SBA Management Review: Office of Government Contracting and Business Development (House Small Business subcommittee hearing, September 15, 2020)
Summary
The printed record of a hearing, SBA Management Review: Office of Government Contracting and Business Development, held September 15, 2020 by the Subcommittee on Contracting and Infrastructure of the House Committee on Small Business, Small Business Committee Document Number 116–092, printed in 2021. The subcommittee met at 10:06 a.m. in Room 2360 of the Rayburn House Office Building with Chairman Jared Golden presiding, as a hybrid hearing under H. Res. 965; Representatives Chu, Balderson, Hagedorn and Stauber were present, and Golden and Pete Stauber gave opening statements. The sole witness was Dr. Francis Spampinato, Associate Administrator of the Office of Government Contracting and Business Development. The appendix carries his prepared statement and his responses to questions for the record from Golden; no additional material was submitted.
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“SBA Management Review: Office of Government Contracting and Business Development (House Small Business subcommittee hearing, September 15, 2020).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/sba-management-review-office-of-government-contracting-and-business-de-d4ff6fca76/
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SBA MANAGEMENT REVIEW: OFFICE OF
GOVERNMENT CONTRACTING AND BUSINESS
DEVELOPMENT
HEARING
BEFORE THE
SUBCOMMITTEE ON CONTRACTING AND
INFRASTRUCTURE
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
HEARING HELD
SEPTEMBER 15, 2020
Small Business Committee Document Number 116–092
Available via the GPO Website: www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
41–346 WASHINGTON : 2021
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HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELÁZQUEZ, New York, Chairwoman
ABBY FINKENAUER, Iowa
JARED GOLDEN, Maine
ANDY KIM, New Jersey
JASON CROW, Colorado
SHARICE DAVIDS, Kansas
KWEISI MFUME, Maryland
JUDY CHU, California
DWIGHT EVANS, Pennsylvania
BRAD SCHNEIDER, Illinois
ADRIANO ESPAILLAT, New York
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
ANGIE CRAIG, Minnesota
STEVE CHABOT, Ohio, Ranking Member
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member
TROY BALDERSON, Ohio
KEVIN HERN, Oklahoma
JIM HAGEDORN, Minnesota
PETE STAUBER, Minnesota
TIM BURCHETT, Tennessee
ROSS SPANO, Florida
JOHN JOYCE, Pennsylvania
DAN BISHOP, North Carolina
MELISSA JUNG, Majority Staff Director
JUSTIN PELLETIER, Majority Deputy Staff Director and Chief Counsel
KEVIN FITZPATRICK, Staff Director
(II)
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CONTENTS
OPENING STATEMENTS
Page
Hon. Jared Golden ................................................................................................... 1
Hon. Pete Stauber ................................................................................................... 3
WITNESS
Dr. Francis Spampinato, Associate Administrator, Office of Government Con-
tracting and Business Development, U.S. Small Business Administration,
Washington, DC ................................................................................................... 4
APPENDIX
Prepared Statement:
Dr. Francis Spampinato, Associate Administrator, Office of Government
Contracting and Business Development, U.S. Small Business Adminis-
tration, Washington, DC .............................................................................. 16
Questions and Answers for the Record:
Questions from Hon. Golden to Dr. Francis Spampinato and Responses
from Dr. Francis Spampinato ...................................................................... 20
Additional Material for the Record:
None.
(III)
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SBA MANAGEMENT REVIEW: OFFICE OF
GOVERNMENT CONTRACTING AND BUSI-
NESS DEVELOPMENT
TUESDAY, SEPTEMBER 15, 2020
HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
SUBCOMMITTEE ON CONTRACTING AND INFRASTRUCTURE,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:06 a.m., in Room
2360, Rayburn House Office Building, Hon. Jared Golden [chair-
man of the Subcommittee] presiding.
Present: Representatives Golden, Chu, Balderson, Hagedorn, and
Stauber.
Chairman GOLDEN. Good morning. I call this hearing to order.
I would like to thank everyone, especially our witness, for joining
us today for our Committee’s hybrid hearing, and I want to make
sure to note a few important requirements.
Thank you.
Let me begin by saying that 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 the
standing rules, including decorum.
During the covered period, as designated by the Speaker, the
Committee will operate in accordance with H. Res. 965 and the
subsequent guidance from the Rules Committee in a manner that
respects the rights of all members to participate.
House regulations require members to be visible through a video
connection throughout the proceeding, so please keep your cameras
on. Also, if you have to participate in another proceeding, please
exit this one and log back in later.
In the event a member encounters technical issues that prevent
them from being recognized for their questioning, I will move to the
next available member of the same party, and I will recognize that
member at the next appropriate time slot provided they have re-
turned to the proceeding.
And, finally, remember to remain muted until you are recognized
to minimize background noise. And, in accordance with the rules
established under H. Res. 965, staff have been advised to mute par-
ticipants only in the event there is inadvertent background noise.
For those members physically present in the Committee room
today, we will also be following the health and safety guidelines
issued by the attending physician. That includes social distancing
and the use of masks. I urge members and staff to wear masks at
(1)
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all times during the hearing. Of course, when you are speaking,
you are welcome to remove your mask.
And I thank you in advance for your commitment to a safe envi-
ronment for all here today.
Today, the Committee will examine the management and oper-
ations of SBA’s Office of Government Contracting and Business De-
velopment. The main purpose of this office, commonly known as
GCBD, is to maximize small business participation in government
contracting. We know that, when a small business is awarded a
Federal contract, it spurs economic development and job growth in
our communities.
One of the ways in which the SBA assists small firms is by en-
suring that a fair share of Federal contracts and subcontracts are
awarded to small firms. In 1953, when Congress authorized the
SBA, it expressly recognized that doing so would advance competi-
tion, bring economic growth, and allow the Federal Government to
receive all the quality goods and services that small firms have to
offer.
To fulfill this mandate, the Small Business Act sets government-
wide small business contracting goals and codifies a series of pro-
grams, like 8(a), HUBZone, and WOSB, which provides contracting
preferences based on socioeconomic categories. The proficient oper-
ation of these contracting programs is crucial for the achievement
of the governmentwide contracting goals.
Within the SBA, GCBD is the umbrella office that oversees the
Federal Government’s performance of these goals and administers
the contracting programs. And so, today, our main objective is to
discuss trends and administrative challenges within GCBD’s pur-
view, especially in this era of economic uncertainty due to the
COVID-19 pandemic.
Let me begin by saying I have been concerned about the overall
participation of small businesses in prime contracts, which has de-
clined in the last decade. According to SBA’s scorecard, even
though last year the Federal Government exceeded the goal of
awarding 23 percent of all eligible prime contracting dollars to
small businesses, with a record high of 132.9 billion, the small
business base shrunk 9 percent in only one year. This is not the
direction that we would like to be trending towards.
Furthermore, the Federal Government failed yet again to meet
the HUBZone set-aside goal of 3 percent with only 2.28 percent
being awarded to these firms and the subcontracting goals for
small and disadvantaged businesses, SDVOSBs in HUBZones going
unmet in fiscal year 2019.
We are also concerned about the declining number of small busi-
nesses that participate in the 8(a) program, the cornerstone of the
contracting programs. In September of 2019, there were 4,450
firms participating in the 8(a) program, which is about a third less
than the 7,000 companies that participated back in 2010.
I would like to learn more about what GCBD is doing to increase
participation, particularly now when this program could be a life-
line for many businesses who are in dire straits and losing busi-
ness due to the pandemic.
Turning to the IT systems which support the contracting pro-
grams, SBA spent $30 million on certify.sba.gov, their certification
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management IT system, as of last September. SBA’s Office of the
Inspector General reported that SBA abandoned the system which,
after 4 years of development, still lacked critical capabilities, and
plans to replace it with another IT program.
It is imperative to learn more about SBA’s strategy, the scope of
this new IT system, and the timelines and costs associated. An-
other issue of concern is the WOSB formal certification process. It
is my understanding that, while SBA already began intake of
WOSB applications, decisions on certification applications will not
be issued until October 15 of this year, the same day that certifi-
cations will start being required governmentwide.
We are wondering is SBA already reviewing applications, and
are there any challenges with these timelines or the IT systems
that support the certification process?
Finally, we would like to know what SBA is doing to increase in-
ternal controls within programs, particularly within the All Small
Mentor-Protege program and the HUBZone program.
With that, we look forward to hearing from the Associate Admin-
istrator of the Office of Government Contracting and Business De-
velopment, Dr. Francis Spampinato, regarding these matters, as
well as ways in which we can work together to improve small busi-
ness opportunities.
I would now like to yield to the Ranking Member, Mr. Stauber,
for his opening statement.
And good morning, Pete.
Mr. STAUBER. Thank you, Mr. Chair, and I appreciate your
leadership, as always.
Thank you, Mr. Chairman, for convening this important over-
sight hearing. Each year, the Federal Government spends hun-
dreds of billions of dollars in goods and services. In fiscal year
2019, Federal contract spending reached its peak at $597 billion,
with a record high of 133 billion in Federal prime contracts to
small businesses.
Recognizing that the Federal Government is a significant eco-
nomic driver, Congress has long mandated that the Federal Gov-
ernment take action to protect the interests of small business con-
cerns and tasked the Small Business Administration, or the SBA,
in leading those efforts.
To this end, the SBA plays a major role in the formulation of the
Federal procurement policies affecting small businesses and man-
ages a variety of procurement programs that are exclusive to small
businesses. Overseeing these important directives is the Office of
Government Contracting and Business Development, or the GCBD,
at the SBA.
The GCBD’s primary goal is simple: To advocate on behalf of
small businesses in the Federal procurement world. This office is
uniquely positioned to develop policies that affect nearly every Fed-
eral agency and, with hundreds of billions of dollars at stake every
year, it is imperative that the GCBD operate like a fine-tuned ma-
chine, efficient, effective, and consistent in delivering the best out-
comes for small businesses.
Small contractors are relying on this office to be their champion,
to understand the whole picture of Federal procurement, and iden-
tify where small business participation can and should be in-
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creased. Small businesses also rely on the GCBD to manage the
SBA’s Federal contracting program successfully since these pro-
grams are the cornerstone of success to many small contractors.
Mr. Spampinato, I understand you are brand new to your current
position as the Associate Administrator for the GCBD. I extend my
congratulations to you on your recent appointment to your current
post and welcome you here today. While this Committee will be
discussing various concerns we have identified that may have origi-
nated prior to your time, these matters are still of great importance
today, and I hope you will take this opportunity to learn from your
predecessors and take what you hear today as a challenge to im-
prove, to do better, and continue to do better.
Small businesses everywhere are counting on you, are counting
on the GCBD, to do your best. And we have every confidence in
your ability.
With that, I thank you, Mr. Chairman, and I yield back.
Chairman GOLDEN. Thank you, Mr. Stauber.
And, if Committee members have an opening statement pre-
pared, we would ask that they be submitted for the record.
I would like to take just a minute to explain the timing rules.
Dr. Spampinato, you will have 5 minutes to testify, and each mem-
ber will have 5 minutes for questioning.
Assuming you are familiar with the lighting system that will as-
sist you, the greens, yellows, and reds. So green means go. Yellow
means you have one minute. Red means you have come up against
your time limit, and if you could do your best to wrap it up at that
point. We will have plenty of opportunity during the Q and A as
well.
Today, we welcome Dr. Francis Spampinato, the new Associate
Administrator of SBA’s Office of Government Contracting and
Business Development.
He brings almost 30 years of procurement experience in the pub-
lic and private sector to the role. In particular, he served as a sen-
ior procurement official at the CIA, the Department of Energy, the
Federal Aviation Administration, and the Federal Emergency Man-
agement Agency.
Most recently, he served as program manager for CTR Manage-
ment Group before joining the Small Business Administration in
June of 2020.
I would also note—as I learned this morning, when he greeted
me with a welcoming semper fi, that he served our country during
the 1980s in the United States Marine Corps, and we thank you
for your service, sir, both in the Marines and ongoing in the public
and private sector.
Welcome, and you are now recognized for 5 minutes.
STATEMENT OF DR. FRANCIS SPAMPINATO, ASSOCIATE AD-
MINISTRATOR, OFFICE OF GOVERNMENT CONTRACTING
AND BUSINESS DEVELOPMENT, U.S. SMALL BUSINESS AD-
MINISTRATION, WASHINGTON, DC
Mr. SPAMPINATO. Thank you, Chairman Golden, Ranking
Member Stauber, and members of the Subcommittee for inviting
me to speak with you today.
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As the Associate Administrator of the SBA’s Office of Govern-
ment Contracting and Business Development, I am pleased to tes-
tify and share significant updates regarding small business partici-
pation in Federal contracting and the SBA program supporting this
important activity.
Last month, SBA released the fiscal year 2019 Small Business
Goaling Report, which contained several notable achievements.
Over 1 million jobs were created by small businesses across the
United States as a direct result of prime and subcontracting
awards made by Federal agencies.
$132 billion were awarded to small businesses in fiscal year
2019, an increase of $12 billion over fiscal year 2018 and the high-
est amount in history. Every socioeconomic category realized
growth in the number and value of small business contracts award-
ed.
While I celebrate these small business contracting achievements,
I know that COVID-19 brought incredible challenges for small
businesses and Federal agencies alike. GCBD rapidly engaged with
stakeholders to identify and implement measures to reduce bar-
riers and increase opportunities for small businesses.
These included posting guidance for small business contractors
alongside SBA’s COVID-19 resources, introducing flexibilities in
8(a) and HUBZone program participation, and conducting robust
outreach to small businesses to connect them with Federal agencies
in need of products and services to combat COVID-19.
On the horizon is the launch of the SBA’s Women-Owned Small
Business Certification program, which implements the NDAA 2015
provision to eliminate self certification for women-owned and eco-
nomically disadvantaged women-owned small businesses partici-
pating in the program.
GCBD commenced robust outreach to stakeholder groups and
women entrepreneurs in late 2019 to ensure awareness of the
changes ahead and to incorporate their feedback in our processes
and systems.
I am working closely with the SBA’s CIO and CFO to ensure
functionality and sustainability of beta.certify as we stand up the
program. I am aware of the history of implementing this program
and the application portal and the Committee’s interest in both. I
can assure you that this has my highest attention and focus as As-
sociate Administrator.
Each of the GCBD’s programs is making notable strides. In De-
cember 2019, we published a rule and began implementing changes
to strengthen the HUBZone program. These program improve-
ments, long overdue, were the result of successful collaboration be-
tween SBA, Congress, and stakeholders, and were intended to
make it easier for small businesses doing good work in their com-
munities to join the HUBZone program and for all certified
HUBZone firms to remain compliant with enhanced oversight from
SBA.
Within GCBD’s Office of Business Development, the 8(a) busi-
ness development program continues to grow and prosper. During
these times of economic recovery, applications from eligible small
disadvantaged firms has increased by 132 percent compared to this
time last year.
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In addition to leading effective and compliant programs, I intend
to vigorously promote strategies that lower barriers to entry and
frictionless acquisition and reduce barriers to success that small
businesses encounter.
The Small Business Goaling Report and analysis of Federal Pro-
curement Data System-Next Generation illustrate the decreasing
number of firms involved in Federal contracting and receiving
prime contract awards. I am engaged with Federal agencies, small
business leaders, senior acquisition officers, and my GCBD team to
understand the causes and how we may address the outcomes.
Additionally, my office routinely engages with small business
contractors to hear their frustrations and where their pain points
are. My intent for GCBD is to be a collaborative facilitator with
agencies and small businesses to achieve better outcomes.
In closing, I want to thank the Committee for your support of our
programs, and I am happy to take any questions.
Thank you.
Chairman GOLDEN. Thank you, sir.
I will begin the question period by recognizing myself for 5 min-
utes.
So, while the Federal Government has been successful in achiev-
ing the 23 percent small business goals—and you laid out some of
the other improvements that you are tracking—the overall partici-
pation of small firms in Federal contracts has declined in recent
years.
According to the most recent scorecard, the small business count
in fiscal year 2019 was 102,422, while in fiscal year 2018, it was
113,135. This represents a 9 percent reduction in the small busi-
ness base in one year’s time.
Based on your expertise, why do you believe the small business
base is shrinking, and what kinds of challenges are holding small
businesses back from either joining or causing them to drop out?
Mr. SPAMPINATO. Okay, sir.
Well, first of all, what we have tried to do is—and I told my staff
when I came on board, was we have got to be facilitators of busi-
ness here. We don’t want to stop business from happening; we
want to be facilitators. So, there is an extensive education program
going on with all our stakeholders, and we have extensive outreach
with the OSDBUs at the agencies, the small business heads, and
with the procurement officers.
And so, I come from the other side of the house basically, the
procurement side of the house. I understand that side of the house,
and so I hold those conversations with those people also.
And so we are trying to figure out what exactly—there is an
awful lot of anecdotal evidence out there, you know, and—but we
need really good data and really good research to find out what the
effects of, for instance, category management are on small busi-
ness, what are the effects of the CMMC, the cybersecurity initia-
tive, and what can we do in the areas of subcontracting to mitigate
some of these issues.
But I focus on hard data, because anecdotal will just get you so
far, but we have got a lot of work to do in those areas.
Thank you.
Chairman GOLDEN. Thank you.
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Could you tell us a little bit about the work that you will be lead-
ing in this office to get SBA to help encourage other agencies to in-
crease and diversify their small business base at the prime level?
Mr. SPAMPINATO. Yes. As I said previously, we are doing ex-
tensive outreach to the OSDBUs. In the approximately 2.5 months
that I have been on the job, I have been able to reach out probably
to half to two-thirds of the 24 CFO agencies, their OSDBUs, and
learn what is difficult for them. What I hear all of the time is that
focus is key.
So, when you add balls to the juggler, and you have got all these
balls in the air, you have got all these socioeconomic groups that
you are focused on, and then you throw in category management
and cybersecurity, like I said.
There needs to be a lot of education and a lot of work done, and
the OSDBUs have really helped me, even in just the 2.5 months
I have been there, understand where the problems are. But we still
have a lot of work to do to figure out exactly where those issues
are, and attack them.
Chairman GOLDEN. One final question from me this round.
Shifting to the HUBZone where, you know, in fiscal year 2019,
we didn’t meet the goal of having 3 percent awarded to all—of all
eligible prime contracts in the HUBZone businesses. I recognize
this is a program where that goal has never been met, so this
doesn’t necessarily represent, you know, a backslide in success, but
I did want to just get your thoughts on what you think you can do
to help implement and ensure the agencies try and make better use
of the HUBZone set-aside program to meet the 3 percent goal.
Mr. SPAMPINATO. Yes. Sir, the first thing I want to say is,
even though we did not meet the 3 percent, over the last 2 years,
there has been an increase in HUBZone, which is, to me—I am an
optimistic person, and I like to see the increases. So that is a good
thing.
But we have a specific HUBZone action plan underway—statu-
tory changes to the program helped with targeted effective out-
reach to firms and agencies, learning lessons from high-performing
agencies, and innovative acquisition strategies by NASA and other
agencies. We are learning from all that.
The other thing is I noticed, when I came on board, coming from
the outside, sometimes even though you are not intimate with the
subject matter, it is good to come from the outside with a different
perspective, and I love to see that.
So I noticed, with the HUBZone, there are a lot of small peculiar-
ities in order to meet the HUBZone requirements. We are address-
ing those proactively and trying to facilitate—as I said, my philos-
ophy is, we should make business easier for people, not more dif-
ficult.
And those are a couple of things that are being done, and every
time I talk to the OSDBUs, it is funny, because I have talked to
a few that have really high HUBZone numbers. I mean, I had
talked to one, like 13, 15 percent HUBZone. And I ask them what
their HUBZone secret is every time. And most of the time the an-
swer is: Focus on the HUBZone.
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So, you know, hopefully with that and the unique points of the
program, which we are covering proactively in GCBD, we will find
an answer to this 3 percent and hopefully exceed it next year.
Chairman GOLDEN. Thank you very much for that.
I am out of time. At this point, I am going to turn it over to
Ranking Member Stauber for 5 minutes.
Mr. STAUBER. Thank you, Mr. Chair.
And, Dr. Spampinato, I apologize for mispronouncing your name
during the opening statement.
As the new Associate Administrator for the Office of Government
Contracting and Business Development, what are your plans for
the future of GCBD, and can you share with us your overarching
goals as well as any specific items you would like to achieve?
Mr. SPAMPINATO. Yes. Thank you, sir. Thank you for that
question.
Like I said when back in the days when I wasn’t in the SBA,
every once in a while, I saw the SBA as a place where sometimes
we were stopped from doing certain things, because the SBA was
looking over small business, and it was a slow ramp-up to learn,
I think, on the agency procurement side that, hey, small businesses
can do this work, so let’s get on board here.
So, my first and foremost thing, like I said, is to facilitate busi-
ness. We have got to do better. Even though—I think SBA is doing
a great job now. When I came on board, I have seen a lot of things,
people working at home, doing a great job because of the situation.
Mr. STAUBER. Yeah.
Mr. SPAMPINATO. But, you know, it is our job to facilitate busi-
ness, to make it happen. And so that is my overall vision, I guess
you would say.
But the other thing is we—and I know we will probably talk
about this a little bit, but the other thing is to get our data needs
together and get our IT together and work on a long-term plan so
that we have good data. We——
Mr. STAUBER. And, Mr. Spampinato, that was actually going to
be one of my next questions, on the data gathering.
So, to that point, just tell us a little bit about your thoughts on
how you are going to do that and what your needs would be.
Mr. SPAMPINATO. Okay. Well, I don’t want to be premature,
but what I do want to say is the old system that we currently have,
we are not abandoning.
Mr. STAUBER. Yeah.
Mr. SPAMPINATO. That is kind of the wrong word to use for
that. We are using, that system to the extent we can to maintain
what we currently have. But we do need a new system, and I have
started having great conversations with the CIO and the CFO, to
determine how we are going to do that.
But we are committed—I don’t have specific plans with me today,
and, like I said, I don’t want to be premature here, but we are com-
mitted to getting a good system in place, because, like I said, if we
don’t have good data, how can we facilitate business?
Mr. STAUBER. No. Right.
Mr. SPAMPINATO. We can’t do it.
Mr. STAUBER. Exactly.
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Mr. SPAMPINATO. But we are going to—we are going to be
completely honest with everyone in what we need and what we
need to move into the future and to be that facilitator of business.
So we will—as soon as we have something in granite, we will share
that, and we just don’t have it right now.
Mr. STAUBER. And, also, if there is anything that this Com-
mittee can help you with, feel free to reach out to the Chair or my-
self, and whatever we can do to facilitate that.
And just one more question. You know, this Subcommittee held
an oversight hearing last May on the SBA’s Women-Owned Small
Business program. In the hearing, the SBA testified the new
Women-Owned Small Business program would not be operational
until sometime in 2021.
Do you have or can you commit to a more specific time period
or date?
Mr. SPAMPINATO. Well, I believe—now, we have received—as
of today, or yesterday, we have received 1,100 applications, and we
are working through the system, but I can’t—I——
Mr. STAUBER. Would you say early 2021?
Mr. SPAMPINATO. I respectfully——
Mr. STAUBER. Mr. Spampinato, if you don’t have the answer—
and I totally understand——
Mr. SPAMPINATO. Yeah.
Mr. STAUBER.—if you would get it to the Chair and myself,
that would be great.
Mr. SPAMPINATO. We will do that.
Mr. STAUBER. Okay.
Mr. SPAMPINATO. We will do that.
Mr. STAUBER. I think my time is running out. Thank you for
your testimony and your service to our country.
Mr. SPAMPINATO. Thank you, sir.
Chairman GOLDEN. The gentleman yields.
I will now recognize Congresswoman Judy Chu, Chairwoman of
the Subcommittee on Investigations, Oversight, and Regulations.
Ms. CHU. Thank you so much, Mr. Chair.
Dr. Spampinato, I wanted to ask about the 8(a) minority small
business program. The participation has declined precipitously
from 7,000 participants in 2010 to just 4,450 in 2019, and this is
why, last year, this Committee held a hearing on the 8(a) program
where we heard from businesses and stakeholders. And they testi-
fied that a major contributing factor to decline in participation is
that they often spent years in the program before receiving their
first contract, and many businesses never received a contract at all
over the 9-year participation window.
So can you tell us how many companies have been accepted into
the 8(a) program this year and how this compares to previous
years, and discuss why there is this decline and how you are ad-
dressing this decline in participation in 8(a)?
Mr. SPAMPINATO. Yes, ma’am. Thank you for your question. I
appreciate that.
What we would like to—are happy to report a steady increase in
the total number of firms accepted. In fiscal year 2020, year to
date, we have 527 new firms; over fiscal year 2019, 437 new firms.
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So we have had an increase of roughly 90 firms accepted into the
8(a) program, and we are still, of course, in this fiscal year.
We acknowledge the decline of program participants in 2010. The
number fluctuates due to a combination of factors: Successful com-
pletion of the 9-year program and graduation, voluntary with-
drawal, firm requests early graduation, or terminated for non-
compliance. We have had, you know, many in those categories.
And what I would like to say, it is important to note that SBA
has strategically focused on application education. We continue to
emphasize to interested eligible firms the importance of being pro-
curement ready from day one, so they are positioned for a fully suc-
cessful 9-year program.
And, in some instances, firms have informed us they are glad
they waited to apply after having received training and education
about the program. They want to apply when they know they are
really ready so they don’t waste time during the valuable develop-
mental program years one through four before they must begin
transition years five through nine and generate strong revenue
streams.
And, I will emphasize, the 8(a) program is a business develop-
ment program as opposed to a government contracting program, so
we are educating and helping firms to develop, to assist them, and
we are doing our best to get more firms into the program with out-
reach and education.
Ms. CHU. Well, thank you for that.
I wanted to ask also about the shortfalls in the subcontracting
goals. You did mention the prime contracting goals, and the Fed-
eral Government did increase in the prime contracting goals for
small business, but, in the subcontracting, the HUBZone actually
also declined. It was 1.4 in 2018, and now 1.37 in 2019.
But also the same decline occurred in the small disadvantaged
business, from 4.9 to 4.17 percent, and then also for the service dis-
abled veteran-owned small business, from 2.1 to 1.95 percent.
So what is the reason for this, and what are you doing about it?
Mr. SPAMPINATO. Okay. Thank you for that thoughtful ques-
tion, ma’am.
I have got to be honest. A long time ago, when I was involved
with the OSDBU at the Department of Energy, subcontracting was
critical to us because we had such a big subcontracting component
out in the field with the labs. I think basically what happens here,
you do well in what you focus on, and I think that there hasn’t
been enough focus on subcontracting.
And, you know, for the last 15 years, I have always thought sub-
contracting was critical. So we have got to take a refocus on sub-
contracting so that we can get those numbers up and get on board
with the OSDBUs and the procurement side of the house to get
these numbers up.
But I think, if we focus on subcontracting and say, ‘‘Hey, look,
this is important as prime,’’ I mean, for years, people looked at the
prime numbers and said, ‘‘Hey, prime is all we are about.’’
But I have been focused on subcontracting my entire career. So,
I will put an extended focus on subcontracting, and we will move
toward better numbers, I believe next year and the following years.
Thank you.
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Ms. CHU. Well, thank you for that, yeah.
And I yield back.
Chairman GOLDEN. Thank you.
We will now recognize Rep. Troy Balderson, Ranking Member of
the Subcommittee on Innovation and Workforce Development, for
5 minutes.
Mr. BALDERSON. Thank you, Mr. Chairman.
Mr. Spampinato, thank you for being here. Excuse me.
The GCBD has a critical role in formulating policy that affects
small businesses contracting governmentwide. With that said, what
policy changes or improvements are you considering in the short-
term and the long-term?
Mr. SPAMPINATO. Thank you for your question.
Our first focus and like I spoke about earlier are the changes
that we have made in the HUBZone program to clarify some of the
what I call, which somebody else may not call, but me looking from
the outside before I got here, some peculiarities of the HUBZone
program. We are clarifying those, making them a little easier to
understand. And so that is a big policy change.
I believe we have to do something in what I just spoke about,
subcontracting, some kind of a policy change to focus or reempha-
size subcontracting, number two. I believe we have to do that.
And we are also working closely with our OIG to ensure that we
keep our eye on the ball and we are focusing on the right policy,
and so we are working closely with them also in developing policy.
Other than that, I can—you know, I can get back to you on other
things we are focused on, but that is what I have right now.
Mr. BALDERSON. Okay. Thank you very much. And if you
would get that to the—myself and the Chairman, please, I would
be grateful.
My next question is: The fiscal year 2019 scorecard shows that
the prime contracting achievement for women-owned small busi-
nesses was exceeded; however, the SBA Office of Inspector General
released a fairly recent report showing severe deficiencies in the
SBA’s assessment of eligible women-owned small business firms.
Do you think this achievement report in the scorecard may be in-
flated by awards made to ineligible firms?
Mr. SPAMPINATO. I would say I do not believe it is inflated,
but, this was a self-certification program, and, to some extent, you
have to believe what people tell you, that they are certified. And
I believe this—I mean, this is only the second time in the history
of the scorecard where women-owned small business goals were
met, and I believe it is a great start-off point.
I mean, to me, to continue on this trend. And I think it will only
be strengthened by bringing the women-owned small business cer-
tification into the SBA.
I really can’t attest to or affirm what we have done in the past
or how—you know, like I said, my past is 2.5 months here, but I
think—I am very optimistic. Moving forward, once we get our cer-
tification and our certification abilities on women-owned small
business and work out some of the IT issues, I believe it is going
to be a much better program, and I believe we are going to con-
tinue on an upward trend.
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Mr. BALDERSON. Okay. My follow-up to that would be—and,
again, I will just have you—and I appreciate and understand your
time as far as being there, but if you would also relay to the Chair-
man and myself, given the inspector general’s report, what steps is
the GCBD taking to ensure only eligible women-owned small busi-
nesses receive contract awards? So if you can get that information
to us also, I would be grateful for that.
And, Mr. Chairman, I yield back my remaining time.
Mr. SPAMPINATO. Yes. We will do that. Thank you.
Chairman GOLDEN. Thank you very much.
I am going to go ahead and ask a second round of questions. Do
I understand you are all set? All right. Very good.
I think I heard you correctly, sir, when you said that you didn’t
really view that the SBA was abandoning the IT program, which
we have heard from the OIG, but, rather, expanding upon it, mak-
ing some additional improvements, and I wanted to just give you
an opportunity, if you could, to elaborate a little bit on what the
system that will replace Certify will bring to the table in regards
to new capabilities that you currently have been struggling with.
Mr. SPAMPINATO. Thank you, Mr. Chairman.
The only—I mean, I can talk in generalities. I don’t know what
the definition of abandoning a system is, because you can’t just
abandon any system midstream and have nothing. So, we are con-
tinuing to do the best we can with what we have.
In the future, some of the things that have been talked about
here. Just, you know, the certifications, having a good certification
system, being able to talk to candidate businesses back and forth,
pass information back and forth, those types of things, and to have
a high level of validity to the system. When somebody is certified,
you know they are certified.
So, I mean, these are the kinds of things that we are looking for
in a big general sense. You know, there are going to be definitely
a lot more specifics coming forth, we can make those available, but
we are—you know, they have this thing in government contracting
which has historically been a problem, and that is generation of re-
quirements. The requirements have always hurt us.
And then we get, you know, two-thirds into the program; we fig-
ure out, well, jeez, we have got to go back and regenerate our re-
quirements because we haven’t done it correctly.
We are being very cautious and very vigilant on the true require-
ments for us to facilitate business, and so we are going to be very
deliberate in that approach. We are not going to rush to anything.
So we are just being very—like I said, I am working closely with
the CIO and the CFO, and we are going to move to a good solution
where we can get the data we need and we can be the facilitators
of business that we need to be for small business.
Chairman GOLDEN. Thank you, sir.
Just coming back to the women-owned small business program,
according to the SBA website, SBA began intake of women-owned
small business applications on July 15 of this year and reported it
would not be until October 15 of 2020 that SBA would begin
issuing decisions on certification applications, and I think I heard
you in response to another question say that you have received
about 1,100 applications under the program. Is that since July?
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And, also, has SBA started vetting these applications, and will
participants likely be notified in October?
Mr. SPAMPINATO. Sir, I can’t be—I can’t be positive on that,
but—because I—I need to know more about the women-owned
small business, so I don’t want to comment on the new program,
but we can get those responses back to you quickly.
Chairman GOLDEN. Thank you. I appreciate that.
Mr. SPAMPINATO. Thank you.
Chairman GOLDEN. And, just lastly, as you have noted, in your
testimony or during the Q and A, you have seen growth towards
a lot of the goals in this fiscal year, and I think I made a note that
you saw 8(a) applications up more than 100 percent from the same
period in 2019. I believe that was during the period in 2020 where
we have been facing the coronavirus pandemic and some of the im-
pacts on the economy and small businesses out there.
Could you just take an opportunity to share with the Committee
anything that you would like about how the COVID-19 pandemic
has impacted either SBA’s resources assigned to the contracting
programs, whether or not there has been any, you know, delays or
challenges in the administration of these programs due to the pan-
demic?
And, you know, some of the data you shared, I will actually sug-
gest that you actually have seen an uptick in participation. Is that,
in part, driven by the pandemic itself?
Mr. SPAMPINATO. Yes, sir. What I would like to say about the
pandemic—I mean, there are a lot of resources within SBA that do
not include my office, which I really can’t comment, but they have
done some great things for small business.
You know, in terms of what we do in GCBD and like I alluded
to earlier, our people—most of our people are working from home.
And, when I came on board, I was concerned about that. But, when
I realized that the work was getting done and in fine form, I real-
ized that is not an issue.
The outreach continues to small businesses. The outreach, the
education, the programs continue to work with their—their busi-
ness—candidate businesses. So we really haven’t lost a step in
working with them and helping and outreach. So I am very pleased
about that.
Specifics, I don’t have a lot of specifics for you, but I know I have
heard at trade groups and others, and they are very pleased with
the way my team has conducted themselves in terms of being avail-
able, you know, and being available in the Federal Government is
a big thing, especially for small businesses. And it has been work-
ing well for us. And I don’t see any problem with that continuing
either.
Chairman GOLDEN. Thank you very much.
Representative Balderson, are you all set?
Mr. BALDERSON. I am good. Thank you.
Chairman GOLDEN. Okay. Well, with that, just some closing re-
marks, and one thing I wanted to make note of, sir, is both the
Ranking Member and I represent rural communities, where one of
the earlier frustrations I have experienced on the Committee was
getting out into the community and hearing too often from small
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business owners that they were essentially unaware of the types of
programs and services that the SBA provides.
Generally speaking, people have viewed it as not much more
than a loan program. I think, in too many cases where, you know,
I see small business, you know, owners who are doing work that
I think, jeez, government would really benefit if you were bringing
this expertise, you know, to service, you know, for our government.
Other programs, like the Small Business Development Center, if
you are familiar with that, where, you know, you have been talking
about education and outreach, they do great work all around the
country, yet far too few businesses are even aware that they are
there and that they are generally, you know, free of a fee.
You know, services and, you know, consultation and all kinds of
things that could help businesses even identify the opportunity to
pursue a contract with the government, there is just a lot of op-
tions out there.
Something else that I know Ranking Member and I have been
interested in is the Office of Rural Affairs, which has for years
been on the statutes but, under multiple administrations, basically
unstaffed and the mission completely unfulfilled.
So we are interested in hearing about education and outreach ac-
tivities that will actually penetrate and get out there into rural
communities, as well as urban ones, but I think really a lot of
missed opportunities when people just aren’t aware of the work
that is being done and what they can bring to the table to the ben-
efit of the entire country.
I want to thank you for being here today and for everything that
you have shared with us, as well as that you will follow up with
in the wake of the hearing. For this Committee, strengthening the
contracting and business development program is of the utmost im-
portance because, overall, it plays an increasing competitiveness in
providing access to Federal opportunities.
I think the discussion today brings us closer in understanding
how these programs can better serve the small business commu-
nity, particularly in these times of economic challenges that we are
all facing.
I also want to thank the staff within GCBD for their hard work
and constant commitment to small businesses. We look forward to
working with you to level the playing field for small businesses
across the country.
Mr. Stauber, do you have any closing remarks?
Mr. STAUBER. No. Thank you very much, Mr. Chair.
I just appreciate your testimony, and, as the Chair said, we both
represent rural areas of this country, and northern Maine is very
similar to northern Minnesota. And we talked about many small
businesses don’t know the opportunities and the advantages that
they can—that can be had by getting involved.
So that is it, and I, again, thank you for your testimony.
Thanks, Chair.
Chairman GOLDEN. Go ahead and ask unanimous consent that
members have five legislative days to submit statements and sup-
porting materials for the record.
Without objection, so ordered.
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If there is no further business to come before the Committee, we
are adjourned.
Thank you very much, sir.
[Whereupon, at 10:56 a.m., the Subcommittee was adjourned.]
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APPENDIX
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Æ
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