Leveraging the Infrastructure Investment and Jobs Act: The Role of the SBA's Bond Guarantee Program (House Small Business Committee hearing, July 27, 2022)

Summary

Transcript of a July 27, 2022 House Small Business Committee hearing, Small Business Committee Document Number 117-064, on the SBA Surety Bond Guarantee Program and contracting under the Infrastructure Investment and Jobs Act. Chairwoman Nydia Velázquez and Ranking Member Blaine Luetkemeyer opened. Witnesses were Peter Gibbs of Foundation Surety & Insurance Company for the National Association of Surety Bond Producers, Ralph Pulver of Traveler's Bond for the Surety & Fidelity Association of America, Alan Gravel of Willow Construction and Joel Griffith of The Heritage Foundation. Velázquez closed by calling for a modernized bond program and the committee adjourned at 11:15 a.m.

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“Leveraging the Infrastructure Investment and Jobs Act: The Role of the SBA's Bond Guarantee Program (House Small Business Committee hearing, July 27, 2022).” Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/leveraging-the-infrastructure-investment-and-jobs-act-the-role-of-the-4122b1f56b/, SHA-256 8384d76b7285936c1081c23ea2beaa93337173e9a8d9d16884209419d3512605.

Full text

LEVERAGING THE INFRASTRUCTURE INVESTMENT
AND JOBS ACT: THE ROLE OF THE SBA’S
BOND GUARANTEE PROGRAM

HEARING
BEFORE THE

COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION

HEARING HELD
JULY 27, 2022

Small Business Committee Document Number 117–064
Available via the GPO Website: www.govinfo.gov

U.S. GOVERNMENT PUBLISHING OFFICE
48–108 WASHINGTON : 2022
HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELÁZQUEZ, New York, Chairwoman
JARED GOLDEN, Maine
JASON CROW, Colorado
SHARICE DAVIDS, Kansas
KWEISI MFUME, Maryland
DEAN PHILLIPS, Minnesota
MARIE NEWMAN, Illinois
CAROLYN BOURDEAUX, Georgia
TROY CARTER, Louisiana
JUDY CHU, California
DWIGHT EVANS, Pennsylvania
CHRISSY HOULAHAN, Pennsylvania
ANDY KIM, New Jersey
ANGIE CRAIG, Minnesota
SCOTT PETERS, California
BLAINE LUETKEMEYER, Missouri, Ranking Member
ROGER WILLIAMS, Texas
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
CLAUDIA TENNEY, New York
ANDREW GARBARINO, New York
YOUNG KIM, California
BETH VAN DUYNE, Texas
BYRON DONALDS, Florida
MARIA SALAZAR, Florida
SCOTT FITZGERALD, Wisconsin
MIKE FLOOD, Nebraska

MELISSA JUNG, Majority Staff Director
ELLEN HARRINGTON, Majority Deputy Staff Director
DAVID PLANNING, Staff Director

(II)
CONTENTS
OPENING STATEMENTS
Page
Hon. Nydia Velázquez ............................................................................................. 1
Hon. Blaine Luetkemeyer ....................................................................................... 3

WITNESSES
Mr. Peter Gibbs, President & Former Director of SBA’s Office of Surety
Guarantees, Foundation Surety & Insurance Company, Bowie, MD, testi-
fying on behalf of the National Association of Surety Bond Producers ........... 5
Mr. Ralph Pulver, Regional Underwriting Officer, Traveler’s Bond, Hartford,
CT, testifying on behalf of the Surety & Fidelity Association of America ...... 7
Mr. Alan Gravel, President, Willow Construction, LLC, Powder Springs, GA .. 8
Mr. Joel Griffith, Research Fellow, Financial Regulations, Thomas A. Roe
Institute for Economic Policy Studies, The Heritage Foundation, Wash-
ington, DC ............................................................................................................. 10

APPENDIX
Prepared Statements:
Mr. Peter Gibbs, President & Former Director of SBA’s Office of Surety
Guarantees, Foundation Surety & Insurance Company, Bowie, MD,
testifying on behalf of the National Association of Surety Bond Pro-
ducers ............................................................................................................. 25
Mr. Ralph Pulver, Regional Underwriting Officer, Traveler’s Bond, Hart-
ford, CT, testifying on behalf of the Surety & Fidelity Association
of America ...................................................................................................... 28
Mr. Alan Gravel, President, Willow Construction, LLC, Powder Springs,
GA .................................................................................................................. 31
Mr. Joel Griffith, Research Fellow, Financial Regulations, Thomas A.
Roe Institute for Economic Policy Studies, The Heritage Foundation,
Washington, DC ............................................................................................ 33
Questions and Answers for the Record:
Questions from Hon. Flood to Mr. Joel Griffith and Answers from Mr.
Joel Griffith ................................................................................................... 41
Additional Material for the Record:
American Property Casualty Insurance Association ..................................... 43
Glen Rose Veterinary Clinic ............................................................................ 45
Glenroy .............................................................................................................. 46
MO-03 Constituents Statements ..................................................................... 48
Precision Pattern Co., Inc. ............................................................................... 50
Significant Labor Shortage Statement ........................................................... 51
Statements for the Record from Hon. Williams, Hon. Tenney, Hon.
Donalds, and Hon. Kim ................................................................................ 52

(III)
LEVERAGING THE INFRASTRUCTURE INVEST-
MENT AND JOBS ACT: THE ROLE OF THE
SBA’S BOND GUARANTEE PROGRAM

WEDNESDAY, JULY 27, 2022

HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
Washington, DC.
The committee met, pursuant to call, at 10:00 a.m., in Room
2360, Rayburn House Office Building, Hon. Nydia Velázquez
[Chairwoman of the Committee] presiding.
Present: Representatives Velázquez, Mfume, Carter, Houlahan,
Craig, Peters, Luetkemeyer, Williams, Stauber, Meuser, Tenney,
Garbarino, Van Duyne, Fitzgerald, and Flood.
Chairwoman VELÁZQUEZ. Good morning. I call this hearing to
order.
Without objection, the Chair is authorized to declare a recess at
any time.
I would like to begin by noting some important requirements.
Standing House and Committee rules will continue to apply during
hybrid proceedings. All Members are reminded that they are ex-
pected to adhere to these rules including decorum.
House regulations require Members to be visible through a video
connection throughout the proceeding, so please keep your cameras
on. Also, remember to remain muted until you are recognized to
minimize background noise.
In the event a Member encounters technical issues that prevent
them from being recognized for their questioning, I will move to the
next available Member of the same party and I will recognize that
Member at the next appropriate time slot provided they have re-
turned to the proceeding.
Before I begin, I just want to let the Ranking Member know that
our thoughts and prayers are with the people of St. Louis who are
affected by the recent historic flooding and I will work with you to
make sure that SBA in an expedited way assists the people from
St. Louis.
Before we begin, I want to welcome our newest Small Business
Committee Member from our side. First, we have Mr. Scott Peters
from California. He brings his experience serving on the Commit-
tees on Budget, Energy and Commerce and Joint Economic Com-
mittee to our efforts to strengthen entrepreneurship and the chal-
lenges facing America’s small employers. Mr. Peters’ understanding
of the importance of bipartisanship will be integral to his work on
our Committee. Welcome, Mr. Peters.
(1)
2

And I will yield later on to the Ranking Member for the introduc-
tion of Mr. Michael Flood from Nebraska.
Last November, President Biden signed the $1.2 trillion Bipar-
tisan Infrastructure Bill into law. The package culminated years of
work to reverse decades of underinvestment and revitalize Amer-
ican infrastructure. This effort represents the most significant in-
vestment in America’s infrastructure in generations.
The funds outlined in the bill include $550 billion in new spend-
ing, which will help rebuild our nation’s roads and bridges,
strengthen public transportation, expand broadband to more Amer-
icans, and improve drinking water and wastewater infrastructure.
Every American stands to benefit from these upgrades. But, cru-
cially, the bill will also boost small businesses as they will play a
critical role in rebuilding American infrastructure.
Today, I want to examine one of the key mechanisms that facili-
tate small business participation in government infrastructure
projects, SBA’s Surety Bond Guarantee Program.
Surety bonds are three-party agreements with a surety, a con-
tractor, and a project owner. If a contractor cannot complete a
project, the surety is responsible for ensuring that the obligation is
met. These bonds help reduce risks in the contracting process and
protect project owners, subcontractors, and suppliers.
That is why the Miller Act requires all federal construction con-
tracts greater than $150,000 to have a surety bond. This practice
has spread outside the public sector as more and more private
projects require surety bonds.
The SBG program guarantees bonds for contracts of up to $6.5
million, and up to $10 million for federal contracts if a contracting
officer deems such a guarantee necessary. Under the program, SBA
guarantees bonds to small entities when a bond is required, the
businesses cannot obtain it elsewhere, and there is a reasonable ex-
pectation they will be able to complete the project they are com-
peting for.
The SBG program is vital to disadvantaged businesses that typi-
cally have a harder time obtaining a bond from traditional sources.
In fiscal year 2021 alone, SBA guaranteed 9,633 bonds for a con-
tract value of approximately $7 billion, which supported more than
34,000 jobs.
As projects related to the bipartisan infrastructure bill continue
to develop, demand for surety bond guarantees may increase. Given
that, this Committee must look for ways to improve the program
to better serve more small businesses. For instance, some experts
have promoted raising program limits on individual and federal
contracts to keep up with increased investment in infrastructure.
Questions have also been raised as to whether the SBG program
has the resources to adapt to the challenges that come with in-
creased demand. In this respect, advocates believe that there is
room for improvement in areas like information technology, staff-
ing, and outreach activities, which could be addressed by allowing
the Revolving Fund to be used for administrative expenses.
Today, I want to take a close look at how the program is oper-
ating and how Congress can ensure it is equipped to meet small
businesses’ needs as they rebuild America’s infrastructure.
3

I would now like to yield to the Ranking Member, Mr. Luetke-
meyer, for his opening statement.
Mr. LUETKEMEYER. Thank you, Madam Chair. And thank you
for convening the Committee meeting this morning. I appreciate
your kind words with regards to St. Louis. Yes, it took me a lot of
extra time to get to the airport yesterday. I live about 2-1/2 hours
from the airport. So between me and the airport there was a lot
of flooding and I made my flight by 5 minutes. Thankfully, it was
delayed. And so I was able to get here at a reasonable time.
Later today, the Federal Reserve will announce its next interest
rate hike. The decision to raise rates is directly tied to inflationary
pressures our country is facing. As we sit here today, inflation is
at a 41-year high of 9.1 percent. This elevated rate did not happen
out of the blue. It has been rapidly rising for the last year despite
some calling this transitory or temporary.
In addition to a CPI reading of 9.1 percent, wholesale inflation,
or the Producer Price Index, is running hot at 11.3 percent. These
highs are impacting all Americans and all small businesses. From
the pump to the grocery store to the energy bill, it all costs more
than it should and you are not going to get more for the money you
are spending. For instance, the latest number that I saw yesterday
was $8,600 is what it is costing more for people to live this year
than last year. That means $165 a week more to live to pay the
same expenses today as what you were paying last year but getting
nothing extra for it. No difference in amounts or quality of what
you are getting. That is astounding.
For small business, this means a cycle of price increases that
cannot be easily offset. The options or tools that they have at their
disposal is limited. They can raise prices on their own, which NFIB
has found that 86 percent of small businesses have already done.
Or small business owners can decrease the goods and services
available, use less expensive products, or resign to the fact that
revenues will be down.
All options are disastrous for a small business owner, their em-
ployees, and the communities that they serve.
Inflation and the ongoing cost pressures cannot be ignored. In
survey after survey, small businesses report that inflation and rais-
ing prices are the top challenge facing their company. When I am
in district visiting with small businesses, the conversation always
begins and ends with inflation.
And it is not just rising costs. Rather, there is a multitude of eco-
nomic headwinds that are hitting main street businesses. From on-
going and persistent supply chain issues that are leaving shelves
bare, to an employment crisis where small businesses cannot find
workers, current economic conditions remain forbidding. In fact,
NFIB found that small businesses anticipating a more robust and
healthy business environment has soured every month this year.
Simply put, we are heading in the wrong direction. Yet, my
democratic counterparts are proposing more spending and potential
tax increases on all passthrough small business entities. This will
be devastating. Higher taxes on the nation’s job creators do not re-
sult in growth, expansion, and job creation.
In addition to the proposed tax increases, the Biden administra-
tion just finished off its first year in office by proposing over $200
4

billion in regulatory costs. During a time of economic uncertainty
that is hallmarked by inflation running at a 40-year high, it is il-
logical to propose tax increases in an enhanced regulatory environ-
ment.
Plain and simple, this administration is ignoring the plight of
small businesses, from the Small Business Administration’s quest
to become a voter agency, to Treasury Secretary Yellen’s refusal to
testify before this Committee. Continued refusal, by the way. The
Biden administration continues to disregard and overlook the top
concerns of small businesses that produce almost half the nation’s
GDP and create two out of every three new jobs.
While some of my colleagues dismiss these concerns, we will not.
I am confident that if we listen and address the needs of our small
business owners, including the soaring levels of inflation, our coun-
try will grow leaps and bounds. The entrepreneurs, innovators, and
startups of our nation can drive our economy forward. In order for
this to happen, we need to get out of their way. We need to usher
in a pro-growth economy that is focused on less regulation and
taxes and do this before we continue to put ourselves in an even
deeper recession. Otherwise, this downward cycle will continue.
With that, Madam Chair, I yield back. Thank you.
Chairwoman VELÁZQUEZ. I would like to take a moment to ex-
plain how this hearing will proceed. Each witness will have 5 min-
utes to provide a statement and each Committee Member will have
5 minutes for questions. Please ensure that your mic is on when
you begin speaking and that you return to mute when finished.
With that, I would like to introduce our witnesses.
Our first witness is Mr. Peter Gibbs, the president of Foundation
Surety and Insurance Solutions, an authorized agent for SBA’s
Surety Bond Guarantee Program. His prior work experience in-
cludes working at SBA for over 30 years, most recently as the di-
rector and deputy director of the Office of Surety Guarantees where
he served for 16 years. Under his leadership, the office established
federal partnerships with some of the largest surety companies in
the world. Mr. Gibbs is also a lieutenant colonel who served 27
years in the U.S. Army Reserve. Welcome, Mr. Gibbs. We greatly
appreciate your service and your expertise on today’s topic.
Our next witness is Mr. Ralph Pulver, a regional underwriting
officer for construction services of Travelers Bond and Specialty In-
surance based in Hartford, Connecticut. Travelers is a participating
surety in the SBA Surety Bond Guarantee Program since its incep-
tion, and Mr. Pulver is Travelers expert for the program counting
with over 20 years of experience. Mr. Pulver serves on the Board
of Directors for the Minority Business Development Institute. He
also provides technical support for the Surety and Fidelity Associa-
tion of America with its initiatives involving small, emerging con-
tractor bond readiness. Welcome, sir.
Our third witness is Mr. Alan Gravel, the president of Willow
Construction, a small business located in Powder Springs, Georgia.
Willow Construction is a heavily civil contractor. The company spe-
cializes in the construction of treatments plants and pump stations
for local water and sewer authorities. It has also taken on the con-
struction of dams. Mr. Gravel is a civil engineer and Air Force vet-
5

eran. He founded his company 30 years ago. Welcome, and thank
you for your service, Mr. Gravel.
And now I yield to the Ranking Member to introduce our final
witness.
Mr. LUETKEMEYER. Thank you, Madam Chair.
Our next witness is Joel Griffith. Mr. Griffith is a research fellow
in financial regulations for the Thomas A. Roe Institute for Eco-
nomic Policy at The Heritage Foundation. With a background in
law and financial services, Mr. Griffith’s most recent research ex-
plores the perils of inflation. Mr. Griffith, I would like to thank you
for joining us today and for your continued commitment tracking
the top issues and concerns that are confronting the nation’s small
businesses. Your testimony will certainly be appreciated. I would
also like to extend my thanks to all witnesses joining us this morn-
ing.
With that, Madam Chair, I yield back.
Chairwoman VELÁZQUEZ. Thank you. The gentleman yields
back.
Mr. Gibbs, you are recognized now for 5 minutes.
STATEMENTS OF PETER GIBBS, PRESIDENT, FOUNDATION
SURETY & INSURANCE SOLUTIONS; RALPH PULVER, RE-
GIONAL UNDERWRITING OFFICER, TRAVELERS BOND & SPE-
CIALTY INSURANCE; ALAN GRAVEL, PRESIDENT, WILLOW
CONSTRUCTION, INC.; JOEL GRIFFITH, RESEARCH FELLOW,
THE HERITAGE FOUNDATION

STATEMENT OF PETER GIBBS
Mr. GIBBS. Thank you, Chairwoman Velázquez, Ranking Mem-
ber Luetkemeyer, and Members of the House Small Business Com-
mittee, for the opportunity to testify today where I will discuss
what I believe is among the most important public-private partner-
ship in government, the U.S. Small Business Administration Office
of Surety Guarantees, Treasury listed surety companies, and sur-
ety bond producers.
My name is Peter Gibbs. I am a small business owner and the
founder and president of Foundation Surety and Insurance Solu-
tions, a licensed insurance agency who assists small businesses to
obtain surety bonds.
I started my agency in October of 2021, and I am a Member of
the National Association of Surety Bond Producers. Prior to start-
ing my agency, I served as director of Office of Surety Guarantees
at the SBA. I retired in 2021 after serving at the agency for over
30 years. I also retired from the U.S. Army Reserves as a lieuten-
ant colonel, and from 2006 through 2010, I served on active duty
at the Pentagon, the Defense Intelligence Agency, and in the Mid-
dle East.
I strongly believe that today’s hearing is vital to make sure that
small businesses, especially those that may have difficulties obtain-
ing surety bonds, have everything necessary to better compete for
work funded by the Infrastructure Investment and Jobs Act.
For over 50 years, the SBA’s Surety Bond Guarantee Program
has been successful because of the efforts of the SBA, surety com-
panies, and bond producers who work cooperatively to provide bond
6

into companies which otherwise cannot qualify for surety credit due
to financial or other reasons.
I will first describe the recent changes to the program which over
the years have expanded opportunities to small businesses to par-
ticipate on public and private work projects and have spurred great
participation from the surety industry. Recent program enhance-
ments have included the following:
Increasing the contract size bond amount from $2 million to $6.5
and up to $10 million for federal contracts;
Granting the SBA administrator with statutory discretion to de-
termine the portion of liability assumed by the SBA and the surety
company;
Increasing the bond guarantee up to 90 percent for participating
surety companies;
Instituting a paperless application process while approving bond
applications in less than 2 days;
Raising the streamlined Quick-App Bond application from
$250,000 to $400,000; and
Reducing the fees charged to sureties and contractors.
There is still work to be done, however, to expand opportunities
for small businesses especially in the current economic climate.
I suggest the following additional enhancements to streamline
the program.
Ensure that adequate staff levels for the Office of Surety Guar-
antees, as natural attrition and retirements have reduced staffing
levels significantly and position replacements have not been made;
Dedicate resources for the investment in information technology
infrastructure to increase program efficiency;
Explore techniques to manage, mitigate, and transfer risk which
may attract participation from the reinsurance industry;
Consider adding other surety products to the program, which
may be difficult for small businesses to obtain in the marketplace;
Establish parity, internal coordination, and communications be-
tween SBA’s Bond Guarantee Program and other SBA Small Busi-
ness programs, such as those relating to loan guarantees and busi-
ness assistance;
Enhance the marketing resources and budget available to the
program;
Provide marketing resources and incentives for federal and state
procuring agencies to make small businesses aware of the program;
Consider a temporary suspension of program fees paid by small
businesses to access the program; and
Consider raising the current contract guarantee amounts from
$10 million to $20 million, and on non-federal contracts from $6.5
million to $10 million.
In the last 50 years, the Surety Bond Guarantee program sup-
ported over 55,000 small businesses, 750 surety bond guarantees,
and an estimated $150 billion estimated contract value. As impres-
sive as that sounds, I believe that more can be done for the benefit
of small businesses with the right enhancements.
Thank you again for your consideration and the opportunity to
testify before the Committee. I am happy to address your ques-
tions.
Chairwoman VELÁZQUEZ. Thank you, Mr. Gibbs.
7

Mr. Pulver, you are now recognized for 5 minutes.
STATEMENT OF RALPH PULVER
Mr. PULVER. Good morning. My name is Ralph Pulver. I am
employed by Travelers Bond and Specialty Insurance in Hartford,
Connecticut, where for the past 20 years I have served as regional
underwriting officer in our Construction Services business unit. My
day-to-day responsibilities include underwriting contract surety
bonds for our construction clients. This includes underwriting sup-
port for a dedicated team that services our small contractor clients,
including those that are underwritten through the SBA Bond Guar-
antee Program.
I am here today on behalf of the Surety and Fidelity Association
of America, otherwise known as SFAA, a nonprofit organization
based right here in Washington, D.C., whose Members are pri-
marily insurance companies that provide over 98 percent of the
surety bonds written in the United States.
Today, I will be addressing three topics. The background on sur-
ety bonding and the operation of the SBA Bond Guarantee Pro-
gram. Secondly, discuss how the SBA program helps small and
emerging contractors grow their companies and contribute to the
economic strength of their communities. And lastly, the positive im-
provements to the SBA program.
Firstly, Mr. Gibbs and Madam Chair Velázquez, did a very good
job of talking about the background of the program and the param-
eters and so forth, so I will not be redundant there and adding any-
thing onto there. I will tell you that the SBA Bond Guarantee Pro-
gram currently consist of a Plan A, which is known as the Prior
Approval Program, and Plan B, which is otherwise known as the
Preferred Surety Bond Program. Travelers participates in the Plan
B program. This means that the SBA has reviewed our under-
writing and administrative practices and our financial strength and
made a determination as to the aggregate limit of bonds that Trav-
elers can underwrite. Under the Plan B program, Travelers does
not have to submit individual bonds to the SBA for approval, which
streamlines the process. The SBA has given us the authority to un-
derwrite and issue the bonds on behalf of SBA. As a preferred sur-
ety, Travelers must also agree to periodic review and audit of those
SBA bonds.
As of the most recent update from SBA, Travelers is the third
largest writer in the Plan B program, averaging about 262 bonds
annually and impacting about 85 to 100 contractors each year an-
nually.
It should be noted that this ranking is determined by the number
of bonds written, not by the amount of the surety bond premium.
Under the Plan A and Plan B programs, the emerging contractor
must qualify as a small business as classified under the U.S. Office
of Size Standards. The size standard is determined by the gross
revenues of the company and their affiliates averaged over the last
5 years, as well as the company’s industry or class of work. The
SBA’s regulations provide that a bond must be required in the con-
tract in order for it to be eligible for the guarantee. And, the con-
tractor must certify that they have been unsuccessful in finding
surety bond credit in the standard marketplace.
8

The Surety Bond Guarantee Program provides an effective tool
for surety companies to favorably underwrite small and emerging
contractors that would otherwise not qualify for surety support. Al-
though these emerging contractors may not have the balance
sheets that reflect financial strength of larger companies, the sur-
ety will still undertake a very rigorous prequalification process fo-
cused on the contractor’s ability to complete the obligation.
Providing an initial opportunity for small and emerging contrac-
tors to participate in public bid market is critical for their future
success. While there is no time restriction for a contractor regard-
ing how long the SBA supports them, most growth-oriented con-
tractors aim to meet the underwriting standard requirements or
traditional surety markets and in effect, graduate from the SBA
program.
This is what I often refer to as the ‘‘groom and grow’’ period,
where the small and emerging contractor receives coaching and ad-
vice from their surety bond professionals on how to best position
their company to obtain surety bond support in the traditional sur-
ety marketplace. Undoubtedly, the Infrastructure Investment and
Jobs Act will provide increased opportunities for small and emerg-
ing contractors, including minority- and women-owned businesses.
For some contractors new to the surety bond market, the SBA Sur-
ety Bond Guarantee Program helps make that opportunity a re-
ality.
Under the leadership of Peter Gibbs and currently, Jennifer
Vigil, significant, positive operational and program improvements
have been made to the SBA program, including the size enhance-
ments that Peter mentioned earlier. The enhancements to the Men-
tor-Protégé Program, including the size for eligible projects that
has been referred to earlier, increasing the guarantee percentage,
permanently decreasing fees for the contractors and increasing the
quick application, again, that Mr. Gibbs referred to earlier. All
these improvements have increased the number of participating
small and emerging contractors, surety bond producers, and surety
companies, now the largest number of sureties ever participating in
the program.
I commend the SBA for making these improvements to the pro-
gram and would like to thank the Committee for your support and
leadership on this issue.
And thank you for the opportunity to appear before you today.
Chairwoman VELÁZQUEZ. Thank you, Mr. Pulver.
Now, Mr. Gravel, you are recognized for 5 minutes.
STATEMENT OF ALAN GRAVEL
Mr. GRAVEL. I am Alan Gravel, Chairman of the Board of Wil-
low Construction. I grew up in Louisiana, earned a B.S. in Civil
Engineering at Louisiana Tech, and an MS in Environmental
Health Engineering at the University of Texas. I joined the Air
Force and flew the C-7 Caribou in country in Vietnam and then the
KC-135 in Vietnam after that. In 1974, I left the Air Force and
moved to Atlanta to work for a civil engineering consulting firm.
In 1981, I left that firm to work for a utility contractor. When that
company went out of business in 1992, I started Willow with the
employees who had worked for me at the old company. Of the 28
9

or so employees, we now have about six or seven of them who have
been with me over 35 years. Willow itself has completed 600-plus
jobs worth about $170 million in our 30 year history. We just cele-
brated our 30th anniversary.
In the beginning, we were, like many startups, undercapitalized
but we established modest banking and bonding relationships and
steadily built our business. In 1997, we bought a tract of heavy in-
dustrial property and built a shop and an office, you can see it be-
hind me, and moved from the office where we had been renting. By
2000, we reached our target volume of work and were on reason-
ably sound footing. In these early days, almost all our work was
public bid work that required payment and performance bonds.
Between 2000 and 2008, we gradually picked up some private
and subcontract work which did not require bonding, but we were
still actively bidding bonded work. Our bonding agent at the time
was an experienced professional who recognized us as a minimal
risk to the bonding company. We had always been able to provide
the financial documentation that he needed because of the experi-
ence we had had in the previous company.
The financial crisis of 2008-2012 ended our steady progress to-
ward financial security. My late wife, Sheri, said to me, ‘‘So let me
understand. We are giving up our retirement savings to ensure
that all Willow employees have a steady paycheck through the re-
cession?’’ And my answer was, yes, that is exactly what we are
doing, but if Willow survives then all problems can eventually be
solved.
Willow lost significant amounts of money in 2009-2012 and es-
sentially broke even in 2013. I depleted most of my retirement sav-
ings, and in 2011, we had to sell some of our construction equip-
ment. All salaried employees took pay cuts. We did not have raises
for 7 years. We survived and throughout that time, our experienced
bond agent, who knew us well, was able to provide bonds at the
reduced level of business that we were able to maintain.
Things improved starting in 2014 but we had dug a pretty deep
hole for ourselves. Our private and subcontract work picked up sig-
nificantly but when public bid opportunities came along, we had to
do some serious negotiation to get our bid bonds. Then, our long-
term professional bond agent fell ill and had to retire. His company
replaced him with a young man with no experience and things
quickly went downhill from there.
Howard Cowan and I were friends in college. We had maintained
that friendship through all of the years since. When he left the Air
Force, he became a surety underwriter and eventually a surety
agent. When I left the Air Force, I worked for a consulting engi-
neering company and then a utility contractor. We have always
found it amusing that I studied civil engineering and he studied
philosophy and somehow we ended up in two parts of the same
business. Particularly since Willow had started, I had relied heav-
ily on Howard’s advice about bonding and many other things.
When bonding became very difficult for Willow, I called Howard.
After some discussion he said, ‘‘I have resisted doing this for 30
years, but I think it may be time for me to become your bonding
agent.’’ He recognized that Willow had a proven track record but
10

for circumstances that were somewhat beyond our control, we did
not meet the normal commercial standards for bonding.
Howard had a long-term relationship with the underwriters at
SureTec. They studied our situation and concluded that Willow was
a good candidate for SBA’s Preferred Surety Bond Program. Early
in the relationship, Howard and the SureTec underwriters visited
our office in Atlanta to meet our key people and to get a better un-
derstanding of our capabilities. Through SureTec’s comprehensive
understanding of Willow’s operations and their strong partnership
with the SBA, we were able to continue bidding bonded work.
Through lots of hard work, some good luck, and the SBA-backed
bonding program, Willow has recovered our financial stability, and
in 2020, we were able to re-enter the commercial bond market.
Since then, we have had our third and fourth best years in our 30-
year history. We are steadily reducing our debt, upgrading our
equipment fleet, and hiring young employees to carry the company
into the future.
In those dark days of 2010 and 2011, we could have chosen to
declare bankruptcy. Instead, we chose to never give up. Had the
SBA program not been available, we might have eventually recov-
ered but it would have taken much, much longer and it would have
been a lot more painful. With it, we returned to financial health,
providing good incomes to our employees, paying taxes, and com-
pleting quality projects for our community and the environment.
Thank you.
Chairwoman VELÁZQUEZ. Thank you, Mr. Gravel.
And now we recognize Mr. Griffith for 5 minutes.
STATEMENT OF JOEL GRIFFITH
Mr. GRIFFITH. Chair Velázquez, Ranking Member Luetke-
meyer, Members of the House Small Business Committee, thank
you for the opportunity to testify.
My name is Joel Griffith. I am a research fellow at The Heritage
Foundation. The views I express today are my own.
Businesses of every size, especially smaller businesses, are strug-
gling with supply chain issues, rising prices, and a shortage of peo-
ple willing to work. The Biden administration insists that these
problems are transitory, and the administration continues to blame
the pandemic and the war in Ukraine for these economic woes.
Meanwhile, this presidential administration refuses to acknowl-
edge the primary culprit behind our economic turmoil. Senseless
COVID restrictions throttle production. Ill-targeted transfer pay-
ments that shrink the workforce. The opposition by organized labor
to common sense port operations. New environmental regulations
that target diesel semi-trucks in California, and record government
spending financed by the Federal Reserve. In short, the federal
government reduced supply while stoking demand. This is a recipe
for the shortages and higher prices that we are facing today.
Far too many here in Washington, D.C. continue to blame the
pandemic for our economic woes. But it is important to keep in
mind that the pandemic itself did not shut down the world. To the
contrary, governments across the world shut us down with
lockdowns and oppressive restrictions. These erratic, unpredictable,
arbitrary tramplings of human freedom made planning by busi-
11

nesses even for the short term nearly impossible. Politicians across
the world pushed millions of families and businesses off an eco-
nomic cliff all the while misleadingly blaming the pandemic.
Government policies also created the unprecedented labor short-
age that we are experiencing today in the United States, a shortage
caused by millions of workers leaving the workforce. Generous fed-
eral unemployment bonuses in terms of payout and duration acted
as a powerful disincentive to returning to work even as the econ-
omy reopened, especially when combined with multiple federal
stimulus checks. Many individuals delayed their return to the
workforce even after benefits ended, instead choosing to live off the
stockpiled cash.
Private vaccine mandates and a threatened federal vaccine man-
date pushed many others out of the workforce. Now, businesses
across nearly every industry are desperate for workers and have
expanded their benefit packages. Of course, those failed to keep up
with the rise in prices. Nearly half of small businesses are unable
to fill open positions. This is more than double the national aver-
age, or the historical average.
Small businesses, too, are suffering from the supply chain dis-
array. California, specifically, matters on this because it receives
nearly half of all containers coming into the U.S. Yet, in the midst
of this supply chain crisis, what did California do? Well, California
ordered a continued phaseout of older diesel trucks and organized
labor in California continues to resist modernization of their ports
in favor of inefficient modes of operation.
Labor costs and bottlenecks on the supply chain side could in-
crease even further if the Teamsters Union convinces the Biden ad-
ministration to change the definition of employee so that busi-
nesses can no longer hire independent truckers to transport their
goods.
Lastly, while governments hampered the supply of goods and
services, the federal government has used the Federal Reserve as
a piggybank, selling trillions of dollars in debt for newly printed
cash, nearly $80,000 per family of four that has flooded into the
economy. Our Federal Reserve has doubled its balance sheet from
just $4 trillion in March 2020 to nearly $90 trillion just months
ago.
Unfortunately, today’s proposals to expand the Small Business
Administration’s Lending and Bond Guarantee Programs do noth-
ing to counteract these destructive policies. Broadly speaking, calls
to expand the role of the SBA and the credit markets also ignore
this reality, that small businesses are being serviced by private
credit markets. Only 3 percent of respondents to the January 2022
NFIB Survey reported that their borrowing needs were not satis-
fied. Only 1 percent of small businesses reported financing as their
top business problem.
In conclusion, misguided COVID-19 restrictions, combined with
Federal Reserve financed government borrowing and spending set
in motion the current economic turmoil, the skyrocketing inflation,
and the supply chain havoc that are crippling businesses and fami-
lies. Proposals for yet more government spending, more labor regu-
lations, more attacks on energy production, and massive tax hikes
on businesses risk further pain. Thank you.
12

Chairwoman VELÁZQUEZ. Thank you.
And now I will recognize myself for 5 minutes.
Mr. Gibbs, considering the bipartisan Infrastructure Investment
and Jobs Act that Congress passed last year, $1.2 trillion, it was
great to see in the social media every Member praising the projects
that have been funded in their district thanks to the infrastructure
legislation. Why is the Surety Bond Guarantee program more im-
portant than ever?
Mr. GIBBS. I think it is important because it is going to allow
small businesses who are having difficulties to get bonded and to
take advantage of opportunities because of the infrastructure bill.
They will be in a better position to get into the game. They will
be able to bid on projects. I mean, there are companies who cannot
even, if they cannot get a bid bond, they cannot even bid on a
project. So they are left out of the process. So I think small busi-
nesses having the opportunity to bid on projects puts them in the
game and gives them a fairly equal opportunity to get awarded a
project.
Chairwoman VELÁZQUEZ. Thank you.
Mr. Pulver, many small businesses across the country are un-
aware of the existence of the SBA Surety Bond Program. Based on
your knowledge of the program, what can we do to spread the
word?
Mr. PULVER. Yes. Program awareness, increasing the number of
agents and producers that are involved in security the bond aids
for contractors, making more sureties aware and making more con-
tractors aware of the program, it could use that to help to your
question.
Chairwoman VELÁZQUEZ. Thank you.
Mr. Gravel, your company was able to recover financially with
the help of the SBG program. What does the SBG program mean
for you, your business, and the personnel you employ?
Mr. Gravel, you are muted. You need to unmute yourself.
Mr. GRAVEL. We were able to more quickly return to a position
where we could give raises, our employees can send their kids to
college. We were able to focus on safety and quality issues instead
of feeling like we have to cut corners to get by. It means that we
can afford to provide healthcare, Section 125 flexible spending pro-
grams, a 401(k) retirement plan. It means that the sacrifices that
you expect to make when you start a business do not have to last
forever. And we are back up on our feet financially in a time period
that we could not have accomplished without SBA assistance.
Chairwoman VELÁZQUEZ. Thank you.
Mr. Gibbs, I understand that there are concerns with the capital
access financial system which is the IT system SBA uses for the
SBG program. Could you please expand on those concerns and
what needs to be done to improve that situation?
Mr. GIBBS. Yes. So as stated earlier, I spent 18 years in that
program. And that system needs a total overhaul. I think it would
assist not only the external users but also the internal users of the
program. The system is antiquated and it needs to be upgraded.
Chairwoman VELÁZQUEZ. Thank you.
And Mr. Pulver, there have been efforts to increase the bond
guarantee thresholds to $20 million for federal contracts and $10
13

million for all other contracts. And these thresholds have not been
increased in more than a decade. Would it make sense to increase
those now, and why?
Mr. PULVER. It is the position of SFA and their Members that
the program works very well at the current levels and that further
dialogue around increasing them is something that SFA would like
to be a part of.
Chairwoman VELÁZQUEZ. Thank you.
Mr. Gravel, it seems you were not able to access the standard
market for bonds due to economic losses experienced following the
2007 recession. So what options would you have had to have to
save your company had it not been for SBA’s Surety Program
Guarantee Program? Would your company——
Chairwoman VELÁZQUEZ. Yeah, go ahead. Go ahead.
Mr. GRAVEL. Without bonding, without SBA backed bonding we
would have had to cut way, way back, more or less start over. I
mentioned in my testimony that I have multiple employees who
have worked for me for 35, 38 years, like that. Most of those people
would probably have had to go to other employers and we would
have lost that experience. And that would have slowed our recovery
even more. We had just built the building that you see behind me
in 1998. We might have been in a position where we would not
have been able to maintain those buildings and that property
which helps us to function very, very well.
Chairwoman VELÁZQUEZ. Thank you, Mr. Gravel. My time
has——
Mr. GRAVEL. At the very least it would have delayed our recov-
ery.
Chairwoman VELÁZQUEZ. Thank you.
And now we recognize the Ranking Member.
Mr. LUETKEMEYER. Thank you, Madam Chair.
Mr. Griffith, as you can imagine when I am back home visiting
small businesses, the topic of inflation comes up every single con-
versation. It is at the top of everyone’s mind. And with that I would
like to submit statements for the record with regards to two of my
constituents with regards to the comments that they made, Madam
Chair.
Chairwoman VELÁZQUEZ. Without objection.
Mr. LUETKEMEYER. Thank you very much.
We are now running at a 41-year high with inflation. Wholesale
inflation is double digits. Mr. Griffith, you have written about this
extensively over the last year. Where do you see inflation going in
this country short term and long term?
Mr. GRIFFITH. Well, longer term, so long as we continue to em-
power the Federal Reserve to print the resources to fund our gov-
ernment, we can expect inflation to continue to be exacerbated.
And I think it is important to keep in mind that even if the infla-
tion rate comes down from the 9 and 10 percent rate that we are
at today to say a more typical 2 or 3 percent, that does nothing to
mitigate the fact that families have lost thousands of dollars over
the past year. The income does not just recover once inflation re-
turns to normal. All of the families that benefitted from the stim-
ulus checks from all the benefits, they benefitted from that but now
14

they have lost income in excess of what they received. And I am
really hoping that these families are able to connect those dots.
Mr. LUETKEMEYER. You make a great point there from the
standpoint that a figure I just got last week is now $8,600 more
to live in this country than it was a year ago, which is about $165
a week that you get nothing extra for, which I mentioned in my
opening remarks and follows along with your conversation there.
When you talk about the Fed, yesterday in Politico, there was an
article with regards to Fed Relies on Dubious Data to Chart the
Economy’s Course. And then the byline was officials are preparing
another huge rate hike likely to convulse economy markets which
is kind of like it blows your mind. If they do not have the right eco-
nomic information that they are going to try to make a move here,
it is like what in the world are we doing?
One of the things that is in there is that it talks about going in
the wrong direction here. So, we actually had, again, since mid-No-
vember, this is the highest level of unemployment claims that we
have had, 251,000. We are in a recession and nobody seems to on
the administration side to want to admit it.
So Mr. Griffith, how would you define recession?
Mr. GRIFFITH. Well, historically, once you have 2 quarters of
negative economic growth, a recession has been declared. That has
been the norm. We had negative economic growth in the first 3
months of this year. We are going to know very shortly if we saw
the economy contract in the second quarter. Typically, that has
been a recession. And the administration can deny the recession all
they want but the bottom line is that American families are feeling
the impact right now of this economic misery.
Mr. LUETKEMEYER. It is interesting that they are trying to re-
define recession before the numbers come out which tells you they
know where the numbers are going to be. They know it is going
to be bad. It is going to be recessionary numbers. And so they are
trying to redefine this. And this is not something new. I sit on the
Financial Services Committee and I see this every day, especially
with the Consumer Financial Protection Bureau. Not only do they
reinterpret laws, redefine words, make up words, they also issued
press release one time saying it is a problem so suddenly they can
go back and say, you know what? We saw on the news that this
was going on so all of a sudden then they can go out and have au-
thorization to go after somebody when they created the problem
themselves. When you go in and redefine what is going on in the
world, I think the American people are not going to be hoodwinked
by this. They know things are going in the wrong direction. It is
interesting that the administration keeps touting all the jobs they
created. If you look at the numbers, we are still 520 some thousand
people short than we were prior to the pandemic. So I know your
labor participation continues to be low. How does this all factor
into inflation, Mr. Griffith?
Mr. GRIFFITH. Well, on the job side you are exactly right. We
have actually more than a million people that just disappeared out
of the labor force. You mentioned rightfully that our total number
of people employed is about 500,000 lower than it was a few years
ago and that is despite the fact that our population has grown in
the meantime. And this is feeding into inflation because companies
15

now are having to increase those labor costs, and those labor costs
as they increase are not keeping up with the cost of living. So it
really feeds in as a cycle.
Mr. LUETKEMEYER. Thank you.
Mr. Gravel, thank you for being here. You are an entrepreneur.
You are a businessman, and we certainly appreciate you are willing
to share some experiences. I congratulate you on being a survivor.
I hope that you were able to participate in the PPP program. I
hope that was able to be helpful to you.
Just one quick question for you. Whenever you are bidding these
projects now, with inflation the way it is, how do you continue to
protect yourself against the rising inflation when you are bidding
a project that may take several months or years to do?
Mr. GRAVEL. We basically bid hard dollar projects where we
have a hard quote from our suppliers on the major things. Things
like pumps and generators and things like that, we will have a
hard quote, and some quotes like electrical subcontracts will be
hard dollar. So, once we commit our pricing, the supplier is com-
mitted to us.
Mr. LUETKEMEYER. So the bond process is helpful to you in
case something goes wrong you would be able to have a backstop;
would that be a fair assessment?
Mr. GRAVEL. Well, the costs that we have are fixed, basically,
for all of the major part of the cost. Now, there are costs that can
go up like fuel, and to some extent our labor costs and that is our
risk. They are going to go up during the course of the contract. We
just have to build that into our markup and make sure that we are
prepared.
Mr. LUETKEMEYER. Thank you. I yield back.
Chairwoman VELÁZQUEZ. The gentleman yields back.
The gentlelady from Pennsylvania, Ms. Houlahan, is recognized
for 5 minutes.
Ms. HOULAHAN. Thank you, Madam Chair.
Just confirming that you all can hear me okay.
Chairwoman VELÁZQUEZ. Yes, we can hear you.
Ms. HOULAHAN. Excellent. And I have a series of questions but
I actually have a follow up to Mr. Luetkemeyer’s question really
quickly for Mr. Griffith.
You mentioned that there are a million people that still have not
returned to our economy inexplicably. Really briefly, what is your
hypothesis? Who are those people? Could it be childcare issues?
What kinds of things are keeping a million people from coming
back to our economy?
Mr. GRIFFITH. Part of the situation is that much of the
childcare providers have not returned and that is being an impact
on parents. But a big part of this, too, is the fact that families, a
lot of people were able to earn more off the job than on the job.
A lot of those resources were stockpiled.
Ms. HOULAHAN. Yes, sir. But right now that is not the case
any longer. So a million people are still not back in the economy
and part of your hypothesis is childcare might be an issue. Is there
anything else right now that might be the issue that we could be
doing to be helpful to bring those people back?
16

Mr. GRIFFITH. What we do know is that people are still actually
drawing down on their savings. The savings rate has declined but
families are still working through that surplus. That has been a
drag. And then also if you look at the fact that wages have not
come up with the cost of living, that is also a deterrent to those
returning to the workforce.
Ms. HOULAHAN. Well, it would seem to me that if you do not
have any money that you would return to the workforce if you had
the ability to return to the workforce. And thank you very much
for that. I really, really appreciate that insight. That is a thing that
I am also trying to unwrap.
If it is okay, I am going to turn my questions over to Mr. Gravel
and to Mr. Pulver as well. And again, thank you very much for
joining us today.
There is definitely no doubt that the passage of the bipartisan
Infrastructure Investment and Jobs Act was historic, not just for
the larger industry but also for smaller enterprises that we are fo-
cusing on today. Since its passage, the project has helped 342 new
Pennsylvanian roadway, bridges, and projects this year, and infra-
structure development with many more projects to follow during
the remainder of this year it is anticipated. So it is clear that the
IIJA is an economic engine that is supporting good paying, local
jobs. Businesses and communities across our country offer manu-
facturing to construction across all other industries. And as our
panelists, you guys included, have mentioned, the SBA plays a very
key role in assisting our smaller businesses and enterprises in ac-
cessing these important opportunities.
Mr. Gravel, first, thank you very much for your service and for
being an entrepreneur. You and I have those things in common.
And for sharing your story with us. Would you talk a little bit more
about how the increased contract opportunities made available
from legislation like the IIJA will benefit small firms like you?
Mr. GRAVEL. Right now, virtually all of our work, 90 percent of
our work is private. So I do not know to what extent these funding
programs might affect that indirectly or not but they are not affect-
ing it directly.
Ms. HOULAHAN. And that actually pivots to my next question
which is I feel as though there is a little bit of a gap in terms of
small business owners being aware of what sort of resources and
opportunities are available to them through the IIJA program and
through the SBAA.
Mr. Pulver, you recommended in your testimony that the SBG
program provide marketing resources and incentives. Where is the
disconnect, Mr. Gravel and Mr. Pulver, where we could be able to
be more forthcoming and people could be able to understand more
what is available through IIJA and SBC for smaller businesses like
yours. And Mr. Gravel, maybe I could start with you.
Mr. GRAVEL. In our particular case, our connection with the
SBA was through our agent. And I would support more robust sort
of a relationship between SBA and some of the agents. And any
way you could enhance that relationship would be good. If we go
for bonding, we are going to go to an agent first. That is where we
have to go first. We cannot go directly to the SBA. And so the rela-
tionship between the agents and the sureties is the most important
17

thing and that is why in our case it worked out so well because
our guy, our agent was very much involved in the SBA and knew
a lot about it, and through NASB he had become very aware of it.
And that is why it worked so well for us. But I think the small
companies and, of course, we have been in business a long time
now, so we do not really represent new companies anymore, I
guess. But there are lots of opportunities out there. There are plen-
ty of people who are advertising all the jobs that are out for bids
and things like that. There is no shortage or anything of that sort.
Ms. HOULAHAN. Thank you.
Mr. GRAVEL. But these people need to know that they can find
bonding if they find the right agent and get to know the right
agent and develop his faith in them as far as their ability to per-
form.
Ms. HOULAHAN. Thank you, Mr. Gravel.
I am afraid I have run out of time. And I yield back, Madam
Chair.
Chairwoman VELÁZQUEZ. The gentlelady yields back.
And now we recognize the gentlelady from Texas, Ranking Mem-
ber of the Subcommittee on Oversight, Investigations, and Regula-
tions, Ms. Van Duyne, for 5 minutes.
Ms. VAN DUYNE. Thank you very much, Madam Chair
Velázquez and Ranking Member Luetkemeyer for holding this
hearing.
For over a year, Members of this Committee have called on
Treasury Secretary Yellen to meet her legal and statutory obliga-
tion to appear before this Committee and speak on matters related
to COVID-19 relief loans. While some may view this requirement
to be pointless so much time later, I can assure you that the small
businesses around this country who have watched their margins
shrink in this volatile economy care. What small businesses under-
stand, which this administration apparently does not, is that
amidst record high inflation and rising costs of capital, every fraud-
ulent dollar that went to a criminal pocket was a dollar taken away
from a deserving small business. For the lifeblood of our economy,
this is just another signal from this administration of their indiffer-
ence to the economic standing of our smallest employers.
While President Biden may look the other way of regarding this
inflation-ridden economy, we simply cannot. Tomorrow, we will
likely see the second quarter GDP report indicate that we have just
recorded another quarter of negative growth in the economy, which
is typically an indicator of a technical recession. And as if they
were anticipating an abysmal report, the White House released a
blog post Monday arguing that 2 straight quarters of negative
growth no longer indicates a recession. And while Secretary Yellen
may not have time to follow the rule of law, she stated in her inter-
view on Sunday that our economy was not in a recession but in a
period of transition in which growth is slowing.
While this administration would rather debate semantics than
admit that their policies have devastated our economy, small busi-
nesses are struggling. And even if every major news outlet may
hold the water for this administration’s economic misdealings, let
us set the record straight. As Michael Strain of AEI has pointed
out, 10 recessions were declared the last 10 times we have experi-
18

enced a consecutive quarterly decline. That fact seems straight-
forward to most people.
And if you needed another sign times are getting tougher, retail
giant Walmart lowered its profit outlook Monday due to consumers
having to redirect money usually spent on leisure goods to afford
highly inflated food and fuel costs. Every administration official
and Member of this Congress has seen the evidence that this econ-
omy is in a rough spot. Hopefully, they are in touch with the com-
munities and constituents they represent to understand the perils
consumers have faced over the last year. But unfortunately, based
on the actions Democrats are planning to take, I fear they have
not.
I want to be very clear. Republicans will continue to combat the
Democrats’ plan to spend hundreds of billions on the new reconcili-
ation package and they will continue to fight their planned in-
creases on the small businesses which they claim to support.
I appreciate all the witnesses being here today. And Mr. Griffith,
I know you wanted to respond to the last question. In addition to
potentially childcare not being available, what impact do you think
forcing kids to stay home from school, forcing people to get vac-
cinated against their will or lose their job, and ridiculously high
gas prices have affected these million people who have not been
able to get back to work?
Mr. GRIFFITH. Thank you for that question.
In relation to families with children, a lot of the new data are
actually showing that those are the individuals most likely to have
returned to work. They need to supply resources to their families.
They found a way to get back to work. What we see is that the real
drawbacks now over unemployment has been, like I said, the fami-
lies that are still drawing down on all the resources the federal
government provided, well intentioned, maybe, but still, families
are drawing down on those resources.
And second of all, the fact that working pays less than before.
A middle-class family right now, they are earning $3,000 less per
year in real terms because of this inflation that was caused by
these shutdowns and by all the money printing that we undertook
in order to pretend that shutdowns do not have economic con-
sequences.
Ms. VAN DUYNE. How much do you think that reckless spend-
ing by this administration has contributed to the inflation that the
country is experiencing today?
Mr. GRIFFITH. Oh, it has definitely exacerbated it. Remember,
this started several years ago when Democrats and some Repub-
licans teamed up together to paper over the impact of the shut-
downs. But this administration has doubled down on those mis-
takes. We knew this was going to be a problem. We had left wing
and right wing economists that were saying if you print money to
pay for massive expansion government spending, there will be in-
flationary results, and this administration chose to double down on
those mistakes.
Ms. VAN DUYNE. I have been talking a lot about how much reg-
ulations cost. Can you share with the Committee the impact that
regulatory costs have had on small businesses, especially in our
current economic climate?
19

Mr. GRIFFITH. Regulations in general, and a lot of these regula-
tions are related to the energy sector. We know that over the years
the Green New Deal has not been able to be passed by Congress,
and prior administrations, including the Obama administration
and the Biden administration, they are trying to implement the
regulatory package. They are trying to do that through Executive
Order and through the rules making process. And that is driving
up costs. And on the energy front, that has indirect cost, too, on
the manufacturing sector because we are driving up energy costs
on a lot of these smaller factories.
Ms. VAN DUYNE. I appreciate that. Thank you very much. I
yield back.
Chairwoman VELÁZQUEZ. Time has expired.
And now we recognize the gentleman from Louisiana, Mr. Car-
ter, for 5 minutes.
Mr. Carter, you are muted.
Mr. Carter, you continue to be muted.
Mr. CARTER. Can you hear me now?
Chairwoman VELÁZQUEZ. Yes, we can hear you now.
Mr. CARTER. Okay. Okay. Thank you very much.
My question is for Mr. Pulver. What private or public resources
would you recommend to small businesses for them to gain a better
understanding of how the SBG program works?
Mr. PULVER. Yes, thank you for the question. It refers back to
what we were speaking earlier about with regards to the small
business more than often does not have a board of directors. It has
a circle of influence, be it their banker, their CPA, their bond pro-
fessional, their insurance advisor. So looking to those trusted advi-
sors, and particularly the surety bond professional to help them
identify opportunities that exist within the Jobs Act or elsewhere
is critical, and finding access to the SBA Bond Guarantee Program
as well.
Mr. CARTER. Part of the problem, I appreciate it, is small busi-
nesses have historically had a difficult time in getting bonding, pe-
riod. And learning of these programs, having technical assistance
to get ready for them continues to be a barrier. Any advice or sug-
gestions you would give to a small business person, particularly a
DVE or women-owned enterprise that may be watching today on
how do they break through these barriers of, someone mentioned
a while ago about not even having the bonding to do a basic bid.
We know that that continues to be a problem. And as we talk to
contractors, having the ability to contract and never getting a con-
tract is two different things.
Mr. PULVER. Yes. Again, I am going to refer back to the surety
bond professional that understands SBA and the SBA Bond Guar-
antee Program. Those are few and far between. And getting that
guidance from that individual to help make the appropriate invest-
ments into their business to prepare it to be bondable and perhaps
using SBA as the foundation to getting there.
Mr. CARTER. Based on your company’s profile, what percentage
of SBA guarantee bonds are for these business?
Mr. PULVER. I am going to decline that question. I do not have
that data.
20

Mr. CARTER. You are going to decline into r you do not have it?
Those are two different answers.
Mr. PULVER. I do not have it.
Mr. CARTER. If you had it, would you share it? I am not sure.
You said decline, so I am wondering, does that mean you would
have shared or you just do not have access today?
Mr. PULVER. Well, I will rephrase that. Earlier I said on an av-
erage we have, at Travelers, I am taking the question to be at
Travelers, we have between 85 and 100 contractors annually that
are benefitting from the program. Some of those contractors move
up, graduate, and become ready for bond credit elsewhere. Does
that answer your question?
Mr. CARTER. A little bit more. But I will draw down. I have
your information. I will send something more specific to you that
will get at that.
This is a question for anyone. What changes do you think could
be made for this program to expand bonding capacities for DBEs?
Again, I will mention that we know that that is a major barrier.
If you had a magic wand and you had this Committee being able
to advance any issues that it might be able to make it clear and
more available, what suggestion or advice would you give us?
Mr. GIBBS. This is Peter Gibbs. My suggestion is the Office of
Surety Guarantees needs the resources so they can market the pro-
gram. A question earlier, you know, not too many people, as the
former director of this program, we had three marketing personnel
to market a $6 billion program. Right now I believe there is one
marketing person to speak to organizations and small businesses,
so I think the response is——
Mr. CARTER. Are you saying, I am sorry, you say one marketing
person within SBA to promote this SBG program?
Mr. GIBBS. The Office of Surety Guarantees. Yes. We have one
marketing person. They need the resources so that they can go to
all these organizations, conferences, to small businesses, to agents,
to surety companies. They just do not have the resources to spread
the word of this program.
Mr. CARTER. Under your leadership when you worked for the
organization, you may or may not remember this, but tell me if you
just had to guess, the percentage of small, disadvantaged enter-
prises being able to fully take advantage of SBG and bonding ca-
pacity. Is that number 20 percent, 30 percent, roughly?
Mr. GIBBS. I do not know what that percentage is. I am sorry.
Mr. CARTER. I mean, and I will not hold you to any science, but
it is short. Is that a fair assumption?
Mr. GIBBS. Yes.
Mr. CARTER. Okay. And what changes do you think the pro-
gram——
Chairwoman VELÁZQUEZ. Time has expired. Mr. Carter, time
has expired.
Mr. CARTER. My time has expired?
Chairwoman VELÁZQUEZ. Yes.
Mr. CARTER. I am sorry. Thank you, Ma’am. I yield back.
Chairwoman VELÁZQUEZ. Now we recognize the gentleman
from Texas, Mr. Williams, Vice Ranking Member of the Committee.
Mr. WILLIAMS. Thank you, Madam Chair.
21

There is no question that small businesses across the country are
hurting as they try to manage the various economic headwinds
during the Biden administration.
I am a small business owner. I employ about 300 people back in
Texas. I am a car dealer. I have been in business 51 years. I re-
member 1971. I remember 1981. I remember 1988. I remember
2008. And this president is really putting it on us compared to
what we saw in the past.
And I recently received a letter from a constituent in my district,
Mr. Michael Jones, who is the owner of Glen Rose Veterinary Clin-
ic that I would like to share with you all today. Mr. Jones wrote,
he said, ‘‘The past few months have been particularly challenging
as I have been struggling to keep up with the rapid price increases
as a result of supply chain disruptions and increased gas prices.’’
And on top of this he is having trouble keeping up his employees’
wages since inflation is eating away at all of their hourly rates.
The economic realities have left him with no choice but to pass
these costs along to his customers in order to keep his business
running.
So before I get on with my questions, I would like to submit this
letter, Madam Chair, for the record.
Chairwoman VELÁZQUEZ. Without objection.
Mr. WILLIAMS. Thank you. Thank you for that.
And unfortunately, Mr. Jones’s experience in Glen Rose is becom-
ing all too common for small businesses across the country. There
again, I am a small business. I get it. I know what he is going
through. I know it is hard to hire people. Supply chain is a dis-
aster. Try that in the automobile business right now. So I know
what he is going through and what small businesses have hap-
pening.
We have an administration that has no small business experi-
ence, no business, making rules they have actually no reference to
go from.
So Mr. Griffith, what specific actions can the administration and
Congress take to combat these economic challenges small busi-
nesses are facing right now?
Mr. GRIFFITH. Well, I think one of the things Congress could
do would be to take a second look at what has been proposed in
the Pro Act. The Pro Act would actually apply basic California
labor standards to the rest of the country and would make it very
difficult for independent truckers, for instance, to work. And that
is something that Congress right now is actively considering impos-
ing. This would really put small businesses in a bad situation and
harm a lot of independent workers.
Mr. WILLIAMS. Well, and you know, 75 percent of the work-
force, 75 percent of the payroll is small business but, yet, we have
one party that wants to help. We have another party that wants
to hurt.
So it has been over 4 years since the 2017 Tax Cuts and Jobs
Act passed Congress and was signed into law by President Trump.
This historic tax reform ensured that American small businesses
and workers were provided opportunities to grow and compete. Un-
fortunately, many of the important provisions in this bill will ex-
pire in the next few years, and rather than working to extend these
22

important provisions and make it easy for small business and easy
for main street that prove successful in jumpstarting main street,
the Democrats continue to discuss new taxes on passthrough enti-
ties and S corps. What a time to be raising taxes; right? It is unbe-
lievable.
So Mr. Griffith, can you discuss how the additional 3.8 percent
tax that the Democrats keep reviving would hurt small business?
Mr. GRIFFITH. Well, it is going to discourage these business
owners from actually saving and reinvesting that capital. Instead,
they are going to be incentivized to consume that capital. It is
going to harm not just the business owners but it is going to harm
those people who rely on those businesses to create new jobs.
Mr. WILLIAMS. Well, they are going to have to raise prices;
right? They are going to get in defense mode. Instead of spending,
they are going to have to hold for taxes. So it is a disastrous, back-
wards economy. And Americans are seeing Help Wanted signs ev-
erywhere in the windows of businesses across the country. A recent
survey by the NFIB found that 50 percent of all business owners
reported job openings it could not fill. These overwhelming staffing
shortages are hindering business operations and limiting owners’
abilities to keep up with current demand while preventing business
growth. We have talked about this.
Why do you believe, Mr. Griffith, that there are so many open
jobs across the country right now, and how should the administra-
tion encourage Americans to return to work? Before you answer
that, we have talked a little bit about it, but they might be able
to encourage workers to go to work if we cut taxes. Let people
make more money. Let people understand that there are jobs out
there and employers like me, let’s hire people, put them back to
work because we have got a generation of kids that think a career
is a $15 minimum wage or it is an unemployment check. We need
to fix that. So what would be your advice?
Mr. GRIFFITH. Well, two of the leading factors right now of peo-
ple not going back to work, (1) People are still drawing down on
the savings that they accumulated with all the generous govern-
ment benefits. But also, work pays less today because of all this
government spending and money printing. The typical person is
earning around 10 percent less today in real terms than they were
just 1-1/2 years ago. Work pays less.
Mr. WILLIAMS. Right. And they want more money because they
are trying to stay up with inflation and small business cannot af-
ford to do it. So it creates a problem.
So I guess at the end of the day I would certainly have less gov-
ernment and I would cut taxes again because it works and put
money in the hands of these people so they can start spending
again.
With that in mind, Madam Chair, I yield my time back.
Chairwoman VELÁZQUEZ. The gentleman yields back.
And now we recognize the gentleman from Pennsylvania, Mr.
Meuser, Ranking Member on the Subcommittee on Economic
Growth, Tax, and Capital Access.
Mr. MEUSER. Well, thank you very much, Madam Chairwoman.
I thank the Ranking Member Luetkemeyer as well. Thank you very
much to our witnesses. And I am also pleased to say that I have
23

a number of small business owners from Pennsylvania’s District 9
here attending. So thank you all as well.
So, Mr. Griffith, you know, facts are stubborn things. I am appre-
ciating the fact that you are bringing out the facts. And, you know,
there is a saying, ‘‘In God we Trust but everybody else bring their
data.’’ So why do we not stick to the data and priorities?
Small businesses are clearly under great pressure. This topic of
access to capital is very important but it is simply not the priority
right now. Inflation is. And there is also a saying that goes, ‘‘When
you are in a ditch, the first thing you do is stop digging.’’ But I am
not so sure the Biden administration understands this because the
things that got us here are part of the plan moving forward, such
as continued spending, a continued assault on our domestic energy,
continued regulations. The CBO puts it over $200 billion just in the
last 18 months. And no pro-growth or pro-production proposals.
You know, pro-production would increase supply to meet demand
as opposed to trying to diminish demand with higher taxes, which
incredulously is being considered by the Biden administration and
our friends in the left.
So right now inflation is at 9.1 percent. In laymen’s term, 9.1
percent is about 1/12th of your income or revenue for a year; right?
So, in other words, 1 month of every year, 1 month of this year,
income and revenue will be evaporated for every business and
every family because of inflation. That robs people of a lot. And it
is not looking much better moving forward. I mean, right now we
have as much as 46 percent of families struggling to pay bills. One
year ago, according to surveys, it was 60 million people struggling
to pay bills as they would denote. Now it is 90 million, right, again,
with no end in sight.
We are also about to be informed that we are in a recession, re-
gardless of whether or not the administration wants to admit it or
how they want to redefine it after the historical definition that has
existed. And inflation as we all know plays no favorites; right? It
affects construction. It affects farmers. It affects manufacturers,
service, families, everyone in the U.S.
So some of my small business constituents stated that their focus
right now is on fighting headwinds rather than growing their busi-
ness. Another stated that, a family farm owner, fertilizer is up 300
percent. It should be no wonder why food prices are through the
roof as they are. Others state how they cannot hire. Projects are
being delayed, construction projects and other, and one of my con-
stituents informed us that the infrastructure bill that was passed
will now provide 30 percent less projects because of the level of in-
flation that has taken place. So we really have some serious issues
to address.
And Mr. Griffith, let me ask you this. Will continued regulations,
continued excessive spending, continued assault on our domestic
energy industry, keeping gasoline prices near $4.80, and new taxes,
again, remarkably, they are considering new taxes on small busi-
ness, is that going to help us turn the corner and provide small
businesses relief? Or are there better solutions than that?
Mr. GRIFFITH. No, this war on production right now that you
see with this administration will make matters far worse. And you
mentioned something very important. Fertilizer costs. Well, what
24

goes into fertilizer? It takes a lot of energy to actually produce that
fertilizer. So when you see our administration declaring war on fos-
sil fuels, declaring war on affordable natural gas, we are remaking
ourselves in Europe’s image and Europe is even in a far worse situ-
ation than we are in terms of energy costs and in terms of agricul-
tural production. So if we continue down this road, declaring war
on production at the same time that we are going to continue
spending trillions of dollars that we do not have, we are promising
to make matters worse. And there is an alternative, and the alter-
native is to actually incentivize production and get government
spending under control. That will make it possible for American
families to have a higher standard of living once again.
Mr. MEUSER. All right. I would love to ask the other witnesses
the same question but I am out of time.
Madam Chair, I yield back.
Chairwoman VELÁZQUEZ. The gentleman yields back.
And let me take this opportunity to thank the witnesses on this
very important topic that is the Surety Bond Guarantee. Maybe
next time when there is a bill to cut taxes we should all be com-
mitted to make sure that small businesses are not an afterthought,
sunsetting those taxes while corporate American runs away with
the biggest cut in the history of this country.
For small businesses to benefit as much as possible from this
once in a lifetime infrastructure investment, they must be well-
equipped to engage in the federal contracting process. By finding
ways to improve and modernize the Surety Bond Guarantee Pro-
gram, we can help more small businesses take part in this historic
effort. I look forward to taking the insights we have heard today
and working with my colleagues to ensure this program meets the
needs of small firms, especially the disadvantaged businesses that
need it the most.
Without objection, Members have 5 legislative days to submit
statements and supporting materials for the record.
And if there is no further business to come before the Committee,
without objection, we are adjourned. Thank you.
[Whereupon, at 11:15 a.m., the committee was adjourned.]
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