SBA Management Review: Office of Government Contracting and Business Development (House Small Business Committee hearing, June 23, 2022)

Summary

The printed record of a House Committee on Small Business hearing, SBA Management Review: Office of Government Contracting and Business Development, held June 23, 2022, Small Business Committee Document Number 117–059. Chairwoman Nydia Velázquez presided from 10:02 a.m. in Room 2360 of the Rayburn House Office Building; she and Ranking Member Blaine Luetkemeyer gave opening statements. The sole witness was Bibi Hidalgo, Associate Administrator of the Office of Government Contracting & Business Development. Her answers to Luetkemeyer's questions for the record describe PowerBI dashboards tracking certification applications and processing times, say completed HUBZone and WOSB applications remain well below the 90-day statutory threshold, and report that survey respondents from May 2022 through August 2022 gave SBA's Certify system a 4 out of 5 rating.

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“SBA Management Review: Office of Government Contracting and Business Development (House Small Business Committee hearing, June 23, 2022).” Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/sba-management-review-office-of-government-contracting-and-business-de-2e9b3a35b1/, SHA-256 e9d3b014ef600b7cc5d26c7fe557349ffa110c9a6c70b7d29d20bef993bb80d0.

Full text

SBA MANAGEMENT REVIEW: OFFICE OF
GOVERNMENT CONTRACTING AND BUSINESS
DEVELOPMENT

HEARING
BEFORE THE

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

HEARING HELD
JUNE 23, 2022

Small Business Committee Document Number 117–059
Available via the GPO Website: www.govinfo.gov

U.S. GOVERNMENT PUBLISHING OFFICE
47–840 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

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 ....................................................................................... 2

WITNESS
Ms. Bibi Hidalgo, Associate Administrator, Office of Government Contracting
& Business Development, U.S. Small Business Administration, Washington,
DC .......................................................................................................................... 4

APPENDIX
Prepared Statement:
Ms. Bibi Hidalgo, Associate Administrator, Office of Government Con-
tracting & Business Development, U.S. Small Business Administration,
Washington, DC ............................................................................................ 31
Questions and Answers for the Record:
Questions from Hon. Luetkemeyer to Ms. Hidalgo and Answers from
Ms. Hidalgo ................................................................................................... 37
Additional Material Submitted for the Record:
None.

(III)
SBA MANAGEMENT REVIEW: OFFICE OF
GOVERNMENT CONTRACTING AND BUSI-
NESS DEVELOPMENT

THURSDAY, JUNE 23, 2022

HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
Washington, DC.
The committee met, pursuant to call, at 10:02 a.m., in Room
2360, Rayburn House Office Building, Hon. Nydia Velázquez
[chairwoman of the Committee] presiding.
Present: Representatives Velázquez, Davids, Mfume, Bourdeaux,
Carter, Chu, Evans, Houlahan, Craig, Luetkemeyer, Williams,
Stauber, Meuser, Tenney, Garbarino, Young Kim of California, Van
Duyne, Donalds, and Fitzgerald.
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 and practice will continue to
apply during hybrid proceedings. All Members are reminded that
they are expected 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 will recognize that
Member at the appropriate time slot provided they have returned
to the proceeding.
With that, let’s start this hearing.
When a small firm wins a federal contract, it creates a ripple ef-
fect that creates jobs, invests in communities, and generally boosts
the economy. The presence of small firms also helps drive innova-
tion nationwide and competition in the federal marketplace.
Congress recognized these benefits in 1953, when they created
the Small Business Administration and tasked the agency with en-
suring that a fair proportion of contracts and subcontracts are
awarded to small businesses.
Today, SBA’s Office of Government Contracting oversees this
mission and works to create an environment where small busi-
nesses can compete on a level playing field in federal procurement.
(1)
2

In addition to supervising governmentwide contracting goals, the
office is also responsible for administering multiple programs like
the 8(a) program, the Service-Disabled Veteran-Owned Small Busi-
ness program, the Women-Owned Small Business program, and the
HUBZone program. These initiatives help create contracting oppor-
tunities for disadvantaged small businesses and are instrumental
in helping the government reach its overall small business con-
tracting goal.
Given its critical mission of maximizing small business participa-
tion in the federal marketplace, we must take steps to ensure the
Office of Government Contracting and Business Development oper-
ates as effectively as possible.
Today, I hope we can take a close look at the office’s challenges
and actions Congress can take to alleviate them. For instance, de-
spite the federal government consistently meeting its goal of
awarding 23 percent of eligible federal contracting dollars to small
firms, small business participation has been steadily declining.
Last week, we held a hearing detailing the severe impact of cat-
egory management and governmentwide contracting vehicles to
small firms. I would like to hear what steps SBA is taking to mini-
mize these effects and safeguard the small business base.
While the government has met the overall small business con-
tracting goal in recent years, the goals for programs like HUBZone
and the Women-Owned Small Business program were not met. In
fact, the goal for the Women-Owned Contracting Program has only
been met twice, and the HUBZone goal has never been met. It is
important that we address these shortcomings and ensure that pro-
gram participants are getting an adequate number of opportunities.
I also want to discuss IT challenges. As reported by the SBA’s
Office of Inspector General, SBA abandoned Certify.SBA.gov alleg-
ing it was unsustainable in the long term and intended to replace
it. Given the importance of having an IT platform that can success-
fully and efficiently service all of the contracting programs, I am
interested in examining SBA plans and timelines related to this
initiative.
These are just a few important issues we will cover today. I
would also like to hear more from our witness about staffing re-
sources, strengthening internal controls, and implementing key leg-
islation related to contracting programs.
When small contractors can thrive, our nation’s small businesses,
government, and economy all benefit. I look forward to hearing
from Associate Administrator Hidalgo about the ways Congress
and the agency can work together to protect the role of small busi-
nesses in the procurement process.
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 having this important hearing with the associate administrator
of SBA’s Government Contracting and Business Development Of-
fice.
Now, more than ever, small businesses deserve to hear from
agency officials that administer some of the most important small
business programs within the government, including federal con-
tracting programs. These are incredibly challenging times for small
3

businesses, their employees, and their communities. Inflation is
running rampant across the nation and impacting nearly every
product and service. In fact, the Consumer Price Index is at a 40-
year high, and wholesale inflation is in the double digits. This is
unacceptable for our nation and for Americans.
Surging prices and runaway costs have direct and immediate im-
pacts on main street. Not only is inflation one of the top concerns
for small business owners, but also has direct effects on the entire
small business supply and demand ecosystem. According to the
most recent survey out of NFIB, nearly three-quarters of all busi-
ness owners are increasing prices. This matches the highest per-
centage on record.
In addition to red hot inflation, the nation’s smallest firms con-
tinue to experience sharp supply chain issues and an ongoing labor
crisis that is hindering the busy summer season.
It is for these reasons why it is so important for this Committee
to hear from Treasury Secretary Yellen. This administration has
the ability to talk directly to small business through one of the fed-
eral government’s most important cabinet-level agencies, the De-
partment of Treasury. Despite being legally required to testify be-
fore this Committee last year and twice this year, Treasury Sec-
retary Yellen is a no-show. Small businesses employ approximately
half of all workers in America; yet, she cannot find the time to
speak to us.
COVID programs, including the PPP, which the Treasury De-
partment assisted with by bringing in new lenders, is currently in
the loan forgiveness stage. Secretary Yellen refuses to talk to us
and talk directly to small business owners. This continues to be un-
acceptable and a violation of the law. It is my hope she stops ignor-
ing the loss to small businesses on this Committee and testifies
soon.
When it comes to contracting, small businesses are a critical
player in helping to strengthen the nation’s industrial base. They
act as prime contractors and subcontractors on numerous projects
that span the federal government.
Billions of dollars are processed through federal contracts, and
small businesses have a significant role to play. Unfortunately,
their impact is waning and this Committee must continue to study
a balanced approach when it comes to cost savings and consolida-
tion.
I look forward to having a thorough conversation on this very im-
portant topic. Additionally, I look forward to discussing the federal
government’s practice of setting and measuring goals within fed-
eral contracting, the role of subcontracting, and various other
issues related to small businesses that participate in federal con-
tracting programs.
As I mentioned, these are difficult times for small businesses,
their owners, and their workers, as well as the nation’s businesses
that supply the federal government with goods and services.
With that, Madam Chair, I yield back.
Chairwoman VELÁZQUEZ. Thank you, Mr. Luetkemeyer. The
gentleman yields back.
I would like to take a moment to explain how this hearing will
proceed. Ms. Hidalgo, you will have 5 minutes to provide a state-
4

ment, and each Committee Member will have 5 minutes for ques-
tions. Please ensure that your microphone is on when you begin
speaking and that you return to mute when finished.
With that, I would like to introduce our witness.
Ms. Bibi Hidalgo is the Associate Administrator of the SBA’s Of-
fice of Government Contracting and Business Development. In this
role, Ms. Hidalgo oversees and reviews procurement-related policy
for small business contractors hoping to work with the federal gov-
ernment. Before joining the SBA, she was a co-founder of Future
Partners, LLC, which advised Fortune 500 corporate executives on
procurement and minority business strategy and created a model
for how to facilitate significant opportunity for both. She also
served in the White House where she managed a government-wide
initiative with 24 cabinet agencies to position the federal govern-
ment to meet the 23 percent small business goal for the first time
in a decade. Ms. Hidalgo has a Master’s in Public Policy from the
John F. Kennedy School of Government at Harvard University.
Welcome, Ms. Hidalgo. You are now recognized for 5 minutes.
STATEMENT OF BIBI HIDALGO, ASSOCIATE ADMINISTRATOR,
OFFICE OF GOVERNMENT CONTRACTING AND BUSINESS DE-
VELOPMENT, U.S. SMALL BUSINESS ADMINISTRATION
Ms. HIDALGO. Thank you, Chairwoman.
Good morning, Chairwoman Velázquez and Ranking Member
Luetkemeyer, and distinguished Members of the Committee. On
behalf of our Administrator, Isabella Casillas Guzman, and the
SBA, thank you for the opportunity to appear before you today to
discuss the important role that government contracting plays in
empowering small businesses across the United States.
The federal government is the largest purchaser of goods and
services in the world, leveraging its immense spending power of
over $500 billion annually on everything from biopharmaceutical
research to cybersecurity improvements to green building architec-
ture. And time and again, it is our nation’s small business contrac-
tors who are driving these innovations, strengthening our supply
chains, moving our economy forward, and keeping our country se-
cure.
For small businesses, there is real power that comes with getting
to say that the United States Government is one of their clients.
Under the leadership of President Biden, we have seen an over-
haul in how federal agencies approach and promote small business
procurement. This administration has shown that it believes in ad-
vancing small and socioeconomic business contracting not only for
the sake of our congressional goals, but also for the health, secu-
rity, and prosperity of our industrial base. I am proud to be a part
of the Administration’s work to ensure that innovative businesses
can engage in the federal marketplace.
By way of background, I am the daughter of Cuban exiles who
came to the United States after the Cuban Revolution. The day of
the Bay of Pigs invasion, the Cuban militia stormed into my grand-
parents’ house in Havana and took my grandfather, my mom, who
was only 17 years old, and her two sisters to prison. Though my
mom and her sisters were deprived of their freedoms for 39 days,
America soon offered an open door for a better future, a future for
5

my mom and dad to start their family, raise five children, and
teach each of us about grit and determination. And based on our
deep Ignatian faith, we were taught the importance of working in
service of others.
I have worked to promote small business interests under two
U.S. Presidents. I was a small business owner myself, starting a
business with my younger brother Patrick to serve Fortune 500
companies in developing strong supply chains. During this time, I
faced many of the same challenges that I hear about from small
business owners across the country, from making payroll to landing
that first contract.
And I faced devastating loss at the start of the pandemic. My
brother Patrick, who was my best friend and business partner,
passed away suddenly in March of 2020.
As Associate Administrator of SBA’s Office of Government Con-
tracting and Business Development, I am deeply aware of the im-
pact the pandemic has had on small businesses. My team and I
work daily to widen the doors of access and opportunity by moni-
toring the progress of all agencies towards the congressionally
mandated goals for small business contracting. Collectively, these
goals translate to almost $150 billion in small business contracts
per year.
As part of the Administration’s commitment to equity in procure-
ment, SBA worked last year with the White House, OMB, and our
partner agencies to develop five major policy changes for federal
contracting to ensure that socioeconomic firms have a strong foot-
ing on which to compete in the federal marketplace. These changes
included incorporating all socioeconomic firms into Tier 2 credit of
category management, tracking all new entrants into the federal
marketplace, publicly releasing FY20 disaggregated contracting
data, adding small business goals to SES performance evaluations,
and increasing the small disadvantaged business goal to 15 percent
by 2025 with an initial goal of 11 percent for this fiscal year.
At the same time, we have spent the past year working to mod-
ernize our certification IT systems. These changes have come in
two forms. First, as client-facing improvements to the system itself,
such as making the application process easier to navigate. And sec-
ond, as staff facing system improvements that have cut down on
processing times.
Our reforms are making a difference. Across the board, SBA is
processing certification applications over 20 percent faster than
statute requires. And the new Veteran Certification Program that
Congress entrusted to us and is slated to begin at SBA next year
will be leading our technology-forward approach across SBA. As we
work to support a new generation of entrepreneurs, it is more im-
portant now than ever to ensure that small businesses can access
the exceptional resources of SBA and the opportunities afforded
through federal contracting.
Thank you again Chairwoman Velázquez, Ranking Member
Luetkemeyer, and distinguished Members of the Committee for the
opportunity to appear before you today. I look forward to your
questions and our conversation today.
Chairwoman VELÁZQUEZ. Thank you, Ms. Hidalgo.
6

I now recognize myself for 5 minutes. I am very sorry for your
loss.
Last Tuesday, we held a hearing here on category management
and the impact that it is having on small businesses, so it is great
that we have achieved the 23 percent small business goal. That is
a good thing. However, the overall participation of small firms in
federal contracts has declined significantly over the past years,
largely because of initiatives such as category management.
My question to you is, based on the anecdotal data stories that
we have heard and the numbers that are showing a decline, what
is SBA doing to counter defects of category management?
Ms. HIDALGO. Well, thank you very much, Chairwoman, for
that important question. That is the top issue that the White
House and Administrator Guzman wanted us to address. And so
right out of the gate we started to meet with everybody across the
White House, OMB, and the largest contracting agencies to figure
out how we could reverse that trend, realizing that category man-
agement was one of the biggest issues. And so as a result, we nego-
tiated with OMB and the White House to have all the socio-
economic firms, that includes service-disabled veterans, women-
owned businesses, all place-based HUBZone firms, and small dis-
advantaged businesses into Tier 2 of category management, which
is the rating system that they had created. So that means that
33,000 more firms are part of that higher level tiering category
which will create more access for contract opportunities.
Chairwoman VELÁZQUEZ. So we have followed-up with OMB to
obtain more information about this change, Tier 2 Category. We
have not received a response. Do you have a sense of the impact
this change is having thus far, and would you please share with
them that we are awaiting a response?
Ms. HIDALGO. Absolutely, Chairwoman. I will share with them
that you are awaiting response. What I do with my team is check
initially for anecdotal information while we also track the data, and
we are seeing positive trends. We are hearing from business own-
ers that they have been contacted for the first time in years. We
are seeing an increase in new entrants, which is one of the things
that we are tracking to make sure that it is not only an increase
in dollars but that we are bringing back the industrial base, that
we are lifting it up.
Chairwoman VELÁZQUEZ. In fiscal year 2020, the federal gov-
ernment also failed to meet the 5 percent prime contracting goal
for the women-owned businesses program and the 3 percent goal
for the HUBZone program. In fact, the women-owned small busi-
ness goal has only been met twice as I mentioned in my opening
statement and the HUBZone goal has never been met. What is
SBA doing to ensure agencies make use of these programs and
meet the goals?
Ms. HIDALGO. Thank you for that great question, Chairwoman.
This is really important to us, and so now we have the women-
owned business goal and the HUBZone goal in the performance
evaluations of not just acquisition staff but all senior executive pro-
gram managers. So this is part of essentially their KPIs. And so
we are seeing a difference. They are now reaching out more and
more, the agencies. My staff was just telling me this yesterday,
7

across the board agencies are reaching out to identify more busi-
nesses across all the socioeconomic categories.
Chairwoman VELÁZQUEZ. Are you optimistic that the 3 percent
and the 5 percent goal will be achieved?
Ms. HIDALGO. I am optimistic that we are approaching closer
to getting to the goal. I cannot say where we will be this year but
I am optimistic of the trend that we are seeing.
Chairwoman VELÁZQUEZ. Okay. Let me ask you about an im-
portant concern that I have, and that is that the agency now has
performed a strategic review of certified.sba.gov. Could you please
share with us what the plans are and associated timelines to im-
plement an IT platform that achieves this goal?
Ms. HIDALGO. Thank you, Chairwoman.
We are very pleased that the systems are fully functioning and
that was the number one thing I asked my team was to make sure
that it is functioning and that we gain small wins along the way.
Rather than doing an outright overhaul, we wanted to see that it
would become much more user friendly for the customer. And I am
pleased to say that we just recently released a rollout——
Chairwoman VELÁZQUEZ. Okay, so to be clear, will SBA have
one IT platform for all of the contracting programs or is the plan
to improve each of the existing certification applications IT sees?
Ms. HIDALGO. Yes. We are working towards one contracting
platform. But in the meantime, we wanted to make sure that it
was fully functional, what we have, so that applicants are not un-
duly burdened in the process.
Chairwoman VEĹAZQUEZ. My time has expired. Now I recog-
nize the Ranking Member, Mr. Luetkemeyer, for 5 minutes.
Mr. LUETKEMEYER. Thank you, Madam Chair. And thank you,
Ms. Hidalgo, for being here today. And for your compelling per-
sonal story. It is always great to hear people’s willingness to come
to this country and participate in our process. As a capitalist and
entrepreneur, you were able to take advantage of the economic
freedom this country presents and start your own business and do
well with it. I congratulate you and your family on that.
Along those lines, as a small business owner, I am sure you un-
derstand the effects of things that go on with regards to what is
going on right now with our economy, with inflation, for instance,
taxes and things like that. So in your position, you know, the Con-
sumer Price Index right now is at 8.6 percent, and as I go home,
that is the number one concern I hear from small businesses. With
regards to contracting, I have heard from several businesses that
seem to be stuck with a situation where they signed a government
contract pre-COVID and because of runaway inflation and supply
chain problems now they are stuck. There is not enough flexibility
in the contracts to be able to recover the increased costs that are
there due to inflation or delays. So my question I guess is do the
government contracts have some type of clause or flexibility to
allow small businesses who more than likely do not have a large
cash flow to survive in these instances?
Ms. HIDALGO. Thank you, Ranking Member, first of all for your
acknowledgement of my family’s story. We are so proud to be in
this country and my parents taught us that all our lives, to be
proud of being able to become and be American citizens.
8

This issue is top of mind for me and so as a result I met with
all of my Procurement Center Representatives to ask them what
can we do to solve these challenges for our businesses? Contracting
affords an incredible opportunity to contract with the largest pur-
chaser in the globe and so we realize that this helps to serve as
a strong buffer during these challenging times. And apart from
that, I have been asking my team how we can adjust for inflation,
and they have been giving me a number of recommendations, some
of which we are working into our regulations now to provide addi-
tional relief to small business contractors.
Mr. LUETKEMEYER. I asked this question last week of one of
our witnesses and they said that there was some flexibility in some
of the contracts. They were making changes to allow that to hap-
pen. I know that I have got some of my constituents who are work-
ing to try to get that done because there apparently is not any
flexibility in theirs. So the reason for the question I guess is it does
not seem to be consistent across the board and do you find that
there is flexibility? And if not, are you working to try to fix the
problem immediately so that they can exist? Otherwise, it is going
to run the small businesses out of business.
Ms. HIDALGO. Yes, thank you. So fortunately, given that small
business contracting is a big priority of the President, we are in
constant conversations with the Office of Federal Procurement Pol-
icy that issues guidance to address systematically all of these
issues. And so together with OFPP, the White House, and the larg-
est seven contracting agencies, we are trying to find ways to make
sure that we can be consistent across the board in our guidance
and allow for more variability in the costs associated with the con-
tracts.
Mr. LUETKEMEYER. One of the things that the Government
Accountability Office and SBA’s Inspector General originally criti-
cized the SBA for their lack of controls on these programs leading
to potential fraud risks. Can you tell us what new measures you
have implemented or plan to implement to combat the fraud risks?
There seems to be a lot of problems with it, and from the IG report,
there does not seem to be a lot of concern.
Ms. HIDALGO. So we are pleased that we have closed out many
of those reports. We do have a couple of management challenges
which we have been addressing and have proposed to the IG now
to move them to green. So making sure that we have all the firms
that Congress intended for us to have in the program. And I am
really pleased to share that our Size Protest program issues a for-
mal size determination when contractors’ size is questioned by an-
other bidding firm or a contracting officer. And in fiscal year 2021,
because of these reviews, GCBD, or my office, was able to identify
66 companies that were not legitimate small businesses.
Mr. LUETKEMEYER. I have got one real quick question for you.
How many of the recommendations from GAO and IG are still out-
standing?
Ms. HIDALGO. We have two that are outstanding from the IG.
Mr. LUETKEMEYER. Okay.
Ms. HIDALGO. And those are what we are working on right
now. One, of course, is on business development for 8(a) firms
9

which we are pleased to be working on that and really strength-
ening——
Mr. LUETKEMEYER. Do you have a date where you think you
will get those fixed or can be compliant with?
Ms. HIDALGO. We are working diligently with IG daily. I actu-
ally hired a top team to address these issues and as you know, the
Administrator has increased vigilance through the Fraud Risk
Management Board of which we are very much a part in it.
Mr. LUETKEMEYER. Thank you. My time has expired.
Thank you, Madam Chair.
Ms. HIDALGO. Thank you, Ranking Member.
Chairwoman VELÁZQUEZ. The gentleman yields back. Now we
recognize the gentlelady from Kansas, Ms. Davids, Chairwoman of
the Subcommittee on Economic Growth, Tax, and Capital Access.
Ms. DAVIDS. Thank you, Chairwoman Velázquez and Ranking
Member Luetkemeyer for holding this hearing today. And thank
you, Ms. Hidalgo for testifying before us today.
The SBA is charged with ensuring that a fair proportion of con-
tracts and subcontracts for the federal government are placed with
small businesses, which we have been discussing. And while the
federal government has met its overarching goal of awarding 23
percent of contracts to small businesses, as we have been talking
about there has consistently been a failure to meet the contracting
goals for the Women-Owned Small Business program and
HUBZone program. And one of the things that I have been made
aware of more recently in part because the Kansas 3rd happens to
have a really strong entrepreneurial ecosystem, is that the federal
contracts we are seeing are largely going to small businesses in
concentrated areas. Forty-three percent of the contracts went to
around 17 congressional districts, 12 of which are located in Mary-
land and Virginia. And I, of course, want to make sure that all the
amazing businesses that we have in Kansas that could absolutely
provide the services and expertise that federal contracts require
are able to do that.
So I am curious if you are aware of or can speak to some of the
factors that have lead to this kind of high geographic concentration
as it relates to these small business contracts.
Ms. HIDALGO. Thank you, Congresswoman, for that very impor-
tant question.
We are deeply concerned about the issue of contract bundling
and it favors companies that tend to be larger or that are working
with larger corporations, and so as a result, that is part of the rea-
son why we are seeing that concentration as well as with category
management. And so, we are quite often looking at, studying the
maps, including in your district to figure out what we can do to un-
leash more opportunity. And that is part of the reason why we are
now tracking new entrants and we are hearing from agencies con-
stantly what they can do to connect with new small businesses or
small businesses that have not been contracting with the federal
government. And recently, I signed a rule that also provides a lot
more NAICS codes for set-asides for women-owned businesses. So
now 92 percent of all federal spend can qualify as a set-aside for
women-owned businesses. So we are hopeful that that will have an
impact on women-owned business contracting as well.
10

Ms. DAVIDS. Thank you. That is really good to hear and I am
sure our office will follow up so we can figure out if there are ways
that we can be helpful in making sure that geographically diverse
small businesses are able to access the government contracting.
I am curious if you could talk a little bit about the $5 million
funding, most recent funding request for HUBZone and 8(a) and
the Women-Owned Small Business program for staffing resources.
Can you just share with us a little bit about how you hope to use
that funding to increase the effectiveness and efficacy of those pro-
grams?
Ms. HIDALGO. Yes, definitely. Thank you for that question, Con-
gresswoman.
When I arrived, there were historic lows in some of our staffing,
particularly around the Procurement Center Representatives who
monitor the contract awards as well as the Commercial Market
Representatives who monitor subcontracts. So this is one of the
areas where we want to make sure we can get back to more his-
toric levels of staffing. Each one of the PCRs, I asked my team to
give a ballpark figure of what that represents in the return and
value on contracts to small businesses. Each one represents about
a billion dollars in additional contracts for small businesses. So we
will leverage that $5 million in staffing to be able to increase sig-
nificant opportunity for small businesses.
Ms. DAVIDS. Thank you. And we will follow up about that as
well. Thank you for your time today and Madam Chair, I yield
back.
Chairwoman VELÁZQUEZ. The gentlelady yields back.
Now we recognize the gentleman from Texas, Mr. Williams, Vice
Ranking Member of the Committee, for 5 minutes.
Mr. WILLIAMS. Thank you, Madam Chair. And thank you for
being here. I appreciate it.
You probably know the president. Well, you do know the presi-
dent much better than I do. You probably see him or you do see
him more than I do. I am a small business owner. Tell him a cou-
ple things. Tell him that he needs to quit talking about tax in-
creases. He needs to be fixing inflation. Okay? And he also needs
to quit burdening small business owners with regulations through
adding to compliance costs that are destroying profits in small
business. If you would tell him that I would appreciate it.
And thank you again for being here. And as a small business
owner for over 50 years—actually 52 years now—I still have my
business. I employ about 330 people back in Texas. I can tell you
that the Biden administration is completely out of touch with Main
Street America. Main Street America is what this country is about
and small businesses across the country are concerned with supply
chain disruptions that are leaving storage shelves empty. And in
my personal situation, I have no cars to sell on my lot. I cannot
get cars. Excessive government regulations cause an increase in
compliance. We just talked about. And the inability to find quali-
fied workers and the constant threat of tax increases coming from
Democrats in Washington are really hurting small business.
However, when I talk to my business owners back in Texas, they
are most concerned about the out-of-control inflation we are all ex-
periencing. And instead of taking and faking steps to bring down
11

energy costs and bring relief to families and small businesses, the
only thing the Biden administration is doing is making excuses.
The best I have ever seen. They have switched between blaming
the Russian invasion of Ukraine to corporate greed as the main
cause of inflation but I can tell you, Texas are not buying that. And
Americans see the reckless government spending and the hostile
posture towards our energy companies as the main factor in these
record levels of inflation that are killing small businesses and own-
ers who must drastically alter their operations.
So we have talked a little bit about this but I would say what
is your office doing to help small businesses struggling with infla-
tion. We talked about that earlier. But has Administrator Guzman
asked you to examine inflation’s impact on the federal contracting?
Now, you did talk about the impact but you did not have the an-
swer to the problem. And you mentioned a focus group I think that
give you ideas and so forth but we have not talked about what are
they saying? What are they saying that you need to do to fix this
problem?
Ms. HIDALGO. Well, thank you——
Mr. WILLIAMS. You have got the problem and then you have
got to have the fix.
Ms. HIDALGO. Thank you very much, Congressman, and I real-
ly deeply appreciate your perspective as a very successful small
business owner.
So this is top of mind for the Administrator and the White
House. And so as a result, that is why I met with all of my team
members that are very much on the ground working with small
businesses every day to get contracting opportunities to say what
can we do to alleviate any of these challenges. So allowing for more
variable price adjustments is one of the issues that we are looking
at. Looking at thresholds to match, adjust for inflation are other
areas. And so we are meeting regularly as a team to put together
a package of fixes that will help to alleviate challenges——
Mr. WILLIAMS. Well, that’s good. I hope you have some small
business owners giving you some real world experience to help you
do that.
And small business contractors are some of the hardest hit busi-
nesses by runaway price increases. And if a contractor’s resource
costs are rising each month, their margins will get smaller and
smaller. And additionally, every business I speak to has told me
how hard it is to find workers. We talked about that. Everyone
knows that. And this is delaying the timelines on projects when
they can be completed and then the project drags out. And with
high inflation the cost goes up. So unfortunately, there is rarely
any flexibility within these contracts to ensure they can still get
the job done at a reasonable cost when these economic factors out-
side of their control are biting into their margins. So how is your
office working with small businesses that have been awarded a fed-
eral contract? Before inflation, employers’ shoulders were calcu-
lating the original bid. And I think one of the biggest things, too,
is payment terms. Are you all paying them on time? How long does
it take to get payment from the federal government?
Ms. HIDALGO. So we are actually——
12

Mr. WILLIAMS. That is one of the biggest things you can do
right now to help. My experience with the federal government has
been pretty much a slow pay.
Ms. HIDALGO. And we are working now to get back to during
the Obama era where we fast-tracked payment. And so with the
Prompt Pay Act, it is a 30-day requirement and we are trying to
get that back to 15 days so that businesses will have more of a cap-
ital flow during these circumstances. And we are continuing to look
at all the tools that are available at our disposal to ensure that
small businesses can compete and that is where our strong rela-
tionship with OFPP and the White House has been critical in al-
lowing us to provide those recommendations.
Mr. WILLIAMS. Thirty-day pay is good. Ninety-day is bad.
Thank you for being here. I appreciate it.
Ms. HIDALGO. Thank you, Congressman.
Chairwoman VELÁZQUEZ. Time has expired.
Now we recognize the gentlelady from Pennsylvania, Ms.
Houlahan, for 5 minutes.
Mr. HOULAHAN. Thank you, Madam Chair. Just making sure
you can hear me okay. Can you hear me?
Chairwoman VELÁZQUEZ. Oh, I am sorry. Yes, Ms. Houlahan,
we can hear you.
Mr. HOULAHAN. Excellent. Excellent. And thank you so much,
Administrator Hidalgo, for your really compelling testimony today.
And as a women entrepreneur myself, increasing opportunities
for government contracting and business development for women-
owned businesses is obviously particularly important to me and it
very much informs my work on this Committee. I also happen to
be a systems engineer and so I really believe in measuring what
matters, and I am grateful to hear some of your KPIs and some of
your emphasis on systems and systems change.
My Women-Owned Small Business Program Transparency Act,
or the WOSB Transparency Act, passed the house earlier this
month with very strong bipartisan support which would allow Con-
gress and the SBA to gather necessary data that would improve
this really important program that we have been talking about. I
look forward very much to continuing to work with your office on
ways to make sure that the SBA is able to reach their 5 percent
prime contracting goal for women-owned small businesses and I am
really pleased that the Chair and also Representative Davis have
also highlighted this really important goal that has only bee met
twice in history in their remarks.
I am particularly interested in hearing more from you about how
the certification process for that program can be improved because
as I understand it, according to the latest data from the SBA’s Of-
fice of the Inspector General, SBA initially received 15,000 applica-
tions for that WOSB program and 12,000 were screened apparently
and returned to the applicant for more information. Do you know
what the primary reasons were that so many applications were, in
fact, return. And what actions is the SBA able to take to improve
this process so that applicants can get to this process, get this proc-
ess correct from the beginning?
13

Ms. HIDALGO. Well, thank you very much, Congresswoman, for
that important question. And also, for your perspective as well as
a business owner.
This has been top of mind for me since day one. We need to get
women-owned businesses in the pipeline certified as soon as pos-
sible so that they can get access to set-asides. And so this is partly
why immediately I asked my team to figure out what is going on
in the system that leads to incomplete applications.
And I will give you an example. We learned that the way it was
set up is they would ask applicants for all of their documents at
once. But it turns out if they did not upload them individually,
then it would only accept one of the documents. So I said, this is
unacceptable and we need to fix this right away. And my team got
right on it, fixed it to at least inform the business owner that they
needed to upload one at a time. And as a result, we are seeing dif-
ferences like that are having an impact. We have now certified well
over 5,700 firms. We are on pace to certify over 6,000 this year.
Any incomplete applications, I have my pre-screeners working di-
rectly with the applicants to make sure that their application is not
rejected and that they can work towards a complete application as
soon as possible.
Mr. HOULAHAN. I look forward to learning more of kind of the
reason codes for why those things are happening and that is a real-
ly obvious glitch that you are talking about that I have experienced
personally myself in submitting paperwork for health care as an
example.
With what remains of my time, similarly, I am really interested
in exploring the proposals that exist to benefit economically dis-
advantaged women-owned small businesses. While there are clear-
ly requirements to participate in the Economically Disadvantaged
Women-Owned Small Business contracting program or the very
easy to remember EDWOSB such as income and net worth require-
ments, there really does not seem to be currently a separate and
dedicated contracting goal that is EDWOSB’s which would likely
further maximize the utilization of such firms. Given the adminis-
tration’s commitment to these kinds of causes, I am wondering how
the SBA is working to increase contracting opportunities for Eco-
nomically Disadvantaged Women-Owned Small Businesses. For in-
stance, do you believe a separate contracting goal might be bene-
ficial?
Ms. HIDALGO. Thank you very much, Congresswoman, for that
question and concern for EDWOSB firms. Fortunately, a lot of the
firms will benefit from the President’s emphasis on increasing
Small Disadvantaged Business contracting and my team negotiated
with all 24 agencies so we can get to 11 percent for fiscal year
2022. And so between that and the recent rule that I signed that
allows for a significant number of more NAICS codes to be used for
women-owned and economically-disadvantaged women-owned set-
asides, as I mentioned, 92 percent of federal spend now falls under
those NAICS codes. So we are hopeful that we will see an increase
in both EDWOSB as well as WOSB set-asides.
Chairwoman VELÁZQUEZ. Time has expired.
Mr. HOULAHAN. Thank you. I have run out of time, Madam
Chair. I appreciate it and I yield back.
14

Chairwoman VELÁZQUEZ. Thank you.
Now we recognize the gentleman from Pennsylvania, Mr.
Meuser, Ranking Member of the Subcommittee on Economic
Growth, Tax, and Capital Access, for 5 minutes.
Mr. MEUSER. Thank you very much, Madam Chairwoman. And
thank you, Ms. Hidalgo for being with us and testifying today.
I am very concerned about the health of our small businesses. I
am sure you folks at SBA are quite concerned and have a sense of
alarm and urgency because small businesses are facing this tat-
tered economy and the repercussions of it certainly more than large
businesses. Now, first, gasoline prices, fuel in general, diesel, heat-
ing oils as you well know are doubling in people with homes any-
way, and so businesses, instead of paying $3,000 or $2,000 a year,
they will be paying $4,000 a year. Gasoline is costing $5,000 more
a year. Diesel, many businesses are concerned diesel is going to be
rationed. I mean, it is that bad. And yet, the Secretary of Energy
just yesterday very alarmingly said what we need to do is go to
EVs and renewables which the administration should know that
even if every country in the world hit its carbon reduction targets
over the next 10 years, it still will only account to about 25 percent
of the energy needs of the country and the world. And at increased
demand, we need more of the current energies that we produce
here domestically in 10 years. So it really was an unfortunate, I
think, thing to say and kind of foolish. Because it is simple math
on how that works. And so for the energy secretary administration
to say something like that I think that raised a lot of fear in small
businesses and certainly to our economy as a whole.
Small businesses are dealing with workforce issues, right, as well
know. Access to capital. Supply chain disruptions. I mean, it is
crazy. You go into a small business and they are waiting on things.
They will have excess inventory or too little inventory and that is
what throws off their cashflow to much. Regulations, taxes.
You know, it was disappointing when I asked Administrator
Guzman a few meetings ago, Committee meetings ago, what she
thought if she goes to the president and asks, informs him as the
advocate for small business, that raising taxes is not a good thing.
And she said she does not deal with taxes. You know, taxes are
very important, keeping them as low as possible. We need to be a
competitive nation. And you know, when you increase taxes, you
reduce revenues, not just for the business but for Treasury, for gov-
ernment. Or inflation will do that. But you are reducing their net
income. So therefore, you will be receiving less revenues and par-
ticularly with inflation.
Now, I went through that whole list and then let’s just talk about
inflation, which is definitely, as you know, the number one concern
and problem small businesses are facing. And you did not mention
anything about that in your opening. So I just have a couple of
questions on that.
When businesses are dealing with, and why it should be very rel-
evant to you, inflation, when businesses are paying more for goods
and abiding by the contracts that they have with the SBA, they
therefore, are squeezing their margins, their profitability. Are you
in kind in the process of raising the contracted prices by 8.6 per-
15

cent, the highest level of inflation in 40, 50 years, whatever it is?
Are you doing that?
Ms. HIDALGO. Thank you very much, Congressman, for that
question. And we are actually studying the data to figure out
where we can provide relief for small business contractors. Fortu-
nately, what is amazing about these congressionally created pro-
grams is that it is close to $150 billion a year that is contracted
through small businesses which helps, has a significant impact on
the well-being of contractors and firms, small businesses around
the country during uncertain economic times. And so we are look-
ing to see where we can adjust thresholds working with the Office
of Federal Procurement Policy to issue guidelines, as well as adjust
any of our rules or regulations that will provide relief on inflation
for small businesses and our contractors.
Mr. MEUSER. I have limited time. I was going to ask about the
technology contract that you are engaged in. I am sure that is a
lot of fun. But good luck with it and I will have follow-up questions
on that in writing. Thank you.
Ms. HIDALGO. Thank you.
Mr. MEUSER. I yield back, Madam Chair.
Chairwoman VELÁZQUEZ. The gentleman yields back.
Now we recognize the gentleman from Louisiana, Mr. Carter, for
5 minutes. Mr. Carter?
The gentleman from Pennsylvania, Mr. Evans will be recognized
for 5 minutes.
Mr. EVANS. Thank you, Madam Chair.
In the latest budget request, SBA is sort of thumbing—for a new
initiative known as the Manufacturing Hub proposal. Could you
please expand on the scope of this issue and how SBA envisions it
will work?
Ms. HIDALGO. Thank you very much, Congressman, for that
question.
The president has been very focused on increasing manufac-
turing within the United States, and he and our Administrator see
small business manufacturers as being the pioneers in bringing
back manufacturing to our shores. And so as a result, this is why
we responded with the proposal to create a Manufacturing Hub of-
fice focusing more of our technical assistance and outreach to man-
ufacturing firms, understanding some of their challenges and ways
that we can leverage, for example, some of the contracting tools so
that they can get the much needed supplies that they need to part-
ner with our federal agencies. And so basically, our proposal is tak-
ing a laser focus on the ways that we can support our nation’s pio-
neers in manufacturing and ensure that more of our products are
made right here in America.
Mr. EVANS. Contracting vehicles have only gotten larger and
more complex in recent years. What is SBA doing to make sure
that these vehicles are not hurting small businesses and chances
of winning contracts?
Ms. HIDALGO. This is an excellent question, Congressman, and
it is top of mind for us every day. Most recently, we saw an award,
a bundled contract that was going to be a total of $7.7 billion with-
out any small business set-asides. And so my office immediately ne-
gotiated with the agency, was very steadfast, and as a result, we
16

were able to negotiate $2.85 billion within that bundled contract
just for small business set-asides. But the reality is this is our
PCRs and our government contracting team and policy teams were
critical to the success but the PCRs are so critical for monitoring
contracts like these and if we are able to be able to get an increase
in staffing, we will be able to have more of the PCRs monitoring
these contracts across the government to ensure that there will al-
ways be a large amount of set-asides for small businesses and that
we continue to adhere to the Rule of Two across the federal govern-
ment in setting aside contracts for small businesses.
Mr. EVANS. How is SBA working to make sure agencies hold
larger contracts accountable to the subcontracting plans and how
is SBA supporting small businesses especially new entries as they
work as subcontractors?
Ms. HIDALGO. Thank you for that great question. It is some-
thing that we know needs to change as far as ensuring more ac-
countability around subcontracting plans. With limited resources,
we are trying to figure out administratively what we can do to en-
sure more of that accountability from having, for example, poten-
tially firms indicate to the small businesses if they included them
in their subcontracting plan, to having potentially, for example, I
just recently met via satellite with a number of contractors in
Guam who suggested that they be able to indicate what the cost
involved was for them to help support a bid proposal and be able
to attach that to those plans.
So we are looking at all the administrative tools that we have to
make sure there is more accountability. The ESRS system, unfortu-
nately, does not allow for real-time data analysis and that would
be of significant support if we were able to find a way to enhance
that system operated through one of our partner agencies to be
able to track in real-time whether or not major contractors are fol-
lowing through on their subcontracting plans.
Mr. EVANS. Thank you. I yield back the balance of my time.
Thank you, Madam Chair.
Chairwoman VELÁZQUEZ. Thank you. The gentleman yields
back.
Now we recognize the gentlelady from California, Ms. Kim,
Ranking Member of the Subcommittee on Innovation, Entrepre-
neurship, and Workforce Development for 5 minutes.
Ms. YOUNG KIM. Thank you, Chairwoman Velázquez, and
Ranking Member Luetkemeyer, for holding this important hearing.
And I want to thank you, Ms. Hidalgo, for joining us and testifying
before our Committee. And also for sharing your inspiring story.
Like you, I am an immigrant from South Korea, and I can tell
you that America has also opened the door for me for, you know,
a better future for me and my family now. And I am a grandma,
so I am working really hard to ensure that we leave America better
for our future generations. So I hope we can work together to pre-
serve that American dream for all Americans, but especially for
small businesses to prosper and succeed because small businesses
are the backbone of our economy as we heard this millions of times.
But unfortunately, according to the National Federation of Inde-
pendent Businesses survey, small business owners, their expecta-
tion for better business conditions over the next 6 months are at
17

their lowest in nearly 50 years. And small business owners are in-
creasingly pessimistic about the economy because of the increasing
costs, rising inflation, supply chain disruptions, and chronic work-
force shortages. As a Ranking Member on that Subcommittee on
Innovation, Entrepreneurship, and Workforce Development, this is
really a critical and important issue for me.
And given the economic headwinds main street is facing, it is ex-
tremely important that SBA is laser focused in fulfilling existing
mandates and providing business development assistance in a
timely manner.
There was an IG report February 2022, this year. The 8(a) pro-
gram found that SBA has regularly misused mandated deadlines to
report to Congress on program performance because the data reli-
ability issues would certify. Additionally, the report also states that
SBA does not have established standardized procedures for busi-
ness opportunity specialists to use to monitor program participants.
So, have you met with the inspector general to discuss the find-
ings of that report?
Ms. HIDALGO. Thank you very much, Congresswoman, for those
important questions. Business development is really top of mind for
our team, our dedicated team of civil servants and everyone across
the agency. And I am very grateful for the plus-up that we received
in 7(j) technical assistance funding from Congress. We have re-
quested additional resources as well for fiscal year 2023 so we can
continue to enhance our technical assistance and business develop-
ment.
But that said, as you mentioned with the data and the report to
Congress, given that there was a conversion from paper to digital
in 2018, now our team has been catching up in their data analysis
and we are on track to catch up with the reports this year.
Ms. YOUNG KIM. Is that the reason for the delay in coming up
with a solution, conversion from paper to digital?
Ms. HIDALGO. That is one of your questions in terms of reports,
you know, reporting out to Congress, that was the reason for the
initial delay was that conversion. And now we have actually ad-
dressed that and the team is on track to catch up on our report
to Congress on business development for 8(a) firms.
And then apart from that, the wonderful issue that you men-
tioned of Business Opportunity Specialists, we see that there is a
great opportunity there. And this is top of mind for Administrator
Guzman. And so my team just recently met with the leads of all
68 offices around the country to develop an approach for more
training with Business Opportunity Specialists to support our
small business contractors.
Ms. YOUNG KIM. Thank you. You know, I am also hearing that
SBA’s service to small contractors may be falling. For instance, the
8(a) small business was referred to the wrong specialist, an eco-
nomic development specialist, rather than business opportunity
specialist when seeking contracting assistance. District offices also
may be more preoccupied with SBA’s other programs like its lend-
ing programs. Failing to realize they also have a duty to offer busi-
ness development assistance to small businesses. So my question
is, are you aware of these issues?
18

Ms. HIDALGO. We are very aware that over time there has not
been as much emphasis at the district level on business develop-
ment and more on compliance. And so we would like to strike more
of a balance to ensure that across the board there is more support
for business development. And connection with our PCRs and
CMRs. So we are making sure that there is that streamlined com-
munication across offices.
Chairwoman VELÁZQUEZ. The gentlelady’s time has expired.
Ms. YOUNG KIM. Thank you. My time is up. I yield back.
Chairwoman VELÁZQUEZ. Now we recognize the gentleman
from Louisiana, Mr. Carter, for 5 minutes.
Mr. CARTER. Madam Chair, thank you very much for the oppor-
tunity.
Ms. Hidalgo, can you share with me the percentage of African-
American contractors in the 8(a) program?
Ms. HIDALGO. So, in terms of percentage, we have well over
1,000. About 1,500, I believe, African-American firms owned in the
8(a) program.
Mr. CARTER. And can you share with me the percentage of con-
tracts that are awarded to these African-American contractors?
Ms. HIDALGO. So for the first time in history, we released
disaggregated data on race and ethnicity. And of all federal con-
tracts, 1.67 percent are awarded to small businesses that are Afri-
can-American owned.
Mr. CARTER. How many have you lost? My understanding is
that the program has been somewhat diminished and there has
been a decrease in the amount of African Americans that actually
participate in the 8(a) program. Can you share with me some light
on that?
Ms. HIDALGO. We are trying to make sure that across the board
small businesses can compete in federal contracting. So the pro-
grams that Congress has created, the five contracting goals are
really important for ensuring that all small businesses can partici-
pate, including African-American owned firms. And so as a result,
we are making sure that we are doing outreach across the board
in urban areas, as well as in rural areas. We are trying to figure
out ways that individually owned businesses can participate in
more of these ordering vehicles, the contract vehicles. Our work in
trying to dismantle contract bundling also has an impact on Afri-
can-American owned businesses, and especially African-American
women-owned businesses in being able to compete for these oppor-
tunities.
But what we wanted to do is have transparency and establish a
baseline so that we have an understanding of where we are and
where we need to go to ensure that there is access across the board
for all small business contractors.
Mr. CARTER. And forgive me. I do not want to appear to cut you
off but we have limited time, so if I do, please forgive me. It is not
being rude.
Share with me very quickly what plans you have or what you are
doing to increase African-American participation not only in the
program but for those that are in the program to ensure that they
are getting a fair share of contracting opportunities. What are your
aggressive steps or marketing efforts?
19

Ms. HIDALGO. Well, part of it is certainly marketing but also
it is providing more assistance to applicants across the board, mak-
ing sure, I have asked to make sure that our pre-screeners work
with all the businesses. So if we receive any incomplete applica-
tions, rather than being rejected, we are having our prescreening
and screening team work with them to make sure that they can get
all the important documents in for the application.
And then I asked my team to think about Certify in the same
way that you would when you get your iPhone and it guides you
through the process in setting it up. So they should not have to——
Mr. CARTER. Ms. Hidalgo, could you share with us in writing
the percentages that I asked in question, if you can submit them
to the Committee for our review, the percentages of African-Ameri-
cans and other minorities that are in the program against what
percentage of contracts are being awarded to them, that would be
very helpful.
Lastly, before my time elapses, I mentioned this before. 8(a) pro-
gram was disrupted greatly during the pandemic. I know there was
a restoration of theoretically a year. That year was actually trun-
cated. It was not a full year. We know that the impacts of COVID
still exist and it hurt 8(a) contracts. I have consistently asked for
some relief that we consider how we can yet again advance and
grant additional time to those 8(a) contractors so they can enjoy
the full complement of their term of an 8(a) contractor.
Can you share with me any actions that are being taken along
those lines and your thoughts?
Ms. HIDALGO. Thank you very much, Congressman. That is a
very important question and I am asked all the time by small busi-
ness owners if we will extend it an additional year. We would wel-
come that opportunity to extend it. I have asked my team if there
is anything we can do administrative, and unfortunately, we can-
not. It would need to be by statute. And so we welcome any oppor-
tunity to extend it an additional year and we would be pleased to
work with your office or with any of the Members of the Committee
here for that purpose.
Mr. CARTER. I would love to visit with you on that and to work
with our Chair and our Ranking Member to come up with a bipar-
tisan measure that will give us the opportunity to extend it to
make up for the tremendous loss that many of our small and
emerging businesses had to suffer at the hands of something that
was beyond any of our control, COVID>
Thank you very much.
Chairwoman VELÁZQUEZ. The gentleman yields.
Mr. CARTER. If you could get back to us with that information,
particularly those areas of interest relative to contracting opportu-
nities and percentages, I would greatly appreciate it.
Ms. HIDALGO. I would be happy to. I will have my team circle
back with you promptly, Congressman.
Chairwoman VELÁZQUEZ. The gentleman’s time——
Mr. CARTER. As well as the (8)a opportunity extensions. Thank
you so much.
I yield back, Madam Chair. Thank you.
Chairwoman VELÁZQUEZ. The gentleman from Florida, Mr.
Donalds, is recognized for 5 minutes.
20

Mr. DONALDS. Oh, my apologies, Madam Chair. Thank you so
much.
Ms. Hidalgo, thanks for being here. We really do appreciate it
here in the Committee. I also commend you on everything you have
done personally in your life. You know, this country, I think people
sometimes think that success is easy. Success is really, really hard.
It requires a ton of sacrifice. So that is a credit to you and to your
family. But it also requires an environment that allows for these
sacrifices to come to fruition. And it is crystal clear that examining
the globe, it is just not possible in so many other places the way
it is possible here in the United States. So it is really a credit to
you, your family, and it is a credit to the bedrock of our society
here in America.
Obviously, dealing with governmental contractors, can you speak
to some of the inflationary pressures that the contractors are hav-
ing to face right now considering the fact that I think it was said
earlier in the hearing that the contracts are what they are from the
federal government. Yet, business owners have to procure product
or deliver services, whether that is procuring employees to do the
work, whether it is procuring other products to assemble for the
federal government to use. Can you speak to the inflationary pres-
sures that the contractors are faced with today?
Ms. HIDALGO. Thank you very much, Congressman, for that im-
portant question and for your initial comments. I much appreciate
it regarding my family and their coming here to this country.
So this is very top of mind for us and we have been looking at
any which way that we can provide relief for our small business
contractors.
I will give you an example of a firm that, for example, is having
trouble getting retractor bags and they are on the cutting edge of
fighting super bugs, a small business. And the costs are high. And
so one of the requests we got is, are there ways that we can look
to using some of the schedules, even though they have impacted
the small businesses, but could we use some of the schedules to get
supplies at lower costs for small businesses, particularly since they
are part of our government contracting portfolio. So we are looking
across the board at all types of solutions to address any type of in-
flationary pressures that businesses are facing at this time.
Mr. DONALDS. Have you guys had an opportunity to engage the
administration to talk about potential regulatory relief, frankly, in
the economy overall. I understand the purpose of this hearing is
with governmental contractors but, you know, if it works for a gov-
ernment contractor, it will work for any other business in the
United States. Have you guys had an opportunity to engage the
White House about proposals on regulatory relief which would ac-
tually really open up a lot of these issues that businesses across
the country are facing?
Ms. HIDALGO. Yes, definitely. Thank you. That is a great ques-
tion. And that is one of the reasons why I met across the board
with our PCR team and other staff to figure out how we can use
regulations to provide relief to businesses. And we are working now
on that and hope to be having relief sometime soon working with
OMB to provide relief on some of the thresholds.
21

Mr. DONALDS. Switching gears, back under Section 1683 of the
NDAA from fiscal year 2013, the SBA has to submit a report on
suspension and disbarment to Congress. What is the status of that
report? How come that report still has not been provided to Con-
gress? Is there any discussion within SBA about that report actu-
ally getting to the Hill?
Ms. HIDALGO. Yes. We are right now working on updating all
of our reports. It is top of mind for the Administrator and me to
make sure that we follow through on our duty to Congress to re-
port back. And so the team has been working extremely hard in
updating and getting our reports to you and being timely going for-
ward. That is of utmost importance to me and the leadership at
SBA.
Mr. DONALDS. Final question and I will turn you back over to
the Committee, I guess.
The 2019 OIG audit of SBA’s suspension and disbarment process
found that SBA had not established sufficient guardrails to prevent
ineligible entities from participating in small business programs.
What is happening right now at SBA to address the OIG’s find-
ings?
Ms. HIDALGO. Thank you, Congressman. This is really impor-
tant to us and to the Administrator. And I will give you an exam-
ple. Because of our reviews in fiscal year 2021, we were able to en-
sure that $5.28 billion in contracts were redirected to legitimate
small businesses because of some small businesses that were no
longer legitimate small businesses. So this is an example of the
kind of work we are doing to make sure. And I have a top team
in place that is very focused on this to make sure we have the con-
trols in place, working with the Fraud Risk Management Board
that Administrator Guzman also recently created, to make sure
that the businesses that Congress intended to benefit from these
programs are, in fact, benefitting from the programs.
Mr. DONALDS. All right. Thank you.
Thank you, Madam Chair.
Chairwoman VELÁZQUEZ. Time has expired.
Now we recognize the gentlelady from California, Ms. Chu, for 5
minutes.
Ms. CHU. Ms. Hidalgo, from 2010 to 2019 we saw a steady de-
cline in the number of firms participating in the 8(a) program. That
was under the previous administration. And I asked your prede-
cessor what steps the office was taking to address this decline.
However, since then, data does show that under the Biden admin-
istration, the SBA was able to reverse this downward trend in
2021. And for the first time in 10 years, increased the number of
small businesses in the program.
So Ms. Hidalgo, can you talk about what factors contributed to
last year’s growth? And what steps your office is taking to ensure
that we keep up that growth and continue to bring more firms into
the program?
Ms. HIDALGO. Thank you very much, Congresswoman. This is
such an important issue, and we are all working, the dedicated
team of civil servants and staff are working diligently to try to re-
verse this trend. And so, by tracking new entrants, we now have
a requirement across the federal agencies to track new entrants.
22

And as a result, we are seeing results. The agencies are reaching
out to us on a regular basis asking for lists of firms that are new
to the federal marketplace. We want to make sure that we are
being welcoming to firms that want to contract with the federal
government because of the opportunity it provides contracting with
the largest purchaser in the globe. And so by tracking and also put-
ting the goals and performance evaluations, the KPIs of our senior
executives across all 3,000 buying offices, that is where we are see-
ing a whole of government approach to ensuring that we do not
only increase the dollars but we also increase the number of busi-
nesses that can benefit. That is what is so extraordinary about
these programs is just the impact that it can have on our small
businesses across the country in communities and our nation.
Ms. CHU. Well, thank you for that because it has truly made a
turnaround. But however, I did want to ask about other programs.
I know under the previous administration the federal government
failed to meet the subcontracting goals for three programs—the
Small and Disadvantaged Business Program, the Service-Disabled
Veteran-Owned Small Business Program, and the HUBZone pro-
gram. These subcontracting goals are so critical to ensuring these
underserved small businesses have a fair shot at competing for fed-
eral contracts. And I had asked your predecessor under the pre-
vious administration what they were going to do to remedy this.
Now, I do not know what the current results are for those goals
under the current administration. Nonetheless, what do you know
about whether you are meeting the subcontracting goals for these
three areas and what steps your office is taking to make sure that
we do meet these goals going forward?
Ms. HIDALGO. Thank you very much, Congresswoman. We are
trying to figure out what we can do to have more accountability
with the major primes’ subcontracting plans. And we have limited
resources in terms of direct monitoring, so we are looking at ways
to issue more administrative guidance on this front. And we are
working closely with the White House and office of Federal Pro-
curement Policy now to take a more laser focus on subcontracting
in particular. If we were able to track in real time through the
ESRS system, whether or not primes are following through on their
subcontracting plans, that would make quite a significant dif-
ference. But my understanding is that system would need a lot
more additional resources in order to be able to do real tracking.
And I think if we were able to do that we would see an increase
in billions of dollars going to our nation’s small business sub-
contractors.
Ms. CHU. Well, in fact, I know that the SBA requested an addi-
tional $5 million to be divided between 8(a), HUBZone, and
Women-Owned Small Business programs for staffing resources.
Can you explain the purpose of this and how this funding would
be divided between three programs and whether you think it will
increase participation in these programs.
Ms. HIDALGO. Yes. Thank you very much. And definitely, we
want to make sure——
Chairwoman VELÁZQUEZ. Ms. Hidalgo, time has expired. Will
you please send a written answer to the Committee in response to
that question?
23

Ms. HIDALGO. Yes, I would be happy to follow up on that, Con-
gresswoman. Thank you.
Chairwoman VELÁZQUEZ. Thank you.
The gentleman from Minnesota, Mr. Stauber, is recognized for 5
minutes.
Mr. STAUBER. Thank you, Madam Chair, and Ranking Member
Luetkemeyer for holding this. Ms. Hidalgo, thanks for being here
and presenting your testimony.
I think you have a very tough job to try and defend this disas-
trous administration with the inflation and materials, increase in
materials pricing for small businesses that are being devastated
today.
Do you know how many billions of dollars of additional regula-
tions the Biden administration has put on small businesses last
year alone?
Ms. HIDALGO. Congressman, thank you very much for your
question and for your support of the programs. I do not——
Mr. STAUBER. I can answer that for you. It is $201 billion of
additional regulations that you put on small business. That is just
unacceptable.
So in the fiscal year 2022 National Defense Authorization Act, I
was able to successfully add an amendment that will help reduce
fraud in government contracting programs. The amendment re-
quires firms to update their status in SAM within 2 days if they
have received a final adverse decision against their status. If they
do not, SBA is required to update it.
Could you tell me how the implementation of this provision is
going thus far?
Ms. HIDALGO. Thank you very much, Congressman. We have
implemented that and my team has briefed me on that. Exactly as
you said. They have 2 days, and if they do not put the information
in SAM.gov then my team does.
Mr. STAUBER. I appreciate that.
What other controls have you put in place to reduce the number
of government contracts from going to ineligible firms?
Ms. HIDALGO. So as I mentioned, I hired a team that is very
focused on this issue in particular. We are pleased that most of the
IG audits and GAO audits on any of this have been closed out. And
as I mentioned, the Administrator created the Fraud Risk Manage-
ment Board so that we are cohesive as an agency in addressing any
issues related to fraud. And I am pleased that in fiscal year 2021,
we were able to redirect $5.28 billion in contract dollars to legiti-
mate small businesses that had been previously awarded to busi-
nesses that were not legitimately small.
Mr. STAUBER. One of the things that I hear from small busi-
nesses back home, again, as I said, the regulations and the frustra-
tions of government interference, and to me it is unacceptable hav-
ing been a small business owner myself for 31 years.
Do you actively seek out feedback from small contractors on the
regulations which are holding them back?
Ms. HIDALGO. Thank you, Congressman. That is very important
to me. I have met with many small businesses around the United
States. And asked them regularly for their feedback on what we
have been doing, how we can provide relief. For Administrator
24

Guzman, it is very important that any regs we adopt are not overly
burdensome for our firms, and that is what she often asks us to
look at, how we can relieve any burdens for the businesses.
Mr. STAUBER. And do you have a list of those that you can send
the Committee here——
Ms. HIDALGO. A list of——
Mr. STAUBER.—the recommendations that the small businesses
around the country that you spoke to?
Ms. HIDALGO. I am happy to circle back with you, Congress-
man, to see what I can provide to you. Yes.
Mr. STAUBER. So when you circle back, what timeframe would
you be circling back?
Ms. HIDALGO. I am happy to get you any additional information
on ideas that we have heard from businesses sometime in the next
few weeks.
Mr. STAUBER. Few weeks?
Ms. HIDALGO. Mm-hmm.
Mr. STAUBER. Okay. I appreciate that.
And the last thing is, on the regulations, when you are listening
or hearing the small business feedback on the regulations that are
opposite of what this administration has put forward, for example,
the WOTUS rule. Are you pushing back on behalf of small busi-
nesses?
Ms. HIDALGO. I am sorry, Congressman——
Mr. STAUBER. Waters of the United States rule, are you push-
ing back on behalf of small businesses?
Ms. HIDALGO. We are looking at, the President wants to make
sure that all of our regulations are fair and balanced. And so we
are looking across the board at making sure that whatever we do,
the regulations are reflective of being fair and balanced to all of our
small businesses.
Mr. STAUBER. We are seeing that WOTUS is one rule that is
definitely disastrous for farmers and small businesses.
Madam Chair, I yield back.
Chairwoman VELÁZQUEZ. The gentleman yields back.
Now we recognize the gentlelady from New York, Ms. Tenney, for
5 minutes.
Ms. TENNEY. Thank you, Madam Chair and Ranking Member
Luetkemeyer. I really appreciate—I am over here. I am live over
here. Yeah, thank you much. I want to just echo the sentiments of
my colleague. Your personal story is really compelling and as
Americans, we love freedom, and we love the idea of entrepreneur-
ship in the small business community and what they bring. And I
am a small business owner as well. And we have seen just incred-
ible issues facing our small business community in light of the pan-
demic.
And I also have to echo the sentiments of Mr. Stauber. I cannot
imagine trying to explain what you have to explain for this admin-
istration. I understand that you have got to defend it but, I mean,
our small businesses are suffering under incredible inflation. And
that is the biggest tax that you can have on any business right
now, the inflation that we are seeing at such a high percentage.
Among the highest that we face is our sales tax burden in the
25

State of New York. But the inflation rate is now even higher than
our sales tax burden. So that is even a bigger tax on us.
We also have supply chain issues. Energy is a huge issue for our
business, especially my cousins in farming and others are suffering
under the huge costs of fertilizer who is also affected by that.
But also, you know, we are talking about taxes, inflation, exces-
sive burdens that are put on small businesses that cannot afford
to bear the costs of government and compliance like the big com-
petitors have. So when it comes to government contracting, you
know, we see the small business at a huge disadvantage.
And one of the questions I wanted to ask you about on the small
business contracting side is often these small businesses do not end
up getting the higher value contracts. They get the smaller con-
tracts. What is your plan for trying to get these small businesses
that are now overburdened by inflation, supply chain problems?
How do we get them access to higher value federal contracts? Is
that something you are specifically working on? If you could give
me one or two ways that the administration is doing that so I can
get an opportunity to actually be in this ecosystem.
Ms. HIDALGO. Thank you, Congresswoman, for that excellent
question.
We are often discussing ways that through competition—so for
example, the limitations on the 8(a) program, the sole source cap,
if it is competed through an ordering vehicle, then they are able to
qualify for a higher value contract award. I also understand that
Congresswoman Salazar has introduced legislation on increasing
the cap on the 8(a) sole source award. And so we welcome the op-
portunity to work with the Committee in ushering or providing any
technical assistance on that legislation. But higher value contracts
are really important to ensure that we not only increase small
business contacting but that the businesses themselves can con-
tinue to generate wealth and employ people in more meaningful
jobs. And contract bundling is another issue that really impacts the
question that you have stated of higher value contract awards.
When contracts are no longer set aside for small businesses and
bundled, that decreases the opportunity for the firms. And so we
are every day on the frontlines monitoring these contracts and try-
ing to make sure that the agencies are following the Rule of Two.
Ms. TENNEY. Okay. While I say that I want to just also ask
you, you stated in your testimony that the top priority of the Small
Business Administration is to boost the number of certified small
businesses receiving federal contracts behind the current goal of 23
percent. Are you concerned at all that by expanding this goal, it
may cannibalize contracting opportunities for some of the medium-
sized businesses and also some of the growing emerging businesses
that are also in competition for those as we continue to try to make
sure that we always talk about quality and the ability of these
companies to do those contracts.
If you just answer quickly because I have one follow-up question
on that for you.
Ms. HIDALGO. Thank you, Congresswoman.
We want to make sure that all businesses have the opportunity
to continue to grow and compete. Given that we are the largest
purchaser in the globe with over $500 billion in opportunity each
26

year, we feel that there is significant opportunity for all businesses
that want to compete. And so, you know, we feel that we want to
continue to see the firms grow. We also recently released our 5-
year review of the NAICS codes, so that 59,000 small businesses
are eligible for small business set-asides. So we are doing——
Ms. TENNEY. I want to just say one thing because I know you
have got to go back to the president of the United States and I
would just wish he would please, to our small business community
which provides 94 percent of the jobs in our community, stop play-
ing the blame game. Help us out. We are paying record high gas
prices, inflation. It is affecting everyone across our agro commu-
nities, our small business community, and every sector. Let’s solve
these problems. And I think SBA can be part of the solution but
stop blaming these small business owners. We are struggling just
like everyone else.
And thank you. I appreciate your testimony.
Chairwoman VELÁZQUEZ. The gentleman from Wisconsin, Mr.
Fitzgerald, is recognized for 5 minutes.
Mr. FITZGERALD. Thank you, Madam Chair.
Ms. Hidalgo, the Small Business Act requires the SBA to compile
an annual report on the government-wide bundling and its impact
on small businesses. But what we are hearing is that the SBA has
indicated that the report is either difficult to compile or is often-
times incomplete due to the challenges in and around getting this
information. A lot of times either the agency is just flat out declin-
ing to compile this information and provide it. So, let me ask you
this first. Is this accurate? I mean, is this really happening? And
if it is, what I would like the Committee to do and I am working
on a bill to force them to actually compile this and provide it for
SBA.
Ms. HIDALGO. Thank you very much, Congressman. This is crit-
ical to ensuring that more contracts are set aside for small busi-
nesses. And I have asked the White House if we can make sure
that we take an even more laser focus now that we have issued the
reforms on category management on contract bundling. And what
would make a significant difference is if our PCRs and the OSDBU
offices are on the front end of these contract ends rather than the
back end. Otherwise, we are given 30 days’ notice to contest any
bundled contracts. However, if we are on the front end before any
of the bundling takes place, we are going to be able to negotiate
quite significantly much more opportunity for small businesses.
And so I welcome to work with you and your team to ensure that
we have more accountability around this and that we get more op-
portunity to the small business contractors.
Mr. FITZGERALD. So Madam Chair, I would suggest, I think it
is a laudable thing for the Committee to work on and probably a
pretty simple bill to just once again put a directive in place that
all that information should be provided.
Let me just switch quickly to in my district, the 5th District in
Wisconsin, DoD is in the middle of that implementation on the cy-
bersecurity maturity model. And along with that, what I am hear-
ing from some of the DoD contractors or those that participate in
that process, that what they are finding is that the compliance
costs are so astronomical that, especially those that are on the
27

smaller end of the scale, are almost throwing up their hands saying
it is not worth it because it is such an abstract kind of program
and they are having difficulty in not only participating in the pro-
gram but also, you know, kind of getting across the finish line say-
ing we have done everything we have been asked to do. So is this
something you are aware of? And is it something that you are
working on?
Ms. HIDALGO. Yes. Thank you very much, Congressman. This
is so critical for our small business contractors. And the Adminis-
trator has talked with the Deputy Secretary of Defense, and I talk
regularly with the head of the small business office to make sure
that whatever is ultimately implemented is fair and supportive of
our small businesses and the costs associated with this. So my un-
derstanding is DoD has been taking quite a strong look at ensuring
that ultimately whatever is adopted does not unfairly hamper the
businesses. And they are also getting additional resources to sup-
port them on these costs associated with these requirements.
Mr. FITZGERALD. So Madam Chair, once again, I think it is an-
other issue that this Small Business Committee could deal with.
And if my office is getting a steady stream of these contacts, I am
sure there are other Members of Congress that are getting the
same thing. So I would hope it would be something that we could
take a look at related to small business. And I yield back.
Chairwoman VELÁZQUEZ. The gentleman yields back.
Now we recognize the gentlelady from Texas, Ms. Van Duyne,
Ranking Member of the Subcommittee on Oversight, Investiga-
tions, and Regulations.
Ms. VAN DUYNE. Thank you very much, Madam Chairwoman.
So I want to follow up on those questions about the cybersecurity
maturity model certification. You said that they were working on
it. That they were taking steps. Can you give us more detail? What
steps are they taking?
Ms. HIDALGO. Thank you very much, Congresswoman.
We have talked extensively with DoD about how this could un-
fairly burden the small business owners. We have been hearing
from them as well, their concerns directly. And so DoD has prom-
ised to keep us apprised of any ultimate steps that they are going
to take. But one, they are well aware of the costs involved and are
trying to figure out ways to alleviate those costs and where they
can provide extensions on implementing the program to make sure
that ultimately it does not unduly burden the businesses but that
we continue to keep national security top of mind. And so——
Ms. VAN DUYNE. And I appreciate that. I appreciate that. But
what can we do to expedite that? Because they cannot wait years.
I mean, some of these companies are already coming off, you know,
the pandemic, 2-1/2 years of, you know, falling revenues. They can-
not wait that long. What can we do to be able to expedite that?
Ms. HIDALGO. Well, one of the things DoD has done is con-
tracted with a firm to provide free training to any small business
contractors on this issue, and so part of it is getting the word out
on those resources and the training that the DoD is providing. And
then additional technical assistance for the firms would make a sig-
nificant difference. So any resources that Congress can provide on
28

that would have an impact on ensuring that the firms are CMMC
ready.
Ms. VAN DUYNE. Okay. According to NFIB’s May Jobs Report,
the labor shortage continues to be a challenge for small businesses
with over half of them reporting job openings that they could not
fill. And I have seen this directly in my district up in North Texas.
This is up four points from April. Can you tell me what the SBA
is doing to address this growing labor shortage?
Ms. HIDALGO. Thank you very much, Congresswoman.
It is really important for our small business contractors to con-
tinue to create very meaningful jobs. And as a result in the in-
crease that we are seeing in contracting and new entrants, they are
able to create more meaningful job opportunities and so that is
very top of mind because we know that this incredible resource
through congressional goals has an impact on ensuring that more
small businesses can employ and provide meaningful job creation
in districts all——
Ms. VAN DUYNE. I appreciate that you saw it but I want to
make sure, we have a very short time, what are the steps that you
are doing? I see that you understand the problem but what exactly
are the steps that SBA is doing to address the labor shortage?
Ms. HIDALGO. Well, thank you, Congresswoman. This is a very
important issue for the Administrator and for the President. We
want to make sure that small businesses have the support they
need to be successful.
Ms. VAN DUYNE. And I appreciate that. But what are the steps
that you are taking?
Ms. HIDALGO. We are looking at everything from where we can
focus on rules and administrative guidance to provide relief to
small businesses. Every day it is top of mind that we use the vast
resources that Congress has provided us to provide support and
technical assistance to our firms.
Ms. VAN DUYNE. And I appreciate that. But when I get calls
from, you know, our businesses, what can I tell them that you are
doing?
Ms. HIDALGO. So we have very much focused on creating the
opportunities that lead to more meaningful job creation, and as a
result, allows for the businesses to provide excellent opportunities
for their employees. And that——
Ms. VAN DUYNE. So we have the jobs. The jobs are available.
It is not job opportunities. It is actually the labor shortage that we
are looking. We have got a number of job openings. The problem
is filling those.
Ms. HIDALGO. Yes. And that is why government contracting is
so critical because as the labor market is looking for meaningful
opportunity, that is what government contractors provide.
Ms. VAN DUYNE. Okay. Thank you very much.
Chairwoman VELÁZQUEZ. The gentlelady’s time has expired.
Now we recognize the gentleman from New York, Mr. Garbarino.
Mr. GARBARINO. Thank you, Chairwoman, and the Ranking
Member for holding this hearing. Thank you for the witness for her
testimony.
I will follow up on Ms. Van Duyne’s questions. I would love to
actually find out what SBA is doing to help. I am hearing from
29

every different aspect, every small business and they are all having
the same problem. And this is where I think the SBA needs to help
them. So if you actually do have a list of things that you are doing
and I can send them to your office for that would be very helpful.
So I want to thank my colleague for asking those questions.
Last hearing, the witness was questioned whether pursuing ac-
cess to the SBA’s contracting programs was worth it. And in light
of her observation that an increasingly higher proportion of small
business opportunities are found through governmentwide con-
tracts rather than individual set-aside opportunities. What is your
response to her observation?
Ms. HIDALGO. We see that the increasing reliance on these gov-
ernmentwide vehicles does have an impact on small businesses’
ability to compete because as you heard in the hearing last week,
it’s fewer and fewer firms that are able to get onto these contract
award vehicles. We are working closely with GSA to figure out if
there is a way to have more frequent onramps, which is another
issue that you heard last week. And so that more small businesses
can participate in these ordering vehicles.
And then apart from that, by our success in getting all the socio-
economic firms onto Tier 2 of category management. So as these
agencies are rated in their performance, it includes contracting
with small businesses that are separate from the ordering vehicles.
Mr. GARBARINO. Okay. So you heard what she said and you
guys are actually coming up with issues to address it. So I appre-
ciate that.
Another question, according to payroll data, head counts at com-
panies with fewer than 50 employees declined in 3 of the past 4
months. In your opinion, why do you believe this decline is hap-
pening and what can the administration do to reserve the decline?
Ms. HIDALGO. We are very focused on making sure that we le-
verage all the tools that we have at our disposal, from the socio-
economic programs to the small business set-aside to our technical
assistance programs, to make sure that the small businesses can
compete and they have the employees and staff and resources to
do that. And fortunately, because of these programs and the enor-
mous impact it has on the U.S. economy. They are able to create
meaningful jobs. And these jobs are key, are critical in addressing
the labor shortage.
Mr. GARBARINO. I mean, the jobs are there, and my colleague
made this point before. It seems the employees are not. The jobs
are there. There are signs everywhere, you know, jobs available.
So, I mean, what, again, this goes back to my previous colleagues,
why are people leaving the companies? Why are the headcounts
going down and what is the administration doing to change it? Is
it a payroll problem? I mean, what is the issue. The jobs are there;
it is the employees that are not.
Ms. HIDALGO. Right. And I think part of it is when I am talk-
ing about or referencing meaningful jobs that the firms are able to
provide more competitive opportunities to employees and that
makes a difference in being able to hire and find top quality talent.
Mr. GARBARINO. All right. I appreciate your answer.
One last question. I am concerned that the rising use of joint
ventures for the SBA’s Mentor-Protégé Program is creating a de-
30

pendency among small businesses on them to be competitive. It is
a problem since up to 60 percent of the work performed by a joint
venture and corresponding revenues can be obtained by a large
mentor. These are dollars specifically designated for small busi-
nesses that large businesses can now easily access. Please share
your own assessment of the Mentor-Protégé Program and the for-
mation of joint ventures’ impact on these small businesses.
Ms. HIDALGO. Well, it is definitely an important tool for our
small businesses to be able to partner with other companies to go
after contract opportunities and create more value. We have seen
a marked increase in applicants to the Mentor-Protégé Program
thanks to the All Small Mentor-Protégé Program. We are now
tracking regularly the impact that it is having and we are seeing
a significant increase in revenue for the small businesses as a re-
sult. So it is yielding outcomes and we are continuing to monitor
all the rules and regulations to ensure that ultimately the small
business benefits most from this important resource that the SBA
is able to provide.
Mr. GARBARINO. I appreciate it. I am out of time.
Chairwoman VELÁZQUEZ. Time has expired.
I would like to thank Associate Administrator Hidalgo for ap-
pearing here today.
Strengthening the ability of small businesses to compete for and
win federal contracts is one of this Committee’s top priorities. A ro-
bust Office of Government Contracting and Business Development
is integral to achieving this goal. Today, we have covered issues
facing the office, and we will work on a range of potential solutions
to help the office operate more efficiently and effectively.
Without objection, Members have 5 legislative days to submit
statements and supporting materials for the record.
If there is no further business to come before the Committee,
without objection, we are adjourned. Thank you.
[Whereupon, at 11:44 a.m., the committee was adjourned.]
31

APPENDIX

U.S. Small Business
Administration

Testimony of

Bibi Hidalgo
Associate Administrator
Office of Government Contracting and Business Development
U.S. Smal l Business Administration

Before the

Committee on Small Business
U.S. House of Representatives

Hearing on

"SBA Management Review: Office of Government Contracting and Business Development''

June 23, 2022
32

Testimony of Bibi Hidalgo
Associate Administrator, Office of Government Contracting and Business Development
U.S. Small Business Administration

Good morning, Chairwoman Velazquez, Ranking Member Luetkemeyer, and distinguished
members of the committee. On behalf of our Administrator, Isabella Casillas Guzman, and the
entire Agency, thank you for the opportunity to appear before you today to discuss the important
role that government contracting plays in investing in and empowering small businesses across
the United States.

The Federal Government is the largest purchaser of goods and services in the world, leveraging
its immense spending power of over $500 billion annually on everything from biopharmaceutical
research to cybersecurity improvements to green building architecture. And time and time again,
it is our nation's small business contractors who are driving these kinds of innovations,
bolstering our supply chains, moving our economy forward, and keeping our country secure.

For many small businesses, there is real power that comes with getting to say that the United
States Government is one of their clients. At the same time, the Federal Government and the
American taxpayer benefits from partnering with our nation's small business innovators to create
jobs in every community across our nation.

Under the leadership of President Biden, we have seen a governmentwide overhaul in how
federal agencies, from contracting offices all the way up to front offices, approach and promote
small business procurement. This Administration has shown over the past year and a half that it
believes in advancing the cause of small and socioeconomic business contracting not only for the
sake of our Congressional goals, but also for the health, security, and prosperity of our industrial
base. In so doing, President Biden and Administrator Guzman have prioritized breaking down
historic barriers to create opportunity for American entrepreneurs. I am proud to be a part of this
Administration's work to ensure that every person can take that leap of faith into the challenging,
but endlessly rewarding, world of business ownership.

By way of background, I am the daughter of Cuban exiles who came to the United States after
the Cuban Revolution. The day of the Bay of Pigs invasion the Cuban militia stormed into my
Grandparent's house in Havana and took my Grandfather, my Mom, who was only 17 years old,
and her two sisters, to prison. Though deprived of their freedoms for 39 days, America soon
offered an open door for a better future-a future for my mom and dad to start their family, raise
five children, and teach each ofus about grit and determination. And based on our deep Ignatian
faith, we were taught the importance of working in service of others.

These are the values that guide me in public service, as I have worked to promote small business
interests under two U.S. Presidents. I was a small business owner myself- starting a business
with my younger brother Patrick to serve Fortune 500 companies in developing strong supply
chains. During our time working on a start-up, I faced many of the same challenges that I hear
about from small business owners that I meet across the country today. I understand the
challenges with making payroll or landing a contract. I also understand the reward and
satisfaction when that first check arrives.

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As Associate Administrator ofSBA's Office of Government Contracting and Business
Development, my team and I work daily to widen the doors of access and opportunity for all
small businesses looking to share their wealth of talents and innovations in the federal
marketplace.

24 Agencies and Us

SBA advocates on behalf of small business contractors on a national scale. We work to monitor
the progress of all 24 CFO Act agencies towards the Congressionally mandated goals for small
business contracting, including the 23 percent goal for all small business concerns, the 5 percent
goal for Small Disadvantaged Businesses, the 5 percent goal for Women-owned Small
Businesses, the 3 percent goal for Service-disabled Veteran Owned firms, and the 3 percent goal
for HUBZone firms. SBA works with our partner agencies to reach and surpass these
Congressional goals, translating to almost $150 billion in small business contracts per year.

On the first day of the new Administration, President Biden signed an Executive Order on Equity
and Underserved Communities which directed the government to use federal procurement
strategies that expand access for socioeconomic firms. The President also announced an all-of-
govemment effort to grow federal contracting spend with Small Disadvantaged Businesses to
l 5% by 2025. That adds up to tens of billions of additional dollars over five years. Together with
our overall small business goal, women-owned business goal, service-disabled veteran owned
goal and HUBZone goal, these federal commitments represent a once-in-a-generation
opportunity to invest in all of our nation's skillful small business and tum their ideas into the
very real solutions that the U.S. government needs to take on its greatest challenges.

While SBA negotiates and monitors agency-specific goals throughout the fiscal year, we also
have a dedicated team of Procurement Center Representatives (PCRs), who negotiate with
contracting officers across federal agencies to create billions of dollars in new small business set-
asides. As just one example among many, one PCR worked to appeal an agency's recent $7.7
billion IT acquisition strategy, which not only would have displaced pre-existing small business
contracts, but which also did not include set-asides for small business concerns. Because ofmy
team's efforts, they were able to secure a commitment from the agency to set a 37 percent goal
for prime contracting with small businesses, equivalent to $2.85 billion. That amounts to
thousands of quality, good-paying jobs being created or maintained at small firms across the
country over the next decade.

Bundling Impairs our Communities

Given the unprecedented spikes in contract bundling occurring across the federal government,
SBA's work advocating for small business spending has never been more important.
Increasingly, federal contracts are being consolidated until they are no longer within reach for
many small businesses, removing them from the competitive process and effectively, from the
federal marketplace. As context, in the 10 years prior to FY2019, the government bundled a total
of $44 billion in contract work that had been performed by small business but that had since been
consolidated into large-business contracts. In just the past three fiscal years, however, the federal
government has bundled a total of$] 12 billion-averaging almost a full decade's worth of
bundling each year.

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Data demonstrates that bundling practices, present one of the largest barriers to entry to federal
contracting. Just eleven years ago, the Federal Government contracted with more than 131,000
small businesses; today that number is closer to 80,000. That is a 39 percent drop in our small
business industrial base. Over the same time period, there has been a 60 percent decrease in new
small business entrants to federal contracting.

As part of the President's commitment to Equity in Procurement, SBA has worked with the
White House, the Office of Management and Budget, and our partner agencies last year to
announce five major policy changes for federal contracting to ensure that socioeconomic firms
have a strong footing on which to compete in the federal marketplace. These changes improve on
five key areas-Access, Delivery, Accountability, the Playing Field, and Transparency, or as we
have dubbed them in my office, ADAPT.

First is Access-SBA and the White House are committed to tracking new entrants to the federal
marketplace to expand the domestic supplier base, to reverse the past decade's decline in the
number of small businesses contracting with the government, and to ensure that prospective
government contractors can compete and win awards.

Delivery-As was mentioned earlier, President Bidcn committed this Administration to raising
the govemmentwide Small Disadvantaged Business goal to 15 percent by Fiscal Year 2025.
Earlier this year, SBA negotiated with all Cabinet and procurement agencies to establish
ambitious, agency-specific goals around SDB contracting so that, governmentwide, we reach 11
percent in Fiscal Year 2022.

Accountability-Agencies have been directed to add small business goals into the yearly
performance evaluations for Senior Executive Service officials in program offices overseeing
contract activities. When similar policies were introduced under the Obama Administration, we
were able to achieve the 23 percent small business goal for the first time in nearly a decade.
Now, we hope that reintroducing the goals to performance evaluations will spur even more set-
asides for small and disadvantaged businesses, while also cutting down on the bundling of
federal contracts.

The Playing Field-SBA fought to ensure that federal contracting guidelines for small business
set-asides are being followed and to add new guardrails and even more windows of opportunity
for small firms to work directly with the Federal Government. Based on new guidance developed
collaboratively between the White House, the Office of Management and Budget, SBA, and our
partner agencies, more than 30,000 socioeconomic small businesses-that's all Small
Disadvantaged Businesses, Woman-owned Small Businesses, Service-disabled Veteran-owned
firms, and HUBZone firms-are now automatically provided Tier 2 credit for Category
Management. As a result, contracting officers arc incentivized to take maximum advantage of
socioeconomic small businesses both through open market transactions and on existing vehicles,
all with a close eye towards growing the small business supplier base.

And finally, Transparency-For the first time in history, SBA has publicly released data on the
percent of federal dollars that went to Black, Latino, Asian American, Native American, and
tribally owned small businesses. According to Consulting Economist Jon Wainwright," .. .large,
adverse, and statistically significant disparities are found to exist for minority
businesses in the great majority of cases throughout the United States, in the economy as a
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whole, and in each major procurement category and industry sector." Disaggregated data
represents an important tool to ensure that we are not missing out on partnering with talented
CEOs on the cutting edge of innovation. In particular, by housing this data on the SBA.gov
website, we can better track our progress toward achieving the President's bold vision for
partnering with small and socio-economic firms.

Creating a Customer-Centered Approach to GCBD's Certification Processes and IT

At the start of the Biden-Harris Administration, SBA's certification IT ecosystem was in need of
significant process review and improvements. That is why we worked to overhaul the
certification application IT systems, including to Certify, beta.Certify, and the HUBZone
Certification Tracking System (HCTS). These changes have come in two forms-first, as client-
facing improvements to the system itself, such as streamlining the application process and
improving wcbpage performance; and second, as staff-facing improvements to the system that
have heavily cut down on processing times. As part of the governmentwide Customer
Experience initiative and Administrator Guzman's customer-centric focus agencywide, we also
launched a Customer Survey so that we can collect ongoing feedback on our IT systems and put
the voice of the customer at the center of our development efforts.

Our reforms are making a difference: SBA is processing certification applications over 20
percent faster than statute requires. In fiscal years 2019 and 2020, the average processing time
for an 8(a) Business Development Program application was 137 days. Since President Biden
took office, that number has dropped to 94 days. In the past year alone, the HUBZone program
reduced application processing time by 40 percent, resulting in a 3-week turnaround time for
getting application decisions to firms. In just the past few months, process improvements in the
WOSB program have led to a 35 percent increase in the number of applications that move
forward from initial review to be considered for certification.

Moreover,just last month, our Information Technology team deployed a large set of
improvements to Certify.sba.gov that were based on recent feedback, commercial usability best
practices, and federal plain language guidelines to accomplish two major areas of improvement:
re-design of the Certify.sba.gov website and simplification of the program application.

Where more support is needed by the applicant, we provide a clear pathway to Small Business
Development Centers and Procurement Technical Assistance Centers nearby to connect them
with our network of business specialists and counselors. Our application simplification effort has
reduced the number of questions presented to applicants by IO percent, and it has revised 80
percent of questions to reflect federal plain language standards.

The lessons learned from these and other critical reforms to our certification processes have
played an important role in reshaping the application experience for our nation's small business
contractors. At the same time, they have helped to establish best practices that will form the
baseline for the Veteran's certification program that is transitioning from the Department of
Veterans Affairs to SBA on January 1, 2023. America's Veteran community has come to expect
a standard of care from the Veterans First Contracting program at the VA, and SBA has been
working diligently with the VA and stakeholder groups to stand up a program that embodies that
same level of care and attention that our Veterans deserve. By having all small business
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certification, technical assistance, and business development programs under the same roof at
SBA, we will serve as a one-stop shop for veteran entrepreneurs to access resources and trainings
to support their growth and success. For example, already in our Mentor-Protege Program, 31
percent of participants are Service-disabled Veteran-owned firms, receiving everything from
trade education to financial assistance to technical trainings in order to build capacity to compete
in the federal marketplace. With veteran and service-disabled veteran-owned small business
certifications fully incorporated at SBA, we can open the doors to even more veteran-owned
firms to take advantage of our programs.

My technical team's work is driven and prioritized directly by the voice of the customer, and
with Administrator Guzman's technology forward approach to the work we do here at the
agency, we look forward to many new technology releases that case small business entry into the
federal marketplace and support their development as market competitors.

Conclusion

The resulting economic crisis from the pandemic continues to have an unprecedented impact on
America's small businesses. Entrepreneurs across America--especially the smallest of the small
in urban, rural, and Tribal areas, businesses owned by women and people of color-struggled to
stay afloat, and many still live with the lagging effects oflimited work and lost revenues.

As we recover from the pandemic and support a new generation of entrepreneurs, ensuring that
small businesses can access the immense resources of SBA and the federal government through
contracting is more important now than ever. With a wealth of cutting-edge ideas and inventions
from small businesses across the nation, the federal government is poised to help deliver greater
value for taxpayers through government contracting.

Thank you again Chairwoman Velazquez, Ranking Member Luetkemeyer, and distinguished
members of the Committee for the opportunity to appear before you today. I look forward to
your questions.

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SBA Responses to Questions for the Record
SBA Management Review: Office of Government Contracting and Business Development
June 23, 2022

Questions for the Record from Ranking Member Blaine Luetkemeyer (MO-03):

I. I am concerned that an unbalanced approach to the increased use of governmentwide
contracts utilizing contract bundling and consolidation strategies may be unduly excluding
small businesses from most federal contracting opportunities. This may ultimately force
many small businesses to leave federal procurement behind, ultimately resulting in a
weakening of our national security and economic strength. What steps are you taking to
mitigate these risks?
• As part of the President's commitment to small business procurement, SBA worked
with the White House, the Office of Management and Budget (0MB), and our partner
agencies last year to announce a series of major policy changes for federal contracting
to ensure that service-disabled veteran, women-owned, HUBZone and small
disadvantaged businesses have a strong footing on which to compete in the federal
marketplace. Specifically, on governmentwide vehicles and scoring programs like
Category Management, SBA worked to ensure that federal contracting guidelines for
small business set-asides are being followed and to add new guardrails and even more
windows of opportunity for small firms to work directly with the Federal
Government. Based on the new guidance developed between the White House, the
0MB, SBA, and our partner agencies, more than 30,000 socioeconomic small
businesses-that's all Small Disadvantaged Businesses, Woman-owned Small
Businesses, Service-disabled Veteran-owned firms, and HUBZone firms-are now
automatically provided Tier 2 credit for Category Management. As a result,
contracting officers are incentivized to take maximum advantage of socioeconomic
small businesses both through open market transactions and on existing vehicles.
• We also worked with the White House and 0MB to place all five congressional small
business goals into the performance evaluations of senior executive program
managers and acquisition officials in the US Government. And now, all contracting
agencies will track new entrants to federal procurement to ensure that the industrial
base is growing in the United States.
• At the same time, over the past year, SBA has taken an active approach to protest,
appeal, and oppose attempts by Federal agencies to continue the trend in contract
consolidation and bundling. Recently, SBA led a multi-agency workgroup comprised
ofDHS, DLA, ED, 0MB, and GSA in the development of a small business-centric
category management training, which informed the federal acquisition and small
business workforce on regulations surrounding bundling and its connection to
category management.
• The Administration will continue advocating for small business utilization in the
federal marketplace and the careful consideration of small business equities as
acquisition policies, regulations and practices are developed and implemented.

2. At a recent hearing, a witness questioned whether pursuing access to the SBA 's contracting
programs was worth it, in light of her observation that an increasingly higher proportion of
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small business opportunities are found through governmentwide contracts rather than
individual set-aside opportunities. What is your response to her observation?
• SBA recently released the FY21 Small Business Scorecard to showcase each
agencies' performance in achieving the Congressionally mandated small and
socioeconomic business goals. This year's release showed that the federal
government reached record levels of contracting with small businesses, including
Service-Disabled Veteran-owned firms, Small Disadvantaged Businesses, and
HUBZone firms. This is an indication that federal contracting programs continue to
invest in small businesses at historic rates. To ensure these efforts are matched going
forward with an expanded small business supplier base, we are working with 0MB
on guidance and benchmarking tools that agencies can use to increase their attention
to the diversity and depth of socioeconomic and other small businesses in their base,
including the number of new entrants. These efforts, coupled with changes in
category management scoring practices and actions to disincentivize bundling are
designed to increase the likelihood a small business will receive work, whether
through an existing contract or a new stand-alone contract. We will continue to work
with 0MB, the Domestic Policy Council, and others to ensure that government
contracting practices are in line with the Administration's small business priorities
and that agencies maximize their use of small business friendly practices when using
currently existent multiple award contracts, such as small business set-asides, small
business evaluation preferences, and more frequent on-ramps. ·

3. This year, the SBA delayed releasing its latest adjustments to the small business size
standards by a wide margin. This delay was costly. In many instances, small businesses
lost valuable work they could have continued to perform had the size standards been
published in a timely manner. Can you account for this delay and provide the Committee
with assurances that the SBA will publish future adjustments in a timely manner?
• Recent changes to the Small Business Act required SBA to conduct substantial
additional analyses for this batch of size standards updates, which added to the time
required to issue final size standards. For instance, section 3(a)(6) now requires an
economic analysis of the future effect of the size standard; section 3(a)(7) prohibits
SBA from using common size standards without justification; and section 3(a)(8)
requires SBA to calculate a unique size standard for each North American Industrial
Classification System industry. This is the first size standards revision that
implemented these new statutory changes. Additionally, SBA received more than
1,000 comments on the latest size standards during the proposed rule phase. This
historic level of public input and SBA's diligent analysis of and response to each
comment contributed to the delay. SBA endeavors to issue size standards in a timely
manner while complying with the statutory requirements.

4. The Government Accountability Office (GAO), in 2014 and again in 2019, found that the
SBA lacked procedures to assess the performance of third-party certifiers for its Women-
Owned Small Business Program. While the SBA agreed with GAO's recommendations,
no plans were made to regularly monitor their performance.
• Have such procedures been established following the GAO's recommendations? If
so, what they are?

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• Yes, procedures for oversight of third-party certifiers have been established
within the WOSB Federal Contract Program's new SOP 06 08 02. SBA
expects to issue this SOP within the coming weeks and can provide a copy
upon request once published.

• When was the last time the SBA assessed third-party certifier performance to
determine if these entities are in compliance with program requirements and has this
been appropriately documented?
• SBA collects monthly reports from third-party certifiers on several
categories, including the number of applications received, the number of
applications approved and denied, and other information that SBA
determines may be helpful for ensuring that third-party certifiers are
meeting their obligations. SBA also conducts two types ofreviews ofthird-
party certifiers. The first occurs throughout the year and involves SBA
collecting an audit sample of applications that were approved from each
third-party certifier. An SBA analyst reviews the supporting documentation
for each of these applications to determine if an appropriate decision was
made. SBA has also resumed site visits of third-party certifying
organizations which includes reviewing their procedures, systems, and staff.
The most recent site visit was completed in early July 2022.

• I am concerned about discrepancies in results businesses are given among the
different third-party certifiers; one entity may agree to certify a business when
another will not. Has this been resolved so that all entities, including the SBA, are
playing by the same rulebook?
• Over the past year, SBA has enhanced its oversight of each third-party
certifying (TPC) organization to include monthly training-based sessions on
the program's regulatory requirements. In these meetings, we discuss best
practices and share program related updates with each certifier. We also use
these trainings in conjunction with regular, individual sessions to discuss
any reported concerns regarding a specific TPC organization, as well as any
concerns the TPC may have. SBA also completes an annual audit of a
sample of firms that were approved by TPCs to ensure effective controls are
in place and application determinations are compliant with the program's
regulatory requirements. Further, SBA has reinstated in-person site visits of
TPCs to include interviews of staff, full review of each organization's
WOSB Program certification process, and demonstrations of the technical
systems used to process applications. For any identified inconsistencies or
deficiencies identified by SBA during these review processes, SBA
communicates that concern to the TPC and affords the organization the
opportunity to correct the deficiency. SBA then follows up to ensure that the
corrective actions were taken.

5. I am interested in your assessment of the SBA's HUBZone Program. The government has
consistently failed to achieve its 3 percent goal, and the SBA issued new regulations in
2019 relaxing eligibility requirements in its bid to increase program participation. I am

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concerned that relaxing eligibility requirements as the agency has done dilutes the spirit
and intent of the HUBZone program, which is to assist underserved communities. Can
you explain why the SBA made certain requirements easier to meet, such as the
employee residency requirement, even though Congress specifically rejected taking this
approach in its 2018 HUBZone reform legislation?
• The HUBZone Program has been reviewing data to assess the effectiveness of these
provisions in meeting their intended objectives, including the importance of assisting
and creatingjobs in underserved communities. The program will be issuing a
proposed rule to adjust these requirements as needed to ensure the integrity of the
program's mission.

6. Has the SBA seen an increase in participation in the HUBZone program, following the
legislative and regulatory reforms in 2018 and 2019?
• In FY20, the first full year following the roll out of some of the most comprehensive
changes to the program in its 20-year history, the HUBZone Program received 2,651
application submissions, which represents a 49% increase over the prior year. In
FY2 l, the program received a more modest increase in applications over past years,
but HUBZone witnessed a I 0% increase in the number of approved firms, leading to
the largest approval rate in the past several years. The higher-than-average approval
rate reflects the fact that more firms are availing themselves of the new pre-
application resources SBA put into place to improve the quality of submissions,
increase transparency, and reduce administrative/paperwork burdens. Moreover, the
HUBZone Program Office has heard from firms that the program is much more
appealing now because I) certifications are processed significantly faster than the 60
days required in statute, 2) consistent and excellent customer service is available full-
time, 3) paperwork burdens have been reduced, and 4) the frequency ofHUBZone
status protests has dropped dramatically. An economic impact study 1 conducted in
2019 found that every federal procurement dollar to a HUBZone certified firm
generated nearly 2 times the economic activity for the state, through ancillary
activities such as parking, meals at local establishments, office supplies, etc. This
same report found that federal procurement to HUBZone certified firms supported
more than 79,000 direct and indirect jobs. With more than $14 billion in federal
dollars flowing to certified small enterprises in HUBZone designated areas, the
HUBZone Program is experiencing record federal investments in the entrepreneurial
ecosystems of some of the nation's most underutilized business and commercial
areas.

7. Given the government's inability to reach its HUBZone goal, what are the most
significant barriers to agencies contracting with HUBZone companies and what can be
done to encourage utilization from the agency's perspective?
• SBA is encouraged by the federal government's historic contract spend with
HUBZone firms in FY2 I. This $14.3 billion record represents continued progress
towards finally achieving the government's 3% goal, with FY21 representing the

1
U.S. Small Business Administration via Optimal Solutions Group, LLC, "HUBZone Economic Impact
Report," February 2021. https://www.sba.gov/document/report-hubzone-economic-impact-report
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fourth straight year of increases in Scorecard attainment, including the highest percent
spend achievement in a decade. Awards to firms through HUBZone-specific
contracting vehicles increased 16%, and more than half of all federal agencies met or
exceeded their HUBZone goal last year. SBA is regularly meeting with Agency
OSDBUs and the contracting community to make sure procurement officials are
aware of their options for engaging with HUBZone firms. In addition, given that
Tribal lands qualify as HUBZones, the HUBZone Program Office is in conversations
with tribally-owned firms to discern ways that we can make the program more
accessible to their businesses. Moving forward, the HUBZone program team will
build on this positive momentum and continue its robust outreach campaign to share
tools, best practices, and resources with businesses and contracting officials across
the government to make it easier for them to utilize the program.

8. I understand the SBA plans to issue a technology contract to implement its new Service-
Disabled Veteran-Owned Small Business Program.
• Can you tell us more about this technology contract, for instance what the
requirements are and how much it is projected to cost?
• SBA has awarded a contract for the development of a new Veterans
Certification Management System (VCMS), a cloud-based system for
application intake and processing and a public-facing searchable database of
certified firms. VA has provided $IO million to pay for the system
development, with any remaining funds to be applied toward program
operations costs.

• Given the SBA GCBD's poor track record of technology investments, can you
provide us with assurances that this contract will not be yet another failed
investment?
• The development of the Veterans Certification Management System will be
informed by lessons learned from previous development projects related to
its certification management systems, as well as the systems that supported
the administration of SBA 's COVID relief programs and VA 's development
of their VEMS system. The agency is in a much stronger position to develop
and deploy cloud-based applications that leverage its enterprise cloud
infrastructure. SBA is taking steps to ensure that the VCMS development
employs human-centered design principles and that the technology decisions
support integrations with VA and other SBA systems.

• On that same note, I understand the SBA is moving toward a new cloud solution for
all of its certification programs, the SDVOSB program among them. How will you
align whatever product comes out of this technology contract with this new cloud
solution?
• The Veterans Certification Management System will be a cloud-based
application hosted in the agency's enterprise cloud environment.

9. We have heard concerns from veteran-owned businesses certified by the Dept. of Veterans
Affairs regarding the SBA's execution of Section 862 of the NDAA ofFiscal Year 2021,

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fearing that they may lose their certified status and the contracts that come with it if the
SBA is delayed or unsuccessful in its implementation of this contracting program.
• Please provide an update regarding this transfer.
i. SBA remains on target to fulfill our statutory obligation with regard to the
January l, 2023 transfer date. The vendor has done an excellent job in
developing the new system.

• What assurances can you provide to these companies that the SBA will prioritize
continuity and a seamless transfer of certifications between the Dept. of Veterans
Affairs and the SBA?
i. SBA is committed to ensuring that no currently VA-certified SDVOSBs or
VOSBs experience a lapse in certification as a result of the transfer. We
are coordinating closely with the VA on the transfer of data, including
how to handle applications that are in-process at the time of transfer.

• What is your communications strategy to veteran-owned small businesses regarding
this transfer?
i. SBA and VA have been regularly communicating to currently certified
firms, as well as the broader veteran's small business community. We
have ramped up communications this fall to provide more concrete
guidance around what to expect and what actions firms should take to
prepare for the transfer. We are committed to a high-quality customer
experience and are making all our decisions with veteran small business
owners in mind.

IO. This Committee has long been concerned with the data underpinning SBA's Scorecard,
believing such numbers to be higher than they should be. For instance, an agency may
claim JOO percent of a contract awarded to a joint venture as going to a small business,
even if the large business partner claimed up to 60 percent of the work and corresponding
revenue.
• Do you believe the Scorecard should accurately reflect dollars awarded to truly small
businesses, or at least be as transparent as possible where there may be dollars
funneled to large businesses?
i. The Scorecard serves the dual purposes oftransparency-i.e., reporting to
the public what the government has awarded to small business-and
incentivizing action-Le., encouraging agencies to set aside more
procurements for small businesses. Historically, SBA has counted every
prime dollar awarded to a small business (including a joint venture that
qualifies as a small business) as a small-business dollar for the scorecard.
Deviating from that principle would disincentivize agencies from using
set-asides because they would not be assured ofreceiving small-business
credit. Of note here, an agency does not know, at the time that it creates a
set-aside, whether the awardee will be a joint venture. SBA believes a
change to the scorecard calculation for joint-venture awards would not
advance the Scorecard's goal of achieving transparency and may
inadvertently deter additional small business preferences.

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• Do you have any plans to amend or modify the Scorecard to more accurately reflect
dollars awarded to truly small businesses?
i. SBA believes that the scorecard accurately reflects dollars awarded to
prime contractors that are treated as small business under the law. This
includes businesses that receive exceptions to affiliation in accordance
with the Small Business Act, either because they are owned by Native
entities or because they participate in the Congressionally authorized
Mentor-Protege Program.

11. An issue I have with the SBA's Scorecard and agencies focus on solely on the dollars is
that it fails to account for the Small Business Act's directive that small businesses benefit
most when opportunities are spread across all sectors, among a multitude of small
businesses. What are you doing to encourage agencies to contract with more small
businesses in more high-value industries?
• SBA includes in the scorecard a vendor-count metric that measures whether agencies
are expanding their small-business vendor count by creating opportunities. This
encourages agencies to focus not just on dollars but also on reversing the decline in
the small-business supplier base. With regard to spreading opportunities across
sectors, SBA works with each agency to ensure that they maximize small-business
participation in new and emerging industries (vital to the nation's industrial
capabilities). Agencies also look to the SBIR/STTR programs to find contractors that
could create a broader supplier base.
• Specifically for the Women-owned Small Business Program, SBA commissioned a
disparity study2 last year regarding WOSB firms' prevalence and performance across
all areas of government contracting to identify the industries in which WOSBs and
Economically Disadvantaged WOSBs (EDWOSBs) face inequities in federal prime
contracting. Based on the results of that study, we increased from 364 to 646 the
number of industries in which WOSB firms were eligible for set-aside and sole
source preferences. We also increased the number ofEDWOSB-eligible set-aside and
sole source industries from 80 to 113 (with EDWOSB firms also having access to all
WOSB preferences as well). In total, this expansion represents a 70% increase in
industry access for women-owned small businesses in the federal marketplace. Now,
WOSB and EDWOSB firms can have contract preferences in the industries that make
up 92% of all federal spending.

12. As you are aware, agencies can count small business dollars toward multiple different
socioeconomic small business goals, as long as the small business awardee holds that
status. This, unfortunately, masks the actual number and amount of contract actions
awarded through the SBA' s small business programs.
• Does the SBA 's Scorecard include and communicate this information in an easily
understandable and accessible way, for each of its small business programs and
corresponding goals?

2U.S. Small Business Administration via Optimal Solutions Group, LLC, "Women-owned Small
Business NAICS Analysis," May 2021. https://www.sba.gov/document/report-women-owned-small-
business-naics-analysis
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i. By statute, the SBA scorecard accounts for the "dollar value of prime
contracts." As a result, we need to demonstrate the dollar value of awards
for all socioeconomic categories and cannot place preference on one
socioeconomic category over another when determining credit on the
scorecard. Otherwise, making such determinations could have an adverse
impact on the socioeconomic categories individually. The number of
contract actions is available through SAM.gov and based on the reforms
that we rolled out in December of 2021; the federal government developed
a tracking system for new entrants to federal contracting which will be
implemented soon and will also have an impact on the number of contract
actions.

13. The federal government continues to fail to meet most of its subcontracting goals. Why is
this, and what is the SBA doing to ensure small business are awarded more subcontracting
opportunities in the future?
• As noted in SBA's July 2022 report to Congress on subcontracting, FY21 data
indicate that 64% of all goals for small business subcontracting across federal
subcontracting plans (on completed contracts) were met or exceeded, but over half of
the socioeconomic small business goals were not met. The aggregate dollars lost by
small businesses because of large contractors' failure to fully achieve their goals
amounted to more than $1.5 billion in FY2 l. For Small Disadvantaged Businesses
alone, these missed goals account for $740 million in lost revenue.
• SBA plays a key role in conducting regulatory compliance reviews to monitor when
firms are not meeting their subcontracting plans throughout a contract's lifecycle. Our
compliance reviews for subcontracting enable the Agency to evaluate the
implementation ofregulations across the Federal Government to promote prime and
subcontracting opportunities for small businesses. The SBA, through its Commercial
Market Representatives, targets large business prime contractors to ensure
compliance with subcontracting tenets. In fact, SBA revamped its federal-wide
Subcontracting Compliance Program by launching a diverse, cross-functional
committee consisting of government contracting and field staff, legal counsel, and
policy advisors to reexamine agency guidance in advance of the Government
Accountability Office's report titled, "Small Business Subcontracting: Oversight of
Contractor Compliance with Subcontracting Plans Needs Improvement (GAO-20-
464) (May 2020)." As a direct result of new guidance documents implemented in
FY21 for our CMRs, the staff conducted 192 Performance Reviews, including at least
one in each state, encompassing over 700 contracts containing subcontracting plans
and equating to oversight of over $15 billion awarded to small businesses. Separately,
every year, the team looks at the top federal contractor in each ofSBA's six Areas,
reviewing over $1 billion in subcontracting awards to small businesses from these six
firms alone. As a result of these six Subcontracting Program Compliance Reviews in
FY21, all six of the companies reviewed received a "marginal" rating and had to
submit a Corrective Action Plan to the CMR to highlight how the firms will come
into compliance with their subcontracting plans to provide the maximum practicable
opportunity to small businesses.

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• Even with this oversight, subcontracting goaling and enforcement remains an agency-
specific target. There are penalty enforcement mechanisms for contracting officers to
impose when they find that prime contractors have failed to make a "good faith
effort" to meet the goals in their Small Business Subcontracting Plans, but the
contract officer still has discretion on whether to use the enforcement mechanisms.
Finding a "lack of a good faith effort" requires an in-depth analysis by a contracting
officer after contract completion, which is a very high bar to meet. Because of these
circumstances, prime contractors are rarely, if ever, penalized for not meeting their
subcontracting plan goals, which continues to concern the small business community
and its supporters.

14. The SBA requested a $20 million increase in its Fiscal Year 2023 Congressional Budget
Justification to support implementation of Section 862 of the National Defense
Authorization Act of 2021.
• Can you elaborate on how these funds would be spent, if granted?
i. As SBA takes on responsibility for administering the expansion of
certifications for service-disabled veteran-owned small businesses
(SDVOSB), the funding will support the cost associated with establishing
the certification system, staffing increases, and contractor support related
to the certification of these firms for the entirety of the federal
government.

• Are there any further efficiencies the SBA can seek to reduce the cost?
i. The Department of Veterans Affairs has delivered high-quality support to
American veteran business owners. SBA seeks to deliver at the same
standard to the veterans as the certification expands to federal contracts
from all 24 CFO Act agencies. SBA anticipates the expansion of market
opportunities for SDVOSBs will result in multiples of higher applications
for certification as the business owners seek opportunities across the
federal landscape. SBA is taking measures to run an efficient and effective
program, but it is premature to project the level of potential cost reduction
without the experience of running the program.

• If the SBA were not granted this increase, is there a contingency plan to meet the
requirements of Section 862?
i. SBA is committed to ensuring that no currently VA-certified SDVOSB or VOSB
experience a lapse in certification. SBA appreciates Congress' support of the FY23
Concurrent Resolution anomaly request to support the cost of establishing and
implementing the government-wide certification program.

15. The SBA requested a small increase in its GCBD budget for Fiscal Year 2022. Can you tell
us where these extra funds went?
• For fiscal year 2022, Congress appropriated a $700,000 increase for the 7(j) Program.
SBA is authorized to use this two-year funding to provide management and technical
assistance through grants and cooperative agreements to qualified service providers
who in tum provide technical assistance to eligible firms and individuals. These

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funds are being used to help strengthen the business acumen of 7(j) eligible entities
through trainings on business capture, marketing, accounting, contract management,
compliance, and other key areas to support their ability to seek and win federal
contracts more effectively.

16. I have heard anecdotal reports of Procurement Center Representatives (PCRs) failing to
dispute procurements that were highly appropriate for small businesses, even when
confronted with their responsibility to do so. Given the current contracting climate pushing
small businesses further toward subcontracting opportunities, it is vital PC Rs are actively
engaged with their responsibilities and have the authority and drive to push back against
the buying agencies in which they are embedded.
• What oversight procedures are in place to ensure PCRs are carrying out their duties to
the fullest extent?
i. PCRs work closely with acquisition personnel at the respective federal
buying activities to identify opportunities for contracts that could be set
aside for small business and the government's socio-economic contracting
programs. SBA has approximately 40 PCRs who are supported and
managed by six area managers and deputy area managers who focus on
the top 300 buying activities. In recent years, the movement towards
contract consolidation, bundling, and schedules have increased the
complexity of PCR reviews, often extending the time required to conduct
the analysis and negotiate a contracting framework. As these situations
have become more common, the capacity of PC Rs to dispute smaller
procurements has lessened.
ii. More recently, SBA executive leadership has elevated support to PCRs
and Area Managers to push back against bundling and consolidations
actions that would otherwise limit opportunities for small business
participation. This approach is in direct support of the Administrations
goals of increasing the nation's industrial base and bringing in additional
small businesses to the federal marketplace. As the dollars related to the
contract consolidations and bundling have become increasingly larger
PCRs have strategically worked to ensure small businesses have a
reasonable chance to compete for federal contracts. For example, earlier
this calendar year with the support of their area manager an SBA PCR
pushed back on a planned contract bundling award that would have
resulted in at least 12 small businesses losing $170 million overthe IO-
year period of the proposed contract which was set to bundle $7.7 billion
and award the work to a single business entity. SBA's intervention and
proposed adjustments were rejected multiple times before SBA's
negotiations with the buying activity ultimately settled with a small
business carve out that is expected to range from $970 million to $1.2
billion for small business participation at the prime contractor and sub-
contractor levels.
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• How often are PCRs assessed?
i. PCRs are assessed annually during performance plan reviews, which
includes their success in reviewing acquisitions within their portfolio that
were not fully set aside for small businesses, their performance in
advocating for the maximum utilization of small businesses, their work to
advocate against the consolidation or bundling of contract requirements,
and their overall approach to customer service.

• Ifit seems a PCR may be too deeply embedded within a buying agency, perhaps
fearing retribution should they dispute a procurement, how might the SBA handle this
situation?
i. It has been SSA's experience that some of the most fruitful outcomes for
small business contracting opportunities arise where the PCR works
collaboratively with the small business specialist and OSBDU team to aide
in moving proposed full and open contract awards into small business set-
aside. There are cases when the nature of a proposed acquisition strategy
cannot be accepted by the PCR. SBA PCRs understand it is the primary
responsibility to create opportunities for small businesses to participate in
the federal marketplace and if the situation calls for the PCR to rebut the
proposed acquisition approach, it is expected that the PCR will take the
appropriate action and work with the area and/or deputy area director on
the decline.
ii. PCRs understand that their ability to work in environments with
sometimes conflicting priorities, and screening interview questions are
targeted to identify candidates who will support a small business friendly
procurement strategy that may conflict with the Procurement Center (PC)
or program office priorities and maintain that perspective even though
there is strong opposition. In instances where this has occurred, the first-
line supervisor always has authority to oversee a PCR's work and provide
direction that supports small business participation for a particular
acquisition or matter. It would be incumbent upon this first-line supervisor
to ensure that the PCR is advocating for and supporting small businesses
at that PC. Moreover, Area Directors conduct a review and evaluation of a
sampling of PCs in their geographical area on an annual basis to assess
coverage and propose any necessary changes in coverage.

17. The Government Accountability Office issued a report examining PCRs in 2020, finding
that PCRs failed to maintain reports summarizing their activities and accomplishments, and
that the SBA failed to provide a centralized repository for PCRs to store this information
and supporting documentation. Are you aware of this finding and what are you doing to
close the GAO's recommendations?
• SBA worked with GAO to close out their recommendations from this report that the
SBA Administrator develop a central repository for Procurement Center
Representatives (PCR) to store the data they report on their activities. On January 22,
2021, SBA informed GAO that SBA issued a memorandum directing PCRs to begin

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using the Prime Contracting Program PCR Data Repository established on SBA's
SharePoint site as of February 1st, 202 l.
i. The memorandum clearly established the PCR Data Repository as the sole
official records retention site for the SBA's Prime Contracts program and
advised the infonnation collected therein would include pertinent
procurement infonnation and corresponding activities. Additionally, it
stated that the repository would classify all review infonnation in an excel
spreadsheet by fiscal year and federal agency.
ii. Further, the memorandum declared PCRs would be responsible for
entering, uploading, and maintaining the repository infonnation no later
than five business days after the end of the previous month, and that
periodic review of the data's accuracy and completeness would be
performed by Area Office management or their designee on a quarterly
basis, along with consistency assessments by the Prime Contracts Program
Manager biannually. To preserve the integrity of the data, it was advised
that access to the repository was restricted to PCRs, the Prime Contracts
Program Manager, Deputy Area Directors, Area Directors, the Deputy
Director of Government Contracting, and the Director of Government
Contracting. The documents in the electronic repository are maintained for
nine years and three months.
iii. SBA's central data repository is fully developed, and SBA has been
successfully utilizing it as a "central repository" for PCRs to store the data
they report on their activities, consistent with GAO's recommendation. In
fact, within this central repository there are two data entry logs: (I) for
small business co-ordinations/review of subcontracting plans and (2) for
outreach/training. Each PCR has both logs under their name to maintain
data integrity. At the end of the month, the individual logs are
downloaded into one master log.

18. The SBA's Inspector General's 2022 Semiannual Report indicates 43 referrals were made
to the SBA with only two closed as of March 31, 2022, with no suspension or debannent
actions taken. Can you provide me with an update as to the remaining 41 referrals?
To clarify, the SBA OIG 2022 Semiannual Report states 43 referrals were made to
SBA between October 1, 2021, and March 31, 2022. However, this is inaccurate
because SBA reported to the OIG it received 43 referrals between October 1, 202 l,
and April 11, 2022. Out of the 43 referrals mentioned in the OIG's report:
• 17 were referred to SBA before the reporting period in the SBA's Inspector
General's 2022 Semiannual Report (they were referred to SBA in August and
September 2021)
• 3 were referred after the reporting period in the SBA's Inspector General's
2022 Semiannual Report
• 23 were referred to SBA on the last day of the reporting period (on March 31,
2022).

SBA has two Suspending and Debarring Officials (SDOs): the SDO for Financial
Assistance Programs and the SDO for All Other Programs. In FY 2022, SBA took 27

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suspension and debarment actions on the referrals mentioned in the SBA's Inspector
General's 2022 Semiannual Report; these actions were taken by the SDO for
Financial Assistance Programs. SBA is currently reviewing pending cases for action
by the agency. The OIG made no referrals to SDO for All Other Programs during the
reporting period.

19. How many suspension and debarment actions has the SBA processed this year? Please
provide totals for 2021 and 2020 as well.
• This year, SBA has processed 41 suspension and debarment actions.
• In 2021, SBA processed a total of 12 suspension and debarment actions.
• In 2020, SBA processed a total of 83 suspension and debarment actions.

Note: Actions include suspensions, proposed debarments, debarments, and
terminations of suspension. In addition to these four categories, the SDO for All
Other Programs performed the following: "Show Cause" / pre-notice letters,
Administrative Agreements, proactive engagements, post-notice engagements. The
SDO for All Other Programs reviewed additional actions through referral from other
agencies, contractor self-disclosure, or internal agency sources; these reviews resulted
in either suspension or debarment actions by another agency or no formal action
taken by SBA.

20. Have liquidated damages pursuant to a debarment action been pursued by the SBA or any
other contracting agency in recent years, to your knowledge? If so, how much was
recouped?
• SBA has not pursued any liquidated damages pursuant to a debarment action. SBA is
not aware of any other contracting agency pursuing liquidated damages pursuant to a
debarment action in recent years.

21. Do you think the threat of suspension and debarment poses a significant enough deterrent
to ward off potentially fraudulent companies or other bad actors?
• The purpose of suspensions and debarments is to protect the federal government by
excluding persons who are not presently responsible to do business with the federal
government or participate in federal government programs. Suspensions and
debarments are effective once they are taken because they are published and
accessible to the public, which makes the excluded persons not eligible or prohibited
from doing business with the federal government or participating in federal
government programs. Suspensions and debarments are an administrative tool, that,
together with civil and criminal penalties, assist in deterrence of fraud.

22. How many full time staff are dedicated to handling suspension and debarment actions for
the SBA?
• SBA has four employees handling suspension and debarment actions. These
employees are not exclusively dedicated to suspension and debarment functions.

23. It is my understanding that suspension and debarment officials have very limited powers of
investigation. I believe this hampers their ability to pursue potentially fraudulent

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companies and bad actors. Can you elaborate on the authorities or powers that these
officials currently have, and what suggestions do you have to strengthen their ability to
perform their duties?
• The authorities that the Suspending and Debarring Officials (SDOs) have are in
Executive Order 12549--Debarment and suspension as implemented though 0MB
guidelines in 2 CFR 180 and 2700 as well as FAR Subpart 9.4. These authorities do
not confer investigatory powers to the SDOs. The SDOs receive present
responsibility referrals from the OIG after the OIG has investigated the cases and
made exclusion referrals to SBA. The SDOs rely on OIG investigations and
subsequently present responsibility referrals as well as Department of Justice actions.
SDOs' access to information available to OIG investigators would certainly
strengthen their ability to perform their duties.

24. This Committee has identified several small business challenges and concerns with the
Office of Management and Budget's Category Management Initiative. Although I am
aware of and pleased with the OMB's recent steps reacting to these concerns, I fear current
efforts may not go far enough to adequately protect small contracting opportunities. What
are your thoughts on Category Management and is the SBA actively engaged with the
0MB to issue guidance on the treatment and prioritization of small contractors within the
category management framework?
• We do agree that it is essential for the U.S. economy, to foster a competitive
marketplace, and to spur innovation, that small business contractors take priority over
category management initiatives. We worked closely with 0MB and the White House
as a result to make sure significant category management reforms were adopted. As a
result, in 0MB Memorandum M-22-03 on December 2, 2021, 0MB clarified that
small-business goals are of the upmost importance, as compared to category
management goals. 0MB, in collaboration with the White House and SBA,
designated all socioeconomic awards (SDB, WOSB, SDVOSB, and HUBZone) as
Tier 2 for Category Management, and SBA negotiated with 0MB and WH to ensure
that it has a seat on the Category Management Leadership Council once again. SBA
continues to engage with 0MB and the managers for each of the IO Category
Management categories at GSA to ensure that small businesses receive top priority
within the Category Management framework.

25. I hear from small business contractor constituents back home that they are among those
hardest-hit by inflation surges due to long-term fixed price contracts for construction or
major military systems. What is your office doing to address this issue?
• SBA released an interim final rule to raise program participant thresholds, such as the
net worth, gross income, and total contract revenue caps for the 8(a) program, to
account for inflation. This includes SBA's continued support for an increase in the
8(a) sole source thresholds for individually owned firms. The Department of Defense
(DoD) also issued guidance on how to adjust DoD contracts for price increases,
which may have an impact on many small business contractors given DoD's outsize
role in government contracting and spending. SBA also continues to conduct outreach
to agency small business and procurement personnel to advocate on behalf of small
businesses, including with regards to inflation concerns.

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• Currently, our Procurement Center Representatives advocate for negotiating contract
term and condition modifications (when determined to be in scope). These
recommendations have had some success, though the contracting officer at the
contracting agencies ultimately rely on their agency's legal counsel and operating
practices to make a final decision. For example, SBA's procurement staff was able to
work with the Defense Logistics Agency to adjust the terms of the contract for an
industrial waste small business. They were able to do the same with a Department of
Transportation Federal Transit Authority contracting officer to adjust terms for a fuel
products small business in California. Our PCRs will continue to empower and
advocate for small firms looking for support in contract renegotiations to better
handle any effects of inflation. Even when the contracting officer chooses not to
modify the contract to include an escalating cost clause or adjust pricing, PCRs can
and will provide information to assist the small business in negotiating a "termination
for convenience" so that they can exit the contract without incurring the unexpected
heightened costs.

26. Does your office coordinate with the Office of Entrepreneurial Development to ensure that
the Small Business Development Centers, Women's Business Centers, Veterans Business
Outreach Centers, and the SCORE program are helpful to small business contractors?
• We see this as critical to ensuring that small busines_s contractors have a significant
range of opportunities to gain support and guidance among resource partners across
the U.S. As a result, the Administrator realized it was important to have contracting
expertise on the SBDC team. She named our former Deputy Director of the
HUBZone program to be the Associate Administrator for SBDC's in the Office of
Entrepreneurial Development. He is now working collaboratively across the two
divisions to make sure there is synergy between contracting and our resource partner
network. We're also looking at ways to leverage the contracting expertise of
Procurement Technical Assistance Centers (PTAC's) to support our resource
partners. In addition, we see the Veterans In Procurement (VIP) program as a model
for developing contracting expertise at VBOC's around the country. Apart from
determining strategy and policies, SBA's Office of Business Development, in
collaboration with the Office of Field Operations, revised program marketing and
education information toolkits for the 8(a), Mentor-Protege, and 7(i) Programs, which
were distributed to field marketing representatives and SBA's resource partners,
including SBDCs, WBCs, VBOCs, and SCORE offices. SBA often delivers training
sessions to resource partners to ensure that they have the most up-to-date information
and tools necessary to support small businesses on the ground across the country. For
example, SBA held a Government Contracting training session with SBDCs over the
summer. Right now, the HUBZone Program is collaborating with SCORE to provide
a training for SCORE mentors. The WOSB Program does provide regular training
and support to SBDC, WBC, VBOCs and SCORE, including through contracting
office hours and training toolkits.

27. How is your office assisting small business who are fighting inflation and labor shortages?
• As noted, SBA released a final interim rule on participant thresholds, such as the net
worth, gross income, and total contract revenue caps for the 8(a) program, to account

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for inflation. This includes SBA 's continued support for an increase in the 8(a) sole
source thresholds for individually owned finns. The Department of Defense (DoD)
also issued guidance on how to adjust DoD contracts for price increases, which may
have an impact on many small business contractors given DoD's outsize role in
government contracting and spending. SBA continues to conduct outreach to agency
small business and procurement personnel to advocate on behalf of small businesses,
including with regards to inflation concerns. We are fortunate that under President
Biden's leadership, unemployment is at historic lows, currently sitting around 3.5
percent. Even still, through federal government contracting, small businesses can
provide more competitive job opportunities in communities across the United States,
making SBA's certification programs and governmentwide oversight of small
business contracting (and therefore job creation) as important as ever.
• Through the SBA Mentor Protege program, SBA connects protege small businesses
with more experienced and better resourced finns who are able provide guidance to
the protege finn. Coupled with a Joint Venture agreement these mentor-protege
arrangements are helping small businesses leverage resources, connections, and
insights of the larger finn. Additionally, SBA anticipates delivering specialized
training via the 70) program to help firms better plan and manage through the
economic cycles.

28. With ongoing supply chain disruptions presenting challenges for small businesses across
the country, what steps if any has your office taken to address this specific concern?
• SBA is engaged in the Administration's "whole of government approach" with the
White House Task Forces on Supply Chain and Made in America. As an active
member of the Made in America Council, we also continue to look for opportunities
to maximize opportunities for America's small business manufacturers. Through
these initiatives, SBA is committed to ensuring that small businesses play a role in
revitalizing the supply chain and driving our country and economy forward. For
example, there are 1,433 small businesses in the semiconductor industry, including
550 small manufacturers. In Battery Storage and production, there are 1,007
registered small business contractors, including 217 that registered as manufacturers.
• SBA has been identifying ways for the Agency to invest further in America's
innovative small businesses so that they can bolster the supply chain. SBA worked
with DOD earlier this year to include language in their defense-critical supply chains
report on the use of SBA funding programs to support revenue-based investment and
long-tenn loans to small businesses manufacturing mission critical materials.
• SBA also continues to reexamine its current suite of loan products designed to
support small businesses. SBA currently offers 7(a), 504, and microloans, which
provide businesses with up to $5 million for working capital and major fixed assets,
such as for equipment financing. We also produced a communications strategy to
infonn more small manufacturers about the opportunities for resources and financing
available through SBA.

29. In the SBA OIG's most recent report on the most serious management and performance
challenges facing the SBA, the OIG identified management and monitoring of the 8(a)
business development program as one of these top management challenges. The 8(a)

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program is essentially designed to ensure that when companies graduate from the program,
they would have the skills necessary to become viable competitors in the federal
contracting arena without further federal assistance. Yet the OIG's most recent report notes
that the SBA still has no method for consistently determining if8(a) participants have
demonstrated the ability to compete in the marketplace without 8(a) assistance. What steps
have the SBA taken to address this?
• SBA has clarified and enhanced the established annual review of business plans to
institute a process for regular assessment of an 8(a) participant's achievement of its
business goals designed to advance their growth and ability to compete through
stronger business knowledge and capability. In August 2022, SBA issued a
significant update to its Business Opportunity Specialist (BOS) Annual Review
Workbook that target specific aspects of the participant's business plan including any
updates, progress toward short-term and long-term goals, and feasibility to support
business growth and profitability of operations following the participant's completion
of the 8(a) program.

30. In the OIG's review of the &(a) program, the OIG notes that the SBA's written policies
state that specialists will assess a firm's progress by reviewing business plan goals,
discussions with the business owner, and site visits, but there are no effective procedures in
place for objectively making the assessment that firms are making progress toward
individual business development goals. Can you provide an update on how the SBA is
addressing this issue?
• As stated above, SBA has clarified and enhanced the established annual review of
business plans to institute a process for regular assessment of an 8(a) participant's
achievement of its business goals designed to advance their growth and ability to
compete through stronger business knowledge and capability. In August 2022, SBA
issued a significant update to its Business Opportunity Specialist (BOS) Annual
Review Workbook that target specific aspects of the participant's business plan
including any updates, progress toward short-term and long-term goals, and
feasibility to support business growth and profitability of operations following the
participant's completion of the 8(a) program.

31. In the SBA OIG's &(a) program review, the SBA program officials reported that 40 firms
per one Business Opportunity Specialist is an ideal benchmark which was based on an
internal study performed in 2010. Despite that objective measure of how the work should
be allocated, the agency's current benchmark does not appear to balance workloads and
resources across field offices. The Washington Metro Area District Office for example is
averaging nearly 90 firms for each Business Opportunity Specialist. How are you
addressing these disparities amongst the field offices and are you concerned about the
inconsistent services firms may receive based on their region?
• Program officials continue to collaborate on efforts to rebalance 8(a) Program
portfolio needs to ensure equitable servicing to 8(a) Program Participants. The Office
ofField Operations conducted a portfolio analysis of 8(a) distribution for the purpose
of evaluating District Offices that do not have a BOS to ensure that appropriate skills
and staffing are available to service their 8(a) portfolio. Through the analysis, SBA is
assessing the staffing and resource allocation to District Offices and developing a

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Portfolio Realignment Strategy to ensure fair and equitable servicing of 8(a) program
participants. The goals of the realignment are to l) align SBA's 8(a) BD program
portfolio with OFO resources; 2) ensure compliance and business development
requirements are completed in a consistent manner and in accordance with statutory
guidelines; and 3) improve 8(a) program participant customer experience. The
Portfolio Realignment Strategy represents a collaborative effort between GCBD and
the Field Office to best serve our small businesses in every part of the country.

32. Government watchdogs have consistently criticized the SBA for failure to collect, track,
and keep records of important program data. This failure impacts the SBA's ability to
assess effectiveness. What have you done to improve the SBA 's performance in this
regard? What measures or metrics are you using to assess the SBA's performance within
its contracting programs and can you elaborate on what the data shows?
• GCBD has made significant strides to modernize data collection. New tools for the
8(a), Mentor-Protege, WOSB and HUBZone programs have been implemented using
PowerBI technology. These new tools have begun to track improvements in metrics
for all government contracting certification programs to measure applications
received, processing times, and certification decisions. These tools provide effective
management tracking that improve visibility of certification processing and aid
leadership in decision-making. Of note, the tools have allowed SBA to track program
offices' improvements to application processing times, which for HUBZone and
WOSB completed applications remain well below the 90-day statutory threshold. The
dashboards also allowed SBA to identify past customer service issues where firms
with partially incomplete applications were being turned away. Now, because of
Administrator Guzman's customer-centric approach to all of SBA 's services and
products, certification programs no longer reject incomplete applications, but rather,
walk small business owners through the process of submitting any additional
materials. Based on our most recent round of customer service survey responses, from
May 2022 through August 2022, the average respondent gave SBA's Certify system a
4 out of 5 rating for customer satisfaction.

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Our copy: CHRG-117hhrg47840.pdf
Original: www.govinfo.gov