides and just give us the
orders based on those things. Again, I go back to 1996, they have
hit that set aside twice, and never hit HUBZone. So, for me it is
that.
And going back to the innovation piece, like how can we bring
innovation if we do and then we do not even get the contract. So,
you know, it prohibits you from wanting to go out and give your
best foot forward to help our warfighter in my case when it comes
to apparel and say, oh, that is great and we love it and now it is
23

going out to bid. And by the way, you are not getting the contract
and they are not hitting the set-aside. So I do not want to be just
complaining all the time. They are doing some great things and
they are trying. It is just we have to work harder and try harder.
Mr. MOLINARO. I appreciate that. It is very helpful. Thank you.
Mr. Schroder, I am sure others have but I want to thank you for
your 20 years of service to this country. We obviously celebrate
that and all those who have served. I know an area of importance
is welcoming veterans into the same space.
As we discuss what further reforms can be made to the SBA’s
role in small business contracting and its future, what are some of
those important reforms the Committee might take up to mod-
ernize the federal procurement process specifically for veterans?
Mr. SCHRODER. Congressman, thank you for the question. I
would say a couple things the SBA could do in order to help vet-
erans specifically. Number one, the SDVO speed program, which
they just took over, ensure that that program is run effectively.
That is kind of a pejorative statement but make that thing run ef-
fectively. It is a tough process to get through but to date it has
gone rather smoothly. But that is going to take constant focus be-
cause that is the number one step that veterans take to get into
federal contracting is to get themselves certified. So that is step
one.
Step two is SBA has got to be constantly educating across the
federal government the SDVO speed requirements, as well as the
certification process. There is a lot of, based on the NDAA that
went into effect with self-certification, there is still a lot of loop-
holes and there is a lot of ambiguity and a lot of misunderstanding.
When it comes to veterans, specifically, Congressman, I would say
those are the two biggest things they could do to drive home the
requirement and drive home the certification process and get rid of
the self-certification.
Mr. MOLINARO. Thank you, sir.
I yield back. Thanks, Mr. Chairman.
Chairman LALOTA. Thank you. And as we close I would like to
thank all of our witnesses for being here today, for sharing your
insights with us. It helps us as a Committee gain the right amount
of information as we craft and vote on legislation. I appreciate it.
To my Ranking Member for a productive and smooth meeting that
helps inform us as well.
And without objection, Members have 5 legislative days to sub-
mit additional materials and written questions for the witnesses to
the Chair which we forwarded to the witnesses, and I ask the wit-
nesses to please respond promptly.
If there is no further business, without objection, the Committee
is adjourned.
[Whereupon, at 3:15 p.m., the subcommittee was adjourned.]
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