The 8(a) Program: Overview and Next Steps to Promote Small Business Success (House Small Business subcommittee hearing, March 2, 2022)
Summary
Printed record of a hearing of the House Committee on Small Business, Subcommittee on Contracting and Infrastructure, held March 2, 2022, titled The 8(a) Program: Overview and Next Steps to Promote Small Business Success, Small Business Committee Document Number 117–047. Hon. Kweisi Mfume presided, with Hon. Maria Salazar giving the minority opening statement; the subcommittee met at 11:00 a.m. in Room 2360 of the Rayburn House Office Building and via Zoom. Witnesses were Darryl K. Hairston, retired small business advisor; Jackie Robinson-Burnette of Senior Executive Strategic Solutions; Arshdeep Khurana of Avosys Technology Inc.; and Qin Li of Soliel, LLC. The appendix prints their prepared statements and a letter from Annette Hamilton, COO of Ho-Chunk, Inc., on the 8(a) program as an economic opportunity for rural tribes.
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“The 8(a) Program: Overview and Next Steps to Promote Small Business Success (House Small Business subcommittee hearing, March 2, 2022).”
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THE 8(a) PROGRAM: OVERVIEW AND NEXT STEPS
TO PROMOTE SMALL BUSINESS SUCCESS
HEARING
BEFORE THE
SUBCOMMITTEE ON CONTRACTING AND
INFRASTRUCTURE
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
HEARING HELD
MARCH 2, 2022
Small Business Committee Document Number 117–047
Available via the GPO Website: www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
46–931 WASHINGTON : 2022
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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
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
ANDY KIM, New Jersey
ANGIE CRAIG, Minnesota
BLAINE LUETKEMEYER, Missouri, Ranking Member
ROGER WILLIAMS, Texas
JIM HAGEDORN, Minnesota
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)
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CONTENTS
OPENING STATEMENTS
Hon. Kweisi Mfume ................................................................................................. 1
Hon. Maria Salazar ................................................................................................. 3
WITNESSES
Mr. Darryl K. Hairston, Retired, Small Business Advisor, Woodbridge, VA ..... 5
Ms. Jackie Robinson-Burnette, Chief Executive Officer, Senior Executive Stra-
tegic Solutions, Woodbridge, VA ......................................................................... 7
Mr. Arshdeep Khurana, President & Chief Executive Officer, Avosys Tech-
nology Inc., San Antonio, TX ............................................................................... 8
Ms. Qin Li, President, Soliel, LLC, Vienna, VA .................................................... 10
APPENDIX
Prepared Statements:
Mr. Darryl K. Hairston, Retired, Small Business Advisor, Woodbridge,
VA ................................................................................................................... 23
Ms. Jackie Robinson-Burnette, Chief Executive Officer, Senior Executive
Strategic Solutions, Woodbridge, VA ........................................................... 35
Mr. Arshdeep Khurana, President & Chief Executive Officer, Avosys
Technology Inc., San Antonio, TX ............................................................... 50
Ms. Qin Li, President, Soliel, LLC, Vienna, VA ............................................ 60
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
Ho-Chunk Incorporated ................................................................................... 67
(III)
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THE 8(A) PROGRAM: OVERVIEW AND NEXT
STEPS TO PROMOTE SMALL BUSINESS
SUCCESS
WEDNESDAY, MARCH 2, 2022
HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
SUBCOMMITTEE ON CONTRACTING AND INFRASTRUCTURE,
Washington, DC.
The Subcommittee met, pursuant to call, at 11:00 a.m., in Room
2360 of the Rayburn House Office Building, and via Zoom, Hon.
Kweisi Mfume [Chairman of the Subcommittee] presiding.
Present: Representatives Mfume, Carter, Salazar, Stauber,
Meuser, and Fitzgerald.
Chairman MFUME. Good morning, everyone. I would like to offi-
cially call this hearing to order.
And without objection, the Chair is authorized to declare a recess
at any time.
I would like to begin by noting some important requirements. Let
me begin by saying the standing House and Committee rules and
practice will continue to apply during this hybrid proceeding. 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, if you are on a
video connection, keep your cameras on. Also, please remember to
remain muted until you are recognized to minimize background
noise.
In the event that a Member encounters technical issues that pre-
vent them from being recognized for their questioning, I will then
move to the next available Member of the same party and will rec-
ognize that Member at the next appropriate time slot provided that
they have returned to the proceeding.
I want to again thank all of our witnesses who are here today.
I appreciate your time and your effort to get here and I have a few
comments.
Throughout our history, small businesses, especially those owned
by socially and economically disadvantaged individuals, have faced
real challenges when it comes to participating on equal footing in
the American economy, and specifically in the federal procurement
space. Disadvantaged businesses often navigate obstacles like dis-
criminatory lending practices, and fewer mentorship and business
opportunities as they seek to grow their businesses and, of course,
to serve their customers.
(1)
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Recognizing the struggles that disadvantaged businesses face,
Congress created the Small Business and Capital Ownership De-
velopment Program known as 8(a) that was done in 1978. I take
particular pride in the landmark program because my predecessor,
Parren J. Mitchell was the author of that and we are reminded of
him by his picture which hangs down at the far end of this hearing
room.
The 8(a) program is, as we all know, a 9-year program that offers
small businesses owned by ‘‘socially and economically disadvan-
taged individuals’’ training, technical assistance, and contracting
opportunities. 8(a) participants are eligible, as we also know, for
7(j) training, which offers valuable counseling and training oppor-
tunities in financing, management, accounting, bookkeeping, mar-
keting, and identifying new business opportunities.
The federal government has also established a statutory goal of
awarding 5 percent of all eligible contracting and subcontracting
dollars to small and disadvantaged business concerns, including
those that are not currently participants in the 8(a) program where
there is still more needed support. That is why I applaud President
Biden’s goal of increasing the share of contract awards to small and
disadvantages from 5 percent to 15 percent by the year 2025.
For over 40 years, socially and economically disadvantaged busi-
nesses have relied on the 8(a) program to help them compete and
innovate in the federal marketplace. When small businesses win
federal contracts, they grow, create jobs, and they support our com-
munities.
While the 8(a) program helps thousands of small businesses an-
nually, participants have reported and are still reporting ongoing
challenges. For example, many business owners have reported con-
cerns with the duration of the 8(a) program. So, when a small firm,
as we know, is admitted, it typically takes a couple of years to re-
ceive its first award, which hinders the development of program
participants and really raises the question of whether or not those
enterprises are ready for graduation when they are expected to exit
the program.
8(a) businesses have also expressed concern with the program’s
technical assistance and training through the 7(j) program. And
today, we will ask the question of whether the training provided to
8(a) participants is, in fact, adequately preparing small contractors
for graduation, in addition to how to improve the 8(a) program to
better support disadvantaged businesses.
And lastly, we will examine how trends within the contracting
space impact small 8(a) firms particularly. For years, the size and
scope of contracts have been on the rise. That has excluded, as we
know, many 8(a) firms that may not have the capacity to take on
larger contracts. At the same time, sole-source contract thresholds
have remained unchanged over the years and over time, resulting
in fewer 8(a) sole-source contracts. Before this Committee, the Full
Committee, we have tackled the question of category management
in the past and it is something to keep in mind as we look at rea-
sons as to why there has not been growth in this sole source area.
Consolidation in procurement has limited the ability of 8(a) firms
to compete for contracts, ensuring a level playing field for small
contractors is one of the utmost importance to our economy.
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So, I hope that today’s hearing will allow us to explore actions
our Committee can take to improve legislatively and to modernize
the 8(a) program, a program that all of us support and many of us
are still concerned with as it relates to the challenges that many
of you as small business owners and many others who are viewing
this hearing still find yourself confronted with.
With that said, I would like to yield to the distinguished Ranking
Member, the gentlewoman from Florida for her opening statement,
Ms. Salazar.
Ms. SALAZAR. Thank you, Mr. Chairman. Wonderful to be here
for the first time in person right next to each other. And thank you
to all the witnesses.
As you said, contracting with the federal government is the
American dream. And today’s hearing is a perfect example of this
work this Committee must perform on behalf of America’s small
business contractors. We owe it to them.
Congress is at its best when we are making laws that protect the
interests of all small businesses. And let me repeat that. We must
help all small businesses. Congress made a point to give special
recognition to socially and economically disadvantaged entre-
preneurs through the Small Business Act as you mentioned, the
Minority Small Business and Capital Ownership Development Pro-
gram, also known as the 8(a) program. This program creates a
space for entrepeneurs to grow, to compete, and to be productive
contributors to our nation’s workforce. The law mandates that 5
percent of the federal government spending on goods and services
must go towards small, disadvantaged businesses.
But, according to the SBA, this goal was succeeded in fiscal year
2021 at approximately 10 percent or close to $60 billion. That is
what the SBA is saying. But I have doubts about these numbers,
and also, we cannot ignore issues that continue to plague the 8(a)
program. For instance, unfortunately, we are seeing that fewer
small businesses are winning bigger and bigger rewards and that
is a very big problem. Let me translate this for you. This means
less diversity, less competition, more costs for our taxpayers, and
more importantly, less money in the pockets of small business own-
ers.
We have to increase participation within all of SBA’s contracting
programs and enhance diversity of awards so that all small busi-
nesses can succeed and not just a few, the selected ones that know
how to work the system. And the SBA’s role is ensuring the success
of its 8(a) participants is key. The SBA has the responsibility to
make this program work.
Recently, and unfortunately, I need to report that the Inspector
General found that the SBA is failing to accurately measure the ef-
fectiveness of this program. So that means that we are allocating
money but we do not know if that money that is being allocated
is doing what it needs to do. It is effectively going to enhance and
to help those small business owners. The program is as effective as
its ability to root out waste, fraud, and abuse. So, the agency must
aggressively tackle potential fraud and abuse within all of its pro-
grams. Every dollar going to the wrong firm is an American tax-
payer dollar that is wasted and abused.
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So, what do we need to do? We need to ensure that the SBA is
operating the program at optimal levels. That no level of fraud or
abuse is acceptable. That the federal government awards the
widest range of contracts to as many small firms as possible. That
is the American way and that is why I am here and all of us to
ensure that this occurs.
I thank you. I yield back, Mr. Chairman.
Chairman MFUME. The Ranking Member yields back. Thank
you very much for your statement.
I would like to take an additional moment to explain how we will
proceed with the hearing today. Each witness will have 5 minutes
to provide a statement, and each Committee Member will have 5
minutes for questions. Please ensure if you are with us through the
hybrid setup that your microphone is on when you begin speaking
and that you return to mute when finished.
I would like to introduce our witnesses beginning with Mr.
Darryl K. Hairston. Mr. Hairston serves as a small business advi-
sor. He has assisted small businesses for more than 35 years as a
dedicated employee of the Small Business Administration where he
has held senior level positions, including acting administrator of
the SBA and deputy associate administrator for the Office of Gov-
ernment Contracting and Business Development. Mr. Hairston,
again, thank you very much for being with us.
Our next witness is Ms. Jackie Robinson-Burnette, the CEO of
Senior Executive Strategic Solutions, a consulting firm. And she is
also a former federal senior executive having served in multiple po-
sitions, most recently in the SBA as the deputy associate adminis-
trator of the Office of Government Contracting and Business Devel-
opment in 2016. Prior to joining the SBA, Ms. Robinson-Burnette
served more than 20 years in the Department of Defense, both as
a contracting officer and leading small business programs. Ms. Rob-
inson-Burnette, thank you again, and welcome.
Our third witness is Mr. Arshdeep Khurana, president and CEO
of AVOSYS Technology, Inc., located in San Antonio, Texas.
AVOSYS Technology is an 8(a) and HUBZone certified small busi-
ness that offers information technology and management con-
sulting services. Mr. Khurana founded AVOSYS in 1998 and that
company will be graduating from the program this year. So, I want
to thank you, sir, for your insight in advance because your gradua-
tion is a part of the issues that we are talking about. Not yours
specifically, but the amount of time and the people who are, in fact,
graduating.
I would like to yield to the Ranking Member, the gentlewoman
from Florida, to introduce our final witness. Ms. Salazar?
Ms. SALAZAR. Our final witness is Ms. Qin Li. Welcome. She is
the president of Soliel, a small business technology company pro-
viding innovative and cutting-edge technical engineering and devel-
opment services to the United States Government. Ms. Li’s work in
government contracting began in 2010 out of a need for greater ca-
reer flexibility. When an opportunity arose to subcontract to a large
firm, Ms. Li took it. Good for her. And now the company is cele-
brating her 12th year and it is in the 7th year in the SBA 8(a) pro-
gram. Under Ms. Li’s leadership, Soliel has invested heavily in
technology and quality operations, successfully holding many high
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level cybersecurity and technological certifications necessary to
compete for difficult and complex government contracts. A testa-
ment to her success, Soliel has successfully served many govern-
ment customers such as the United States Navy, the United States
Army, and the Defense Counterintelligence and Security Agency.
Ms. Li, it is a pleasure having you to testify before this Committee,
and I look forward to the valuable insights I know you will provide
today. Welcome. I yield back.
Chairman MFUME. Thank you. I join with the Ranking Member,
Ms. Li, in saying welcome to you also. Thank you for being here.
We look forward to your testimony.
The Chair would now recognize Mr. Hairston, if you are pre-
pared, and if so, you are recognized for 5 minutes. Go right ahead.
STATEMENTS OF DARRYL K. HAIRSTON, RETIRED, SMALL
BUSINESS ADVISOR; JACKIE ROBINSON-BURNETTE, CHIEF
EXECUTIVE OFFICER, SENIOR EXECUTIVE STRATEGIC SOLU-
TIONS; ARSHDEEP KHURANA, PRESIDENT & CHIEF EXECU-
TIVE OFFICER, AVOSYS TECHNOLOGY INC.; QIN LI, PRESI-
DENT, SOLIEL, LLC
STATEMENT OF DARRYL K. HAIRSTON
Mr. HAIRSTON. Good morning, Chairman Mfume, Ranking
Member Salazar, and other distinguished Members of this Com-
mittee. I am pleased to present testimony in support of your exam-
ination of how the SBA’s 8(a) Business Development Program cur-
rently works, the resources it provides, and to identify ways to
modernize and improve the program’s effectiveness.
As noted, Congress enacted Public Law 95-507 in 1978 to provide
statutory authority to an existing program that was previously cre-
ated by Executive Order for socially or economically disadvantaged
individuals. The law shifted the program’s focus to Business Devel-
opment and required program participants to be at least 51 percent
owned and controlled by socially and economically disadvantaged
individuals. Since 1978, there have been several additional amend-
ments to the law aimed at achieving the unfulfilled goals of Public
Law 95-507 by addressing abuses and improving its effectiveness.
Additionally, the SBA’s Office of the Inspector General and the
General Accounting Office have also noted instances of fraud and
the lack of quality and consistent SBA monitoring and oversight.
Based on my experience, I believe the following recommendations
for 8(a) business development program improvements will have a
significant impact on the program’s administration and effective-
ness.
First, while the associate administrator for 8(a) business develop-
ment is responsible for the oversight of all matters related to the
8(a) Business Development Program, the business opportunity spe-
cialists who are defined by statute are the primary face of the SBA
to an 8(a) participant and are responsible for delivering the pro-
grams and services of the program to participants. They work in
district offices under the supervision of district management who
report to SBA’s Office of Field Operations. It in my view that this
overlapping organizational structure creates programmatic chal-
lenges. Without the cooperation and the leadership of the Office of
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Field Operations, the associate administrator for business develop-
ment has little to no control over the implementation of program,
policies, and procedures, the hiring and selection process and no
input into the performance review process.
Consequently, I recommend a written agreement should be devel-
oped between the Office of the Associate Administrator for Busi-
ness Development and the Associate Administrator for the Office of
Field Operations delineating the roles and responsibilities associ-
ated with the district offices and the delivery of the 8(a) program.
Additionally, the annual performance goals of the associate ad-
ministrator for Business Development should be shared by the as-
sociate administrator for the Office of Field Operations and should
be incorporated in his or her annual performance standards as well
as those of the district directors and/or business opportunity spe-
cialists.
7(j) resources should be allocated to the development and deliv-
ery of specific programs and curriculums for new and transitioning
program participants. For new program participants, training
should focus on preparing them to compete in the federal acquisi-
tion environment as small businesses and 8(a) program partici-
pants. Similarly, for transitioning companies, this coursework
might include focus on long-term planning and consideration for
market expansion and diversification. Such training for new firms
in their beginning stage may help alleviate the lag that many expe-
rience in receiving their first contract opportunity.
Public Law 100-656 amended Section 7(a) of the Small Business
Act to include an 8(a) Loan Program. Specifically, the administra-
tion was empowered to make loans either directly or in cooperation
with banks and other financial institutions. I have no recollection
that it was ever implemented. The implementation of this program
will provide a source of critical financing for 8(a) program partici-
pants.
Under Section 8a)(12) of the Act, participants are required to an-
nually prepare and submit to SBA a capability statement. Those
statements are to be disseminated to executive agencies and used
during their annual contract forecasting to identify simple con-
tracts to support the 8(a) program. I am not aware of adherence
to this requirement. Adherence to this requirement would greatly
improve the likelihood of a new 8(a) program participant receiving
contract assistance earlier in its 8(a) program participation.
And finally, there should be a focus on preparing transitional
stage firms to become mentors. The Mentor-Protégé program is an
excellent opportunity for transitional 8(a) participants to continue
their growth and development. To ensure the effectiveness of this
program and validate that its objectives are being met, SBA must
improve its oversight to be certain that both mentors and proteges
are adhering to the Mentor-Protégé Agreement and that program
regulations are being followed.
Thank you for the opportunity to testify in connection with this
Committee’s hearing on SBA’s 8(a) program. I am happy to answer
any questions you may have.
Chairman MFUME. Thank you, sir.
Ms. Burnette-Robinson, you are now recognized for 5 minutes. If
I can ever get your first name in front of your second name and
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do this correctly before the hearing is over I will have made a
major accomplishment. Ms. Robinson-Burnette, go right ahead.
STATEMENT OF JACKIE ROBINSON-BURNETTE
Ms. ROBINSON-BURNETTE. Good morning, Chairman Mfume
and Ranking Member Salazar and other distinguished Members of
the Committee. Thank you for all that you do for citizens like me,
giving us a voice and a chance to be heard. I am humbled and hon-
ored to be here before you.
My husband, this handsome man sitting behind me is a retired
Army officer. We have two daughters serving as Army officers and
one just signed her Army Cadet Command contract last week. We
are a family committed to serving this nation.
The 8(a) program expands our ability to easily tap into all the
smart people in different corners of our country to help tackle the
nation’s most pressing challenges as we engage in humanitarian ef-
forts or defend our great country, within our borders and across the
globe.
In the simplest terms, the 8(a) program offers a small, disadvan-
taged business a chance to learn how to win a federal government
contract or subcontract, perform the work with their own money or
an SBA loan, and if the work is deemed acceptable and timely,
then expect payment. When I arrived at the SBA in December
2014, I found the pool of firms shrinking. As an inclusive leader,
I brought my team around the table and asked for solutions. I wish
I could say the excitement and the shift in operations that later led
the team to win the highest-ranking award at the SBA was due to
how smart I was. But it turns out, if you bring smart people
around the table and support them, you have a win.
I would like to share my thoughts today. Unfortunately, a consid-
erable amount of 8(a) firms graduate and they struggle to stay in
business 5 years after graduation. I recommend giving 8(a) grad-
uate mentors priority with the Mentor-Protégé program application
process. It is a low-cost and effective way to help them quickly
transfer their knowledge to a new 8(a). It would increase the com-
petitiveness of a protege and build longevity for the graduate.
For months, the Office of Federal Procurement Policy and GSA
and contracting executives from multiple federal agencies met to
create and implement category management. However, there were
no small business executives at the table with an equivalent seat.
The SBA had a seat but no voice and SBA regulations lagged be-
hind for years without inclusion in the federal acquisition regula-
tion like the similarly situated rule. I would suggest that Congress
require OFPPs for our counsel to consider its regulations in tandem
with the SBA’s rulemaking. I also recommend a full-time senior ex-
ecutive at the Office of OFPP who understands contracting and val-
ues the contributions of small businesses. They would have a seat
at the table where the discussion is category management, prior-
ities for updates to the FAR or the next acquisition reform.
I ran into a retired Army Lieutenant Colonel West Point grad-
uate and he said he has tried unsuccessfully since 2016 to get 8(a)
certification. He was a Special Forces officer. He trained Army and
Foreign Services. He won a 5-year contract with the Special Oper-
ations Command. He shared with me his letter of rejection. One,
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his Board of Directors meeting minutes where he elected himself
as president, treasurer, and secretary had errors in it. The other,
he had 93 percent of his revenues from Special Operations Com-
mand. These issues are irrelevant to eligibility. I am not advo-
cating for dismissing eligibility rules, but there must be a shift in
the SBA culture to ensure that the program is accessible for eligi-
ble firms.
I also recommend the SBA develop justification to significantly
increase their 7(j) budget, and I know that Congress historically
provides the funds based on it and I would ask you to support the
increase.
The 8(a) program typically has vacant positions for the 8(a) BOS
and the business development specialists. I know that the SBA is
considering virtual support and I would recommend that the SBA
also bring on an HR professional from another agency under detail
to help assist objectively look at the allocations. I also think the
8(a) sole source threshold should be raised from $8 million for serv-
ices and $10 million for manufacturing. I understand the simplified
acquisition threshold is not within your jurisdiction but I would
like it to be increased. I would recommend an increase from
$250,000 to $1 million.
Finally, I know that the smart SBA employees in our federal
agencies will raise the bar and support President Biden’s goal of
increasing contracts to small, disadvantaged businesses. His goal is
bold but it is very achievable. I urge you to take my suggestions
today to further strengthen the program. Thank you.
Chairman MFUME. Thank you, very much, Ms. Robinson-
Burnette. And Mr. Burnette, welcome to you also.
Mr. Khurana, you are recognized for 5 minutes, sir.
STATEMENT OF ARSHDEEP KHURANA
Mr. KHURANA. Chair Mfume, Ranking Member Salazar, and
Members of the Subcommittee, thank you for the opportunity to
testify before you today. My name is Arshdeep Khurana, and?I am
the president and CEO of AVOSYS Technology, headquartered in
San Antonio, Texas. AVOSYS provides enterprise IT support, infor-
mation assurance, software development, healthcare staffing, bio-
medical research and support services to the federal government’s
clients. Established in 1998, I have grown the company from a one-
man operation, to currently servicing over 50 commercial and gov-
ernment contracts across 14 states.
When I immigrated to United States, I was in pursuit of higher
education and had the American dream of becoming an entre-
preneur. After naturalization, I started my business from my
apartment with a single dial-up server connection with a server.
For over a decade, I serviced several small and mid-sized busi-
nesses as a trusted chief information officer. My business was 100
percent commercial when I was accepted to the SBA’s 8(a) program
in 2011. Through the program, my company has been able to grow
and become highly successful in the federal marketplace. I am par-
ticularly proud of the multimillion dollar competitive contract I was
awarded to provide clinical healthcare support services to the Air
Force base clinic to service our men and women in uniform. It is
an incredible honor to provide these services, and my company
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would not have been here today without the 8(a) program, tremen-
dous support from my family, and the ever gracious, the Almighty
Lord.
The past 2 years have been difficult for small businesses, and
8(a) firms are no exception. I was thrilled when this Committee
added an extra year to the 8(a) program as part of the pandemic
response. This lifeline helped companies like mine save jobs and
stay afloat. While this extension was incredibly impactful, the pan-
demic has unfortunately impacted operations not just for 1, but for
2 years. Recovery did not truly begin until the current fiscal quar-
ter, leaving many 8(a) companies approaching graduation without
feeling like they had their full time in the program. For companies
like mine to truly succeed, adding an additional year extension
would make all the difference.
Given the increasingly complex and competitive procurement en-
vironment, I also recommend extending the 8(a) program to 10
years permanently. The decline in the number of 8(a) firms has
caused concerns across the program.
According to the SBA, in August 2021, there were about 4,906
program participants, while in 2010, there were about roughly
about 7,000. I believe this is happening for a number of reasons
and I suggest the following changes to the 8(a) program in order
to increase the number of successful participants and dollars flow-
ing to small, disadvantaged businesses.
First, limiting the sole source awards to individually owned 8(a)
firms and other socioeconomic set asides are too small. I suggest
the Committee to increase the sole source threshold as you did in
the 116th Congress by eliminating the option years and allowing
the amount of $4.5 million and $7.5 million each year for services
and manufacturing, respectively. Group-owned 8(a) firms have seen
huge success with the raising of their sole source threshold five
times to $100 million without justification. Therefore, individual
firms would also welcome this important change with similar five
times increase from the current threshold amount.
Second, multiple 8(a) procurements are being bundled and con-
solidated with scope additions making their follow-on contracts too
large for the individual 8(a) companies’ current direct award
threshold level. Data on these awards remains too broad; therefore,
I suggest SBA break down their annual scorecard spend into four
subcategories. Mapping of the impact of these dollars would assist
the administration in identifying contracts that could be set aside
or directly awarded to individually owned 8(a) firms.
Third, changing the business activity target requirements is nec-
essary to the developmental stage of the program. It should start
with the award of the first contract instead of right away. Addition-
ally, 8(a) competitive dollars should be considered as small busi-
ness competitive dollars meaning the Business Activity Target
(BAT) restrictions would only apply to sole source revenue. Simi-
larly, other program continuity ratios including the audit require-
ment threshold should be at least adjusted two to three times.
I cannot express the appreciation I have for the 8(a) program and
how it has dramatically changed my business after a tough sur-
vival in both the 2001 and 2008 recessions. I am sincerely thankful
for the excellent support obtained from the San Antonio Small
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Business Administration office and the many SBA specialists on of-
ficers who are working hard for the thousands of 8(a) business like
myself. Not only does AVOSYS’s success impact me but it also im-
pacts more than 200 employees I have hired around the country as
a result.
Thank you for holding this important hearing and I look forward
to answering your questions.
Chairman MFUME. Thank you, sir.
We will get to questions in just a moment, but I want to make
sure that we go to Ms. Li for her 5 minutes of testimony and to
say welcome again. Thank you.
STATEMENT OF QIN LI
Ms. LI. Thank you, Chair Mfume, Ranking Member Salazar, and
other Members of the Subcommittee. I am really thrilled to be here
to testify today.
My name is Qin Li. I am the president of Soliel, LLC. Soliel is
headquartered in the D.C. area in Vienna, Virginia, and we bring
innovative technical solutions to our customers to help them de-
velop and transform and modernize their IT systems and infra-
structure.
So originally from China, I came here and got my Master of
Science degree from George Washington University 25 years ago.
And I have called the D.C. area home since then.
Soliel’s adventure into the government contracting is also out of
necessity. When I was seeking treatment for my middle child, who
has a very rare chromosome abnormality. So, when the opportunity
to subcontract arose, I took that risk and that is how Soliel started
in government contracting. And 12 years later, today, we very
proudly support a number of DoD agencies, including DISA, Army,
Navy, and DCSA. And that success is really a testimony to our
commitment and investment in innovation and technology, as well
as the contributions from our team.
It is also remarkable if you think about only 9 percent of women-
owned businesses are Asian American owned, and only 6 percent
of the science and engineering employees in the United States are
Asian. So, it is really a remarkable and very humbling experience
for me. And again, I want to really thank this Committee to ad-
vance policies that will further advance the interests for this Com-
mittee, especially the 8(a) program.
So, Soliel started in 2010 as a second-tier subcontractor as I
mentioned earlier. And then we became a first-tier subcontractor.
Gradually, we started bidding for small business prime contracts.
So, we received our 8(a) designation in June of 2015. That is 5
years after we started our government contracting business. So, the
first 5 years we were subcontractors and really building up our per-
formance and qualifications. The 8(a) program is really a game
changer that provided Soliel a critical, if not the only contract to
really prime and be successful. So, I am very passionate and I am
sincerely grateful for the program.
While it has allowed me to find a successful way forward, I also
just want to outline some thoughts on specific elements of the pro-
gram that can be further improved.
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So, one of the challenges as mentioned earlier is for the grad-
uating and successful 8(a) companies to minimize the potential loss
in revenue once they graduate from the program and they are no
longer an 8(a). So, I believe greater assistance from the SBA is
much needed in this transition period out of the program. For ex-
ample, it would be very helpful for the SBA to consider allowing
contracts performed by a graduated woman-owned or HUBZone
company after they graduate for that contract to be solicited as ei-
ther a HUBZone or woman-owned instead of just an 8(a) contract.
This way, it aligns with the SBA’s overall goal as the Ranking
Member has mentioned to really advocate for the entire small busi-
ness community, not just 8(a) or HUBZone or woman-owned. So, it
is fully aligned with that if the graduating 8(a) is still a small busi-
ness. But it also allows the graduating 8(a) companies to minimize
the revenue loss and still retain their revenue.
The other thing that we could use a lot of help from the SBA is
oversight of the Mentor-Protégé program. It is a very powerful pro-
gram and Soliel has been in that since the second year we were ad-
mitted to the 8(a) program. While there is a lot of structured paper-
work and very good oversight during the initial formation of the
JV, there is not as much SBA supervision in the later stage, espe-
cially in the execution stage of the JV. So, there is also very limited
recourse if the mentor is not fulfilling its commitment. And so, giv-
ing the SBA greater power with respect to the enforcement of the
JV will really help 8(a) companies like ours, the Mentor-Protégé
program greatly.
So again, I really appreciate the opportunity to be here today. It
is very much an honor and I look forward to answering questions.
Chairman MFUME. Ms. Li, thank you very, very much. And my
thanks to all of the witnesses who are with us this morning.
I would like to call your attention to the fact that we have been
joined by the distinguished gentleman from Pennsylvania, Mr.
Meuser, and welcome him, obviously, to this hearing as well.
We have got some questions. You have all had great comments
and great suggestions. One of the things I know I can say on behalf
of myself and the distinguished gentleman from Florida, our Rank-
ing Member, is that we passionately want to make the 8(a) pro-
gram much better. It is not something that divides us. It is some-
thing that unites us. And I think beyond this hearing, we have got
to go directly to the administrator of the SBA to figure out what
can be done in the time that we have. And I tell you, I speak out
of a little bit of frustration.
I joined this Committee in 1987 when I first got elected to the
Congress. Served for 10 years, Chaired the Subcommittee, went
away for 24 years, came back, and many of the problems and the
issues and the suggestions that we were listening to then have lan-
guished. They are still before us today. So, it is a passion and there
is absolute unanimity between the Ranking Member and myself to
try to find a way to get something done legislatively with every bit
of strength that we have.
So let me recognize myself for 5 minutes and we will proceed
with the Ranking Member and the order of Members as they ap-
pear.
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Mr. Hairston, we all know the 8(a) program is a 9-year program
divided into two phases—an initial 4-year development stage and
a final 5-year transition stage. You have heard from some of our
witnesses today with respect to changing that, restructuring it be-
cause 9 years is not enough. Can you speak to this 9-year time-
frame? Give us from your own experience a sense as to whether or
not you believe, like many do, that it is just not enough time for
a small firm to develop the skills needed to adequately compete in
this economy, and by the time they do they are out the door.
Mr. HAIRSTON. Thank you for that question. I listened to those
comments with interest. Several years ago, we developed a pro-
posal to redesign the 8(a) program along the lines that were men-
tioned by the witnesses. One of the things that we talked about
was the fact that most firms coming into the program were truly
eligible for the program, had little experience in the federal mar-
ketplace, and found it difficult to navigate the federal system early
on and their ability to achieve contact assistance was hampered to
an extent and sometimes they were 3 or 4 years in the program
before they actually realized some success in achieving that. The
question around whether or not 9 years is long enough, I think the
timeframe is highly dependent upon how successful firms are com-
ing into the program and how well they take off with the benefits
that are available to them in the program. My thinking along those
lines is that the program should be a 9-year program. I think the
way it is structured though and how that term is implemented is
what is important. I honestly believe that when a firm first comes
into the program it should be provided targeted resources for learn-
ing how to do business in the federal environment. They should be
given assistance in understanding acquisition trends, under-
standing how to respond to solicitations, understanding how to de-
velop relationships and market themselves. And when I think of
marketing, I do not speak of marketing generally. I speak of mar-
keting and how that is actually done effectively in the federal sys-
tem. I think a firm’s term should be dedicated to receiving assist-
ance under the 7(j) program targeted to developing its ability to do
business in the federal government. If after that 1 year it does not
receive a contract, its term may start. Or, if it receives a contract
during that 1 year, maybe its term starts in that 1 year. I would
look at structuring a program in phases that allow for business de-
velopment to lead the way to success in the program.
Chairman MFUME. Okay. Thank you, Mr. Hairston.
Ms. Robinson-Burnette, I would like to just turn to you quickly
before yielding.
As was previously mentioned, the president has a goal of increas-
ing the share of federal contracting dollars to small and disadvan-
taged firms from 5 to 15 percent by 2025. In your experience, are
there any specific steps that the SBA should be taking and that we
should be holding them accountable for to ensure that the initiative
results in agencies reserving more opportunities for the 8(a) pro-
gram and not less?
Ms. ROBINSON-BURNETTE. Thank you, Chairman, for that
question.
When I was a contracting officer years ago, in accordance with
the Federal Acquisition Regulation and my contract training, my
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first step was to conduct market research for any acquisition that
came across my desk to determine if the rule of two could be met.
Can two or more small businesses do the work? And if so, I would
set the work aside for small businesses or I would find an indefi-
nite delivery contract or GWAC, one of these multiple award con-
tracts that would allow set-asides for small businesses. With the
shrinking acquisition workforce and the new increase in use of
GWACs and category management, contracting officers are picking
a contract vehicle first, bypassing the small business staff, and say-
ing that contract does not require them to set aside for small busi-
ness. Even if an incumbent is the small business that would be
devastated with the loss of this work, or if the program was in the
8(a) program, they pull it out and put it into these contracts, I
think the SBA must get more depth and more depth engaged with
the OSDIBU and the small business directors at these agencies to
learn what is really happening at their level in terms of the chal-
lenges they have with getting contracting officials to abide by the
rule of two.
The OFPP memo, the White House Memo M2203, Advancing Eq-
uity and Procurement, now requires OFPP and SBA and the
OSDIBUs to work together on category management. I think it is
important that they look across the government and engage in
every level. Our contracting officials abiding by the rule of two.
When small businesses can do the work, is the work going to small
business? Thank you.
Chairman MFUME. Thank you, very much.
My time has expired. I want to yield to the Ranking Member, the
gentlewoman from Florida, Ms. Salazar, and I want to call your at-
tention to the fact that we have been joined by the gentleman from
Wisconsin, Mr. Fitzgerald, who is also a Member of this Com-
mittee. Thank you, sir.
Ms. Salazar?
Ms. SALAZAR. Thank you, Mr. Chairman. And I agree with you
that we have the bipartisan spirit in trying to find solutions for
this program because we are all, at least I consider myself part of
the American dream. And Ms. Li said it specifically and the other
witnesses as well. And thank you, Ms. Robinson-Burnette, for your
service. Not only yours but the handsome husband behind you and
the children that are joining the Armed Forces of the United
States. Very laudable. So, thank you.
I think I have a question for all of you but I am going to start
with Ms. Li. In very simple terms, if there is something that you
need to fix with the 8(a) program that you are saying that helped
you so much and it put you where you are right now, what would
it be? What would you do if you had the power to fix that 8(a) pro-
gram?
Ms. LI. Number one, thank you for that question. Thank you.
Number one would be to raise the threshold as echoed by my fellow
witnesses. The current threshold of $4 million for services is way
too small. Time has moved on. Contracting has moved on. Every-
thing has moved on but that threshold stayed. And what that does
is it really is an impairment to regular individual 8(a) companies.
And Soliel, my company, had multiple times for our 8(a) contracts
to be taken away because there is not enough threshold. Either
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they were given to 8(a) companies that can attain or support $100
million threshold or they were being put on other contract vehicles
due to the consolidation, category management, all those reason to
be put on an IDIQ contract as a task order. So that is our number
one.
Ms. SALAZAR. Number one. Okay. Okay. Let me give the oppor-
tunity to Mr. Khurana. One thing that you would do, that you
would fix with this program?
Mr. KHURANA. Ma’am, I would echo Ms. Li’s comments as well.
The threshold is way too limiting. It deserves the same increase as
the group-owned 8(a)s, up to at least $22 million for the individual
8(a) owned. This will make a significant impact on the competitive-
ness for the business as they get ready for the competitive non-8(a)
small business awards as well.
The second would be to really enhance measures to the scorecard
goals that is set for the agencies to recognize what really makes
the bottom line difference to more than 99 percent of the companies
like myself, which is identifying the trackability as you mentioned,
ma’am, earlier, if the dollars being spent on the direct awards is
indeed going to the individually-owned 8(a)s. And what the recent
trend contrary has been unfortunately that the threshold has shift-
ed predominantly to the group-owned 8(a)s in the recent years be-
cause of their unique capability to get awards at a much higher
threshold value.
Ms. SALAZAR. All right. Ms. Robinson?
Ms. ROBINSON-BURNETTE. Thank you for that question.
Some federal agencies have started decreasing their contracts
going to the 8(a) program because the pool was shrinking and they
did not want their contracts tied into the 8(a) program and not
have enough firms to perform the work. I would make sure that
the SBA shift their focus to include every firm that is eligible. The
SBA can provide statistics on their applications, but when I was at
the SBA, I though the issue with the declining pool was we were
not receiving enough applications. Then I found we were receiving
2,300 applications a year and certifying 300.
Ms. SALAZAR. You said something about shifting the SBA’s cul-
ture.
Ms. ROBINSON-BURNETTE. Yes.
Ms. SALAZAR. What do you mean by that?
Ms. ROBINSON-BURNETTE. Right now the focus is making
sure they mitigate the risk of firms getting into the program that
should not be in the program. Focusing on the fraud and really,
that is the 1 or 2 percent of firms that apply. And so, the other
90-plus percent of firms are struggling to get in, like this lieuten-
ant colonel that I talked about, because the SBA is focused on the
wrong thing.
Ms. SALAZAR. And I would like to hear your opinion. We have
a problem where the SBA is allocating those funds but is not track-
ing if those funds are being successful. Meaning, like at a univer-
sity. We are paying for the tuition but we do not know if the stu-
dent receiving it is getting good grades, if it is attending classes,
or if it is graduating. So, the money is not being, I believe that is
just, we do not know if it is being well used. So, do you feel the
same way? Do you think that is your impression? Ms. Li?
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Ms. LI. Yes, I tend to agree. And one of the questions we always
ask is how do you measure a program’s success? Is it by how many
new 8(a) companies are being admitted or how many 8(a) con-
tracting dollars that went into individual firms like ours? Or is it
by how many are graduating and how many are still in business
5 years after?
Ms. SALAZAR. Which one do you think should be the right an-
swer?
Ms. LI. I think it should be number one, the dollars that actually
go to individual 8(a) firms. And number two, are they still in busi-
ness 5 years after graduation?
Ms. SALAZAR. What do you say, Mr. Khurana?
Mr. KHURANA. I would echo exactly the same, ma’am.
Ms. SALAZAR. Ms. Robinson?
Ms. ROBINSON-BURNETTE. Yes. The number of dollars——
Ms. SALAZAR. What should be the guidelines?
Ms. ROBINSON-BURNETTE. The number of dollars going to eli-
gible, to firms. And not just the super 8(a)s but the individually-
owned small businesses. The number of firms. And then how many
firms graduate and can stay in business after 5 years. I would also
like to add, how many firms graduate and can actually sell their
company to a new 8(a) that comes in. It is important that we re-
duce the burdens on that. A woman-owned can sell to another
woman-owned and their contracts stay. A veteran to a veteran. If
an 8(a) sells to another 8(a), a graduate 8(a) sells to a new 8(a) and
transitions, those contracts are slated to be terminated. And that
is unique only to the 8(a) program.
Ms. SALAZAR. Mr. Hairston, I am going to give you the last
word.
I think he is muted.
Chairman MFUME. Mr. Hairston, we cannot hear you.
Mr. HAIRSTON. I apologize. I agree with the issues around
measuring success, but I think you also have to consider the moti-
vation of the entrepreneur coming in and what constitutes success
to that entrepreneur. I think measuring based on dollars received
is a fair measure, but we cannot forget that this is a business de-
velopment program and it has basically survived based on the no-
tion that it is a business development program. So, anything meas-
uring success also has to be attributed to the business development
assistance that has been provided to the firm.
Chairman MFUME. Mr. Hairston, I am going to ask you to begin
to conclude.
Mr. HAIRSTON. Okay. But I would agree with the comments of
the other panelists.
Chairman MFUME. Thank you very much.
Ms. SALAZAR. I yield back.
Chairman MFUME. The gentlewoman yields back.
The Chair recognizes the gentleman from Pennsylvania, Mr.
Meuser, for 5 minutes.
Mr. MEUSER. Thank you very much, Mr. Chairman. And thank
you to our Ranking Member as well. Thank you to all of you. Very
important subject. I can see it in your eyes. You are living this and
it is very essential to your business livelihood.
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So, the questioning that is taking place here is specific, and boy,
that is what we need to do. And as the Chairman stated earlier,
that he has been dealing with such bureaucracy and less than busi-
ness efficiencies in these requirements for many, many years. And
I am hearing all that.
So, my first question would be to Ms. Robinson-Burnette, and I
think I already know the answer. But do you have a white paper
outlining some strong suggestions of what would be in the interest
of the contracting that we could have and we could work on to ac-
tually try to implement? Do you have such a plan already written?
Ms. ROBINSON-BURNETTE. Thank you, Congressman, for the
question.
I do not have a white paper, but my written testimony is 15
pages long that goes in-depth about the recommendations that I
have offered today.
Mr. MEUSER. Beautiful. I summarized it. I am sorry. I did not
read the whole thing but that will suffice.
Okay. So next, the administrative burdens the government
placed on small businesses that everybody is agreeing we want to
reduce, the fraud end of it, you say that is 1 to 2 percent, and I
agree with that. I think a little bit of a phone call and a little bit
of data analysis in today’s information age should not be all that
difficult to determine whether it is a real company or a phony-balo-
ney company.
Now, on the same note, we just came off of EIDL and we had
some really rush initiatives which we are very familiar with that
did have some significant fraud in them. So, it has got to be a con-
cern.
Quickly, Ms. Li, let me go to you, if you would. What can be
eliminated from that so as we can have integrity and efficiency?
Ms. LI. Thank you. From my own experience, the individual 8(a)
program seems to be administered better than the 8(a) Mentor-
Protégé Joint Venture program. Soliel has been in the JV program
for 6 years now. There is a lot of opportunity for the SBA to really
exert oversight and improve its oversight to stop the abuse from
the mentors to its small business proteges. That is where my per-
sonal experience has been focused on.
Mr. MEUSER. Okay. So, you all must be aware of some compa-
nies, and you have experienced it yourself, engage in the con-
tracting, 4-year eligibility for the contracted self and just run into
barriers that do not make a lot of sense to you but you need to
overcome anyway because it is a very important contract. Does that
happen regularly? And do you know other companies that just give
up because it seems too burdensome?
Ms. LI. Yes, I do.
Mr. MEUSER. Go ahead, Mr. Khurana. Go ahead.
Mr. KHURANA. Thank you for the question, sir. Absolutely.
Through the 9-year journey, the first 3 years I almost gave up
hope. This is after surviving two recessions, surviving in commer-
cial for 14 years, and still facing the challenges. I mean, I thought
8(a) would be to the rescue but of course, in the third year I got
blessed with the first U.S. Air Force contract. Then I started to
foresee a few other challenges which are roadblocks, clearly distin-
guishing them as such on why they are there. What I started to
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notice is the consolidation efforts, the bundling efforts, scope creeps
on the existing requirements just to make them above the direct
award threshold by the agencies so that they could make it com-
petitive or be awarded to the super 8(a)s. And that was at a big
loss of the development dollars which are much essentially needed
for the development firms like myself.
Another common one seen is the category management, and once
we are graduating, those 8(a) requirements are being removed from
the 8(a) to small business or some other category; I believe requires
strengthening the PCRs of the SBA which are procurement rep-
resentatives. They are our guardians. Protecting the program and
the requirements within the 8(a) program. They need to be empow-
ered, should have the influence on the agencies and the additional
scorecard mechanisms, as I have highlighted a few options in my
10-page testimony.
Mr. MEUSER. Lastly, and I have very limited time, do you find
that ineligible companies are gaming the system and gaining the
contracts more in an unfair manner?
Mr. KHURANA. Sir, within the 8(a) program, I believe it is very
well vetted, at least the 8(a) part. The other socioeconomic I am not
too privy about but there may be some.
Mr. MEUSER. Okay. And are there any reasons that businesses
do not apply because the payment is not there, the requirements
are too costly? And I know I am over my time, Chairman, but a
quick answer to that. Do some small businesses not apply because
it is simply not worth it?
Please, Ms. Robinson-Burnette.
Ms. ROBINSON-BURNETTE. As I said, over 2,300 firms apply
every year. They are applying. Only 300 are being brought in.
Firms are paying advisors $4,000 to $10,000 to do applications for
them. So, they are interested. It is just very difficult to get through
the cumbersome process at the SBA, not relative to eligibility but
mistakes or in the application. It has nothing to do with are they
eligible.
Mr. MEUSER. We will certainly work on this. And thank you.
And thanks for your indulgence, Mr. Chairman, for being over.
Chairman MFUME. The gentleman yields back.
The Chair recognizes the gentleman from Wisconsin, Mr. Fitz-
gerald, for 5 minutes.
Mr. FITZGERALD. Thank you, Mr. Chair.
My colleague on this Committee, Mr. Evans and I introduced
H.R. 5861, which is the Waiver Authorization Streamline Act. It
seeks to reduce the regulatory burden on the 8(a) transferring its
contract to another 8(a) company. So, I know that was kind of dis-
cussed here. And after acquisitions or simply just being gobbled up
by the other company, instead of going through the multi-level re-
view process, which could span months as was brought up earlier
again, SBA administration, being the authority to waive the ap-
proval process so long as the 8(a) company is absorbing the con-
tract can perform the work.
So, I am going to ask Ms. Robinson-Burnette. So before serving
as the CEO of the consulting firm you served as senior exec to the
SBA Office of Government Contracting, so I appreciate your experi-
ence. Based on your experience, do you believe streamlining the ap-
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proval process for transferring the 8(a) contract after acquisition
would help keep more small businesses in the program?
Ms. ROBINSON-BURNETTE. Thank you, Congressman, for that
question.
The SBA administrator on a nondelegable authority is the ap-
proving authority for transferring the 8(a) contracts when an 8(a)
graduate is acquired. And I believe that that authority should re-
main at that level. But the contract should not be automatically
slated for termination without that. I believe that the only time
those contracts should be terminated is if the company is going to
a non-8(a), or if with the consolidation of the company that ac-
quires it the company now becomes other than a small business.
Because once you join those two companies, they could now exceed
the size standards. But if they are still small, what a great way for
a new 8(a) to start out with contracts, customers, and possibly the
mentorship of the firm that released the company.
Mr. FITZGERALD. Yeah, I do not want to overgeneralize, but
sometimes those mergers are either because there is a stress on
one of the two, financially, or in some instances, I mean, it makes
sense because both entities kind of say, you know, we are competi-
tors now. We should kind of unite and be more competitive in the
market; right?
Ms. ROBINSON-BURNETTE. Yes. Also, after a 9-year term,
sometimes—one real example I had, and it was the first time I en-
countered this, I was actually the associate administrator of the
8(a) program, an 8(a) participant died. And now his contracts had
to go to another company. And if the company was sold to another
8(a), then, of course, his family that helped him build this company
could benefit but then transition the company and the employees
to a new 8(a) so the company could continue to go instead of the
company having to shut down, employees lose their jobs and all the
contracts be terminated. So it could be because of illness, a desire
to retire after 20 years in the business, or the company just wants
to sell for other reasons.
Mr. FITZGERALD. Gotcha. Very good. Very good. Thank you.
Just real quick, Ms. Li, Wisconsin, my home state, our big three
are tourism, agriculture, and manufacturing. And for the most
part, light manufacturing. So, you have got kind of these smaller
factories and then you have got the transportation component, and
then you might have a tool and dye shop down the road. So, they
are all integrated. In my experience, not only personal experience
because of interacting with some of the small businesses and my
father-in-law that was in manufacturing for years, but oftentimes,
I mean, they would tell the story that the federal contracts would
come, they would land on the desk, and they would put their best
person on it. But by the time they got done bidding it and going
through kind of what the standards and specs are, it just was not
worth their time. So, they eventually would just give up on any of
those types of contracts. The reason I bring it up is because I think
there is a misnomer that, oh, my gosh, we cannot wait to get gov-
ernment contracts because it is just the best thing in the world and
that is not always the case, I think, especially for medium to small
businesspeople. And I am just wondering if you could comment on
that and what your experience on that front is.
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Ms. LI. I would agree. Especially if you think about it, a lot of
the acquisitions, even though it is a direct award or a small busi-
ness set-aside, they require a huge amount of certification, espe-
cially with the cyber risk and supply chain risk for the DoD com-
munity that we support. It is a legitimate requirement, but to what
extent for a small business that you need to require the same level
of certification as those billion dollar companies that have re-
sources to go through, you know, years of certification and invest-
ing hundreds of thousands of dollars to acquire those. So that is a
legitimate concern and I share that.
Mr. FITZGERALD. Very good.
Thank you, Mr. Chair, and I yield back.
Chairman MFUME. The gentleman yields back.
The Chair is happy to recognize and to welcome Mr. Stauber, the
gentleman from Minnesota who has joined us.
Mr. STAUBER. Thank you very much, Mr. Chair.
While we can all agree that increasing contracting goals of the
federal government, especially of the disadvantaged small busi-
nesses, it is a laudable goal, I think we need our agencies to be
more transparent. It seems to me that agencies are picking a few
of their favorite small businesses, dumping all their money into
those very select few, and then reporting that they are far exceed-
ing their contracting goals year after year. So, without competition,
we are guaranteed to see an increase in prices for taxpayers in the
long run.
Ms. Li, can you explain how contract consolidation practices has
harmed more competition amongst 8(a) businesses?
Ms. LI. Thank you. I would be very happy to.
As mentioned by my fellow witnesses earlier, this category man-
agement——
Chairman MFUME. Ms. Li, would you speak into the micro-
phone? Thank you.
Ms. LI. Oh, I am sorry.
Chairman MFUME. That is okay.
Ms. LI. I would be happy to. And that is what we live with as
individual 8(a) companies on a daily basis because there is the
group 8(a)s that have now a threshold of $100 million. So even
when there is an 8(a) opportunity that is being solicited or directly
awarded and Soliel was on the receiving side of that multiple
times, the question for a contracting officer is very realistically, if
you have a requirement that is $4 million a year but a 5-year re-
quirement totaling $20 million or above, so what do you do? Would
you give to an individual 8(a) company that you need to then sub-
sequently, if you are even allowed to reissue that same contract
five times or four more times? Or would you give it to another 8(a)
company, group 8(a) company that has a much higher threshold?
So, it is really a challenge. And one of the contracts that Soliel
performed, we lost that because of the real consideration, very
practical considerations. It went to a group-owned 8(a) company
but I cannot say the performance was up to the level, so it was sub-
sequently recompeted. So, to your question, I am really saying one
of the ways to address that is to raise the threshold so there is
more a level playing field among 8(a) companies and also extending
that to all small business. You have HUBZone, woman-owned, vet-
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eran-owned, SDVOSB. So that would really help the small busi-
ness. Thank you.
Mr. FITZGERALD. Thank you very much. That was the only
questions I have. And I yield back, Mr. Chair.
Chairman MFUME. Thank you very much. The gentleman yields
back.
The Chair recognizes the gentleman from Louisiana, Mr. Carter,
for 5 minutes.
Mr. CARTER. Mr. Chairman, thank you very much. I greatly ap-
preciate the opportunity to ask questions.
Let me ask a question very basically. When we talk about 8(a)
contractors, we know that the issues that impacted those contrac-
tors during COVID have been somewhat adjusted by advancing an
additional year. We know that many of those contractors suffered
beyond that 1 calendar year. What are your thoughts on some addi-
tional time and/or assistance that can be given to those people that
were graduating out of the 8(a) program but lost significant time
because of the pandemic?
Mr. KHURANA. Thank you for the question, sir.
As a graduating 8(a), the recent addition has made a decent im-
pact but it is not yet just enough. I will give an example. The last
year, our own follow-on contract from the United States Air Force
for the clinical healthcare services came up for Avosys to be able
to recompete on and that was only made possible because of the 1-
year extension given. However, there are many other large govern-
ment vehicles which are delayed through the pandemic response in
getting reprocured and I feel that I will be losing that once in an
8(a) lifetime chance to bid on them. So, I humbly request another
year of extension which will make a real big difference to many
graduating 8(a)s like myself.
Mr. CARTER. Anyone else want to add on that?
Ms. ROBINSON-BURNETTE. Thank you, Congressman.
I think an additional year would significantly benefit the 8(a)s
that are in the program right now. Also, I think it is incumbent
on the SBA to really push the Mentor-Protégé Program which al-
lows a graduating 8(a) to joint venture with a new 8(a) and transi-
tion the contracts and continue to perform on 60 percent of the
work. And this is a real legitimate way that an 8(a) that is grad-
uating can maintain their work and their customer base.
Mr. CARTER. How much of that actually happens? I hear about
the Mentor-Protégé Program. I hear varying thoughts on some that
work, some that do not work as well. What is your general experi-
ence on the availability of willing mentors?
Ms. ROBINSON-BURNETTE. Thank you for that question. I
think the SBA’s Mentor-Protégé Program is one of the most suc-
cessful programs that has come out of the SBA. The director of that
program is Mr. Stanley Jones, Jr., I think one of the smartest lead-
ers at the SBA. It is work exceptionally well and the SBA has a
Mentor-Protégé Program conference every year. They had one be-
fore COVID-19. And this is a great place to do matchmaking be-
tween graduated 8(a)s and new 8(a)s and allowed them to meet
and connect at that event.
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Mr. CARTER. Can some body speak to the reverse of that, be-
coming and finding a protege? How successful has that been and
are there seamless opportunities to create that linkage?
Mr. KHURANA. Sir, I would like to add there are elements
which can be implemented to come in line with the mentor-protégé
intention and the success which can be achieved through it. First,
the sole source threshold, if it comes close to the four or five times
the capacity it is, it will help directly give the empowerment to the
prime contractor or the 8(a) contractor to compete for the real
world awards which are generally on an average of $20 to $25 mil-
lion.
Two, the SBA lending program could be empowered with working
with the banks to provide the line of credit which is much needed
on the financial support rather than reliance on just the mentors.
Three, empowering SBA with the additional PCRs for the sup-
port, they can then further help us in providing the contract legal
HR negotiation support which is much needed. These are all ele-
ments which a mentor would typically provide to the proteges and
SBA has been instrumental in giving many of those but more could
be done. Thank you.
Mr. CARTER. Mr. Chairman, unless there is somebody else that
wanted to weigh in? I am sorry; did I hear someone jump in?
Chairman MFUME. None of the witnesses unless it is Mr. Hair-
ston, who is not here.
Mr. CARTER. Okay, in that case, Mr. Chairman, I would like to,
first of all, thank you, and thank all of our witnesses.
Mr. Chairman, I ask at a later date if we can revisit the possi-
bility of visiting with SBA to see what the likelihood and ability for
us to advance discussion to consider an additional year of resources
for those 8(a)s who were undoubtedly significantly harmed by the
pandemic.
Chairman MFUME. Thank you very much. It is so noted and I
appreciate your comments.
One of the things we really I think are committed to doing in
this Committee is to find a way to start being able to mark some
progress so that 5 years from now this is still not the discussion.
And I want to take a moment just to thank again all of our wit-
nesses, Mr. Hairston, Ms. Li, Mr. Khurana, and Ms. Robinson-
Burnette. I have to say I am a little troubled to hear though, and
I was not aware of this and maybe it is my own fault, that if you
are an 8(a) contractor and you die or you retire after 25 years or
something else happens and your business is sold to me, that all
of the contracts that are in place are considered null and void. I
mean, that really, really disturbs me, particularly I think as you
said, Ms. Robinson-Burnette, that that is not the case with any
other category of business. There are a lot of good ideas and sug-
gestions from all of you that I hope we will find our way to make
into legislation. The Ranking Member and I as I have said before
are committed to real change and change that is verifiable so that
we are able to mark progress.
But again, I want to thank all of you. I want to thank Ms. Sala-
zar. She was kidding earlier when she was not really kidding. This
is the first time we have sat together on a Committee because we
have been in a hybrid virtual situation. But here we are, the A
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Team. My thanks to all of you and this hearing now stands ad-
journed. Thank you.
[Whereupon, at 12:14 p.m., the subcommittee was adjourned.]
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APPENDIX
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TESTIMONY OF
QIN LI
PRESIDENT, SOLIEL LLC
HOUSE COMMITTEE ON SMALL BUSINESS
SUBCOMMITTEE ON CONTRACTING AND INFRASTRUCTURE
‘‘THE 8(A) PROGRAM: OVERVIEW AND NEXT STEPS TO
PROMOTE SMALL BUSINESS SUCCESS’’
MARCH 2, 2022
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Chair Mfume, Ranking Member Salazar, and Members of the
Subcommittee, thank you for the opportunity to testify before you
today. My name is Qin Li, and I am the President of Soliel LLC,
located in Vienna, VA. Soliel brings innovative solutions and capa-
bilities to help its customers develop and transform its IT systems
and infrastructure. We provide technical and functional engineer-
ing, development expertise in IT modernization, cloud migration,
DevSecOps, software engineering, data analytics, and cybersecu-
rity.
Bringing the same innovation and cutting-edge solutions that I
worked with in the private sector to the government sector, I
steered Soliel into government contracting in 2010. Soliel, a
woman-owned, 8(a) company provides technical engineering and
development services to the U.S. Government. We have built an
impressive team of subject matter experts that have extensive ex-
pertise in computing, networking, data, and cloud. We serve many
U.S. Government customers, which include the Defense Informa-
tion Systems Agency (DISA), Army, Navy, and the Defense Coun-
terintelligence and Security Agency (DCSA). Originally from China,
I got my Master of Science degree from the George Washington
University and have called the Washington D.C. metro area home
ever since.
Soliel’s adventure into government contracting was also out of a
need for flexibility and taking advantage of opportunity. Seeking
treatment for my middle child with a rare chromosome abnormality
requires more flexibility than full time employment offers. When
the opportunity to subcontract to a large firm presented itself, I
took the risk. Soliel’s success is remarkable given that only 9% of
all women-owned companies are Asian American owned, and Asian
women account for only 6% of science and engineering employees
in the United States.1 Navigating the complex acquisition process
and competitive federal contracting industry is a daunting task for
any company. We have invested heavily to build our own innova-
tion lab to stay on the forefront of new ideas and technologies—be-
fore bringing them to our customers. I am always looking for oppor-
tunities to empower other women to pursue careers in technology
or start a business, as well as participate in acquisition and small
business policy discussions.
I would like to start by thanking the Committee for its commit-
ment to small businesses and for advancing policies that support
small businesses doing business with federal government. Soliel
started in government contracting in 2010, as a 2nd tier subcon-
tractor in support of DISA. We then became a 1st tier subcon-
tractor, and gradually started bidding for small business prime con-
tracts. Soliel received its 8(a) designation in June 2015, and it pro-
vided Soliel a critical contract vehicle to accelerate our growth. I
would like to outline my thoughts on some specific elements of the
8(a) program.
1 The 2019 State of Women-Owned Businesses Report: Summary of Key Trends. American Ex-
press, 2019. https://s1.q4cdn.com/692158879/files/doc—library/file/2019-state-of-women-
owned-businesses-report.pdf
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While the 8(a) program has allowed me to find a successful path
forward, I know many companies have not had the same experi-
ence. For example, one of the downfalls for any company is relying
on 8(a) awards as the majority of their business. So, when it is
time to graduate, companies do not have exit strategies to transi-
tion out of the program. One of the ways the Small Business Ad-
ministration (SBA) is trying to tackle this issue is through the 7(j)
Management and Technical Assistance program. According to the
SBA, the 7(j) program provides assistance in a wide range of busi-
ness activities, including marketing, accounting, opportunity devel-
opment and capture, contract management, compliance, and finan-
cial analysis. When I attended a 7(j) training, I found it was geared
more towards businesses just starting out, instead of those who
were newer 8(a) program participants but more developed contrac-
tors. Although training for companies new to contracting is nec-
essary, it would be beneficial for the SBA to consider having two
tracks—one for businesses who are in the beginning phases of the
program and one that is more advanced. Utilizing this existing re-
source could be a way to tackle the issue of businesses struggling
to succeed after graduation. SBA resource partners and 7(j) train-
ing would benefit from information shared from Business Oppor-
tunity Specialists (BOS) who counsel firms like mine, so that more
relevant resources could be provided to 8(a) program participants.2
Tracking success of 8(a) participants throughout their time in the
program is important for all of these programs to best support
small, disadvantaged businesses (SDBs).
It is also important to assess how participant firms are per-
forming once they have left the program. I have heard many stories
of fellow program participants struggling to continue after their 9
years have ended. A recent report from the SBA’s Office of Inspec-
tor General (OIG) suggested tracking whether the program
achieved business development objectives, including the number of
graduated 8(a) firms.3 I think it is important that the Committee
examine ways to ensure better success of program graduates. Addi-
tionally, greater assistance from the SBA is needed in the transi-
tion out of the program. For example, it would be helpful for the
SBA to consider allowing contracts performed by a graduating 8(a)
women-owned small business (WOSB) to be solicited and awarded
as a WOSB contract instead of 8(a). This approach fully aligns with
the goal of promoting small business success and provides grad-
uating 8(a) small businesses additional opportunities to perform
their contracts, especially when requirements were introduced into
the 8(a) program by the graduating small business. Currently, all
graduating 8(a) small businesses will not be able to prime for their
work once they are no longer an 8(a), losing a significant portion
of their revenue.
There have been some issues with SBA oversight with respect to
the joint venture (JV) program, which has directly impacted my
company. While there is a lot of paperwork and scrutiny in the ini-
tial stages of a JV, there is not much SBA oversight beyond that
2 See Finding 2: SBA Needs Improved Procedures for Providing Business Development Assist-
ance. https://www.oversight.gov/sites/default/files/oig-reports/SBA/SBA-OIG-Report-22-08.pdf
3 Id.
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stage, and there is limited recourse if the mentor is not fulfilling
its commitment. In many instances, small businesses are being
taken advantage of by large companies in these arrangements. For
example, Soliel’s large business mentor used their ‘‘negative con-
trol’’ / ‘‘veto’’ to block the JV from responding to opportunities that
they did not want to pursue, despite them being viable for the JV.
This action, taken by the mentor solely out of self-interest, signifi-
cantly impaired the JV’s success and breaches its fiduciary respon-
sibility as a mentor and shareholder of the JV. The issue was
brought to the SBA district office, but it was not clear what re-
course the SBA can give to enforce a correction of the mentor’s be-
havior. Giving the SBA greater power with respect to enforcement
of these agreements would help assist 8(a) companies, as well as
all small businesses, when mentors take these type of actions.
Further, there are additional policies that impact not just 8(a)
firms, but all small businesses doing business with the federal gov-
ernment. Small business contractors are currently facing unprece-
dented economic and workforce challenges due to the ongoing
COVID-19 crisis. According to the survey by the National Defense
Industrial Association, 60% of small business respondents expect to
have long-term financial and cash-flow issues.4 Additionally, the
small business industrial base has been shrinking over the past 10
years. Analysis of agency data reported in the Federal Procurement
Data System (FPDS) finds similar trends regarding the small busi-
ness supplier base at large, including a loss of 49,000 small busi-
nesses (or 38% of small businesses) in the Federal supplier base
since 2010.5
I. Bring sole source thresholds in line with current government
buying
Since the 8(a) program has a time limit of 9 years, it is impor-
tant to me that other socioeconomic set-aside programs at the SBA
can be utilized after graduation, such as WOSB. One area that
needs to be changed is the current sole source thresholds for indi-
vidual 8(a), WOSB, service-disabled veteran-owned (SDVOSB) and
Historically Underutilized Business Zones (HUBZone) certified
firms. Both the House and Senate Small Business Committees
have attempted to increase sole source thresholds and bring them
more in line with government buying. The House passed H.R. 190
in the 116th Congress, which eliminated option years and would
have allowed for the current threshold amounts per contract year.
A draft of the Senate Small Business Committee SBA Reauthoriza-
tion bill in the 116th Congress also made changes to the thresh-
olds—raising them to $8/$10 million per year by eliminating option
years. Included in the 2021 House passed version of the National
Defense Authorization Act (NDAA) was H.R. 3065, Expanding Con-
tracting Opportunities for Small Businesses Act of 2021. This bill
raised the sole source thresholds to $8/$10 million per year but did
4 NDIA COVID-19 Small-Business Impacts Survey Summary (2020). Available at: https://
www.ndia.org/-/media/sites/ndia/policy/documents/covid-19-small-business-impacts-survey-
summary.ashx.
5 Memorandum from Executive Office of the President Office of Management and Budget M-
22-03, Advancing Equity in Federal Procurement (December 2, 2021).
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not eliminate option years. I would like to thank the Committee for
their tireless work to achieve this increase over the past two Con-
gresses, especially Ranking Member of this Subcommittee, Rep-
resentative Salazar, as well as Ranking Member of the Committee,
Representative Luetkemeyer and his staff.
Soliel has had multiple 8(a) direct awards where our team per-
formed extremely well. However, because some of the requirements
had a higher dollar amount than the $4 million threshold, the work
was awarded other contract vehicles that have a higher ceiling
threshold. In one case, Soliel’s work was consolidated into another
8(a) sole source award to a community-owned 8(a) contractor be-
cause they can be awarded up to $100 million without justification.
In another case, instead of making a direct award to Soliel, since
the threshold was too low, our work was instead competed on a
large existing indefinite delivery/indefinite quantity (IDIQ) and
awarded as a task order.
Broad bipartisan support for increasing small business participa-
tion in the federal marketplace dictates changes are needed to bol-
ster awards to these businesses. Increasing these thresholds is a
necessary change to acquisition policy given the average size of
contracts. By making these programs more accessible for federal
agencies to use such as the 8(a) program, many more small busi-
nesses will benefit.
II. Strengthen subcontracting transparency and accountability
Since subcontracting was so integral to my long-term federal con-
tracting success, I want to discuss how the Committee could im-
prove this process. Subcontracting serves as an important avenue
for small businesses to enter the federal marketplace and build
past performance and often the only way to win work. With larger
contract being utilized by the federal government, subcontracting is
more important than ever. It is critical that prime contractors are
rewarded for adhering to subcontracting plans and penalized if
they do not. Presently, there is little to no recourse for prime con-
tractors that fail to meet their small business subcontracting goals.
Soliel started out its federal work as a 2nd tier subcontractor. We
worked as a subcontractor in the first four years of our operation.
Our first competitive contract win was in our 4th year as a con-
tractor. However, it was protested, which delayed our ability to
perform. Thankfully this protest was defined by the Government
Accountability Office (GAO), and Soliel was able to resume support.
Subcontracting was the critical to Soliel’s survival and success as
a contractor, as I know it is to many other small businesses.
The FY2021 NDAA included language to require large primes
with subcontracting plan requirements to provide past performance
evaluations when requested. However, many small businesses have
faced issues when requesting this information. Creating a stream-
lined framework for large primes to provide this information to
small businesses would greatly assist businesses trying to enter the
prime contracting arena.
Although reports by federal agencies show that dollars are being
awarded to small businesses at consistent levels in best in class
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(BIC) contracting vehicles, the number of small business concerns
being awarded prime contracts is shrinking drastically. Category
management undoubtedly plays a role. Consequently, subcon-
tracting is now incredibly important for small business concerns.
Many small businesses are not prime awardees of BIC vehicles,
and many may not have the qualifications to even bid on these
large contract vehicles. Transparency should include whether
prime contractors have aggressive small business goals in their
subcontracting plans. It would be extremely beneficial to small
businesses if data existed on three fronts: (1) the number of sub-
contractors on BICs broken down by small businesses and the
socio-economic set-aside programs listed under the Small Business
Act; (2) compliance of primes in achieving goals set forward in sub-
contracting plans; and (3) the percentage of subcontracting work
performed by small business concerns on taskorders.
A 2020 GAO report on subcontracting compliance 6 found that
agencies did not consistently follow all required procedures for
oversight of small business subcontracting plans, both before and
after contracts were awarded. GAO reviewed 26 contracts with a
subcontracting plan at 4 agencies and found that of the reviewed
contracts, about half of the agencies could not demonstrate that
procedures for Procurement Center Representative (PCR) reviews
were followed. PCRs are critical for ensuring small business suc-
cess in federal agencies—they have been shown to increase the
small business share of Federal procurement awards through their
work. PCRs initiate small business set-asides, provide small busi-
ness sources to identified opportunities and counsel small firms.
However, there are currently a limited number of PCRs available
to do this important work. Increasing the number of these positions
would assist the success of 8(a) firms, both during their time in the
program and after they graduate.
Further, category management shuts out any small or midsize
companies from competing for the work—the requirements were
structured for very large businesses. Subcontracting is becoming an
increasingly important tool for small businesses to enter the federal
market. I encourage the Committee to look at incentives that would
spur subcontracting plan compliance, transparency, and account-
ability.
III. Align rulemaking between SBA and the FAR Council
Each year, SBA issues a procurement scorecard, which indicates
how agencies performed in meeting their small business goals.7
The governmentwide goal of contracting with WOSBs is 5%. De-
spite this small number, the federal government has only met this
goal twice. However, fewer contracts have likely gone to WOSBs
due to inaccurate reporting. Agencies often count the same dollar
value towards multiple socioeconomic program goals, even though
the contract was not explicitly a set-aside for more than one pro-
gram. For example, if a contract is set-aside for the WOSB pro-
6 U.S. Gov’t Accountability Off., GAO-20-464, Small Business Subcontracting: Oversight of
Contractor Compliance with Subcontracting Plans Needs Improvement (2020).
7 SBA FY2020 Small Business Procurement Scorecard, available at https://www.sba.gov/
sites/default/files/2021-07/GW-508.pdf (last visited Feb. 24, 2022).
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gram, and the winning company is also a certified HUBZone and
SDVOSB, those contract dollars count toward the agency’s goals in
each of the 3 programs. This practice ultimately inflates the data
reported on small business contracting awards. It would be bene-
ficial to the small business contracting community if agencies re-
ported progress toward small business based on how the contract
was solicited. In other words, if an agency set a contract aside for
the WOSB program, then the dollars should only count as a WOSB
award. This change would hold agencies accountable for truly
awarding 5%, for example, to WOSBs, and result in an increase in
the number of awards to small businesses.
Further, pervading inconsistencies exist in government con-
tracting due to discrepancies between final rules issued by the SBA
and the Federal Acquisition Regulatory (FAR) Council. This causes
confusion for both companies and federal agencies on which guid-
ance they should ultimately follow. Many in the acquisition work-
force do not follow changes in small business rules unless it is in
the FAR, despite the fact that final rulemaking by SBA is suffi-
cient. The time lapse between FAR Council action and final rules
promulgated by the SBA can span many years. For example, in
2016, the SBA updated its regulations pertaining to limitations on
subcontracting. It took until August 11, 2021, 5 years later, for the
FAR Council to finally publish two final rules that largely mirrored
the SBA’s. To remedy this problem, I suggest requiring the FAR
Council issue its rulemaking simultaneously with SBA.
As mentioned in the beginning of my testimony, I credit the 8(a)
program to accelerating my company’s success. I believe in the
value of this program and thank the Committee for holding this
hearing to ensure it is helping SDBs to the fullest extent possible.
Thank you again for the opportunity to speak today about my expe-
rience, and I look forward to answering any questions.
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HO-CHUNK INCORPORATED
VIA EMAIL TO: Lauren.Finks@mail.house.gov
March 14, 2022
The Honorable Kweisi Mfume, Chairman
Subcommittee on Contracting and Infrastructure
Committee on Small Business
2361 Rayburn House Office Building
Washington, DC 20515-6315
Dear Chairman Mfume:
On behalf of Ho-Chunk Inc. (Ho-Chunk), I am pleased to submit
this response to the hearing held on March 2, 2022, by the Sub-
committee entitled ‘‘The 8(a) Program: Overview and Next Steps to
Promote Small Business Success.’’ The hearing examined how the
8(a) Program currently works as well as the resources it provides
to small businesses. Members heard from stakeholders about ways
to modernize the program and improve its effectiveness. We would
like to thank you and other members of the Subcommittee for care-
fully considering the impact the Small Business Administration’s
(SBA’s) 8(a) Business Development Program has had on small busi-
ness. We would also like to expand on the information provided by
the witnesses during the hearing and detail the economic opportu-
nities the Program has provided for entity-owned companies such
as ours.
Background:
The designation of Indian tribes as socially disadvantaged for
purposes of the 8(a) program arose due to the high levels of unem-
ployment across Indian Country, often in excess of 60%. Like other
governments, tribal governments are responsible for the health and
welfare of their tribal citizens. But relocation to remote areas of the
Country, along with failed federal policies, led to disparate treat-
ment of tribal governments and their citizens in areas such as
healthcare, education, and home ownership. Removal and reloca-
tion left few opportunities for economic development. Acknowl-
edging the need to create entrepreneurship and economic develop-
ment opportunities for tribal governments and their citizens, tribes
were included in the 8(a) Program to spur economic opportunity.
Ho-Chunk believes the 8(a) Program has been one of the most
successful and consistent federal programs aimed at creating eco-
nomic opportunities and affecting generational change in Indian
Country. We wish the Subcommittee to understand that the role of
8(a) corporations in Native Communities differs from other non-
tribal small businesses. Our letter details some of the requirements
for entity-owned firms in the 8(a) Program, and we make some rec-
ommendations for improvement.
In 1986, Indian tribes, as owner-groups, became eligible for the
8(a) program when Congress passed legislation providing that
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firms owned by Indian tribes were to be deemed socially disadvan-
taged for 8(a) Program purposes. During the 1980s, other owner-
groups became eligible for the Program, including Community De-
velopment Corporations (CDCs), Alaska Native Corporations
(ANCs), and Native Hawaiian Organizations (NHOs).
There are several exceptions to the 8(a) program rules for entity-
owned participants based on the acknowledged lack of economic re-
sources and access to capital. These exceptions to federal regula-
tions allow entity-owned companies to provide revenue to their
tribes that is used for health care, infrastructure for very rural
communities, education, housing, language and cultural retention
and revitalization, and other important tribal initiatives.
The 8(a) Business Development Program certification and par-
ticipation is governed by regulations contained in 13 CFR 124.
These regulations are primarily the same for both individual and
tribally-owned corporations, with some exceptions for ‘‘group’’ or
entity-owned firms. All 8(a) companies, including tribally owned,
must meet strict certification qualifications, are restricted to nine
years in the Program, must be small, must report on their progress
in the program annually, and must meet the limitations on subcon-
tracting, among other CFR and FAR, contracting rules.
The primary exceptions for entity-owned firms are the ability for
tribes to own multiple firms in the 8(a) program and the exemption
from competitive thresholds for sole source awards. These few ex-
ceptions to the Program allow entity-owned firms to provide profits
to benefit communities, sometimes numbering in the hundreds of
thousands of tribal citizens, as opposed to individually-owned firms
that provide benefits to only the owner.
Entity-owned firms, however, are the only 8(a) Participants that
have a regulatory requirement that they must report on the bene-
fits they provide to their communities during each required annual
update. In addition to the requirements of an individual applicant,
tribally owned firms must submit documentation with their appli-
cations that they are included on the official Bureau of Indian Af-
fairs list of federally acknowledged Indian Tribes in the contiguous
48 states and Alaska. Tribes must also show that the applicant
companies are owned and controlled by the tribe. If a non-tribal
person is managing the 8(a) company, the tribe must retain control
of the company and have a management plan in place that shows
how the tribe is mentoring and developing tribal members to man-
age its companies in the future.
Recommendations:
SBA Systems: The SBA has modernized the 8(a) application and
annual reporting process through the SBA.Certify system. The sys-
tem was designed for an individual applicant and not entity-owned
applicants. The Administration has tried to address the system de-
ficiencies through training and some workarounds, however, the
additional documentation required for entity-owned firms is dif-
ficult to fit into the system as it is currently designed. Ho-Chunk,
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Inc.’s experience has shown that the SBA analysts also have a dif-
ficult time finding submitted documentation in the system. There
is a lack of communication between the SBA and applicant compa-
nies regarding the submitted applications, and a lack of trans-
parency in the system. We recommend that SBA improve the exist-
ing system to allow for entity-owned differences and require less
personal information from the managers of the companies, or cre-
ate a new system that tracks the regulatory requirements of trib-
ally certification. We support SBA’s efforts in trying to modernize
the reporting process.
SBA Hubzone Program: We applaud SBA’s efforts in recent years
to improve the Hubzone Program such as allowing an employee
that was living in a Hubzone at the time of certification to remain
counted as living in a Hubzone if they subsequently moved outside
a Hubzone, and allowing firms a one-year certification. However,
Hubzone status is very difficult to maintain when performing serv-
ice contracts for the federal government. Often the employees on a
government contract can be in very disparate locations, most of
which are not in Hubzone areas. We would like to recommend that
the SBA consider a two-year certification period.
Conclusion:
The Native 8(a) program at the Small Business Administration
has been one of the most successful economic opportunities for
Tribes. In many cases, this program is the only economic oppor-
tunity available—especially for tribes who are in rural areas. Ho-
Chunk Inc. through its government contracting businesses and
other subsidiaries has been able to create jobs for tribal members
and members of the local community, has raised the median house-
hold income of Reservation residents and has started to reverse
hundreds of years of poverty on the Reservation.
The 8(a) program at the Small Administration is a model of self-
determination, allowing tribal governments to determine what type
of businesses best suit the needs of their citizens and how to enter
a market that is local, national, and international. The program
musts be protected and encouraged to grow to take into account the
capacity and infrastructure that tribally-owned entities now have
so the gains of the corporations can be returned to the tribal gov-
ernments and citizens.
Please do not hesitate to contact us if you would like any further
information.
Sincerely,
Annette Hamilton
COO - Ho-Chunk, Inc.
Æ
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