Under the Microscope: Reviewing the SBA's Small Business Size Standards (House Small Business Committee hearing, February 6, 2024)
Summary
Printed record of the House Committee on Small Business hearing held February 6, 2024, Under the Microscope: Reviewing the SBA's Small Business Size Standards, Small Business Committee Document Number 118–039. Chairman Roger Williams presided, the Committee meeting at 10:08 a.m. in Room 2360 of the Rayburn House Office Building, with Ranking Member Nydia Velázquez giving the minority opening statement. Witnesses were Jay V. Lambke, president of Government Acquisitions, Inc.; Brad Moore, chief executive officer of Sterling Computers; Andrew V. Christ, chief operating officer of Compass Constructors; and Erin Allen, president of Contemporaries, Inc. Closing exchanges noted that NAICS codes now run to over 41 pages and asked whether the system's rigidity shuts out innovative companies; the committee adjourned at 11:35 a.m.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
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“Under the Microscope: Reviewing the SBA's Small Business Size Standards (House Small Business Committee hearing, February 6, 2024).”
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UNDER THE MICROSCOPE: REVIEWING THE SBA’S
SMALL BUSINESS SIZE STANDARDS
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
HEARING HELD
FEBRUARY 6, 2024
Small Business Committee Document Number 118–039
Available via the GPO Website: www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
54–711 WASHINGTON : 2024
HOUSE COMMITTEE ON SMALL BUSINESS
ROGER WILLIAMS, Texas, Chairman
BLAINE LUETKEMEYER, Missouri
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
BETH VAN DUYNE, Texas
MARIA SALAZAR, Florida
TRACEY MANN, Kansas
JAKE ELLZEY, Texas
MARC MOLINARO, New York
MARK ALFORD, Missouri
ELI CRANE, Arizona
AARON BEAN, Florida
WESLEY HUNT, Texas
NICK LALOTA, New York
CELESTE MALOY, Utah
NYDIA VELÁZQUEZ, New York, Ranking Member
JARED GOLDEN, Maine
KWEISI MFUME, Maryland
DEAN PHILLIPS, Minnesota
GREG LANDSMAN, Ohio
MARIE GLUESENKAMP PEREZ, Washington
SHRI THANEDAR, Michigan
MORGAN MCGARVEY, Kentucky
HILLARY SCHOLTEN, Michigan
JUDY CHU, California
SHARICE DAVIDS, Kansas
CHRIS PAPPAS, New Hampshire
BEN JOHNSON, Majority Staff Director
MELISSA JUNG, Minority Staff Director
(II)
CONTENTS
OPENING STATEMENTS
Hon. Roger Williams ................................................................................................ 1
Hon. Nydia Velázquez ............................................................................................. 2
WITNESSES
Mr. Jay V. Lambke, President, Government Acquisitions, Inc., Cincinnati,
OH ......................................................................................................................... 5
Mr. Brad Moore, Chief Executive Officer, Sterling Computers, North Sioux
City, SD ................................................................................................................. 7
Mr. Andrew V. Christ, Chief Operating Officer, Compass Constructors, Kan-
sas City, MO ......................................................................................................... 9
Ms. Erin Allen, President, Contemporaries, Inc., Silver Spring, MD ................. 10
APPENDIX
Prepared Statements:
Mr. Jay V. Lambke, President, Government Acquisitions, Inc., Cincinnati,
OH .................................................................................................................. 30
Mr. Brad Moore, Chief Executive Officer, Sterling Computers, North
Sioux City, SD ............................................................................................... 34
Mr. Andrew V. Christ, Chief Operating Officer, Compass Constructors,
Kansas City, MO ........................................................................................... 51
Ms. Erin Allen, President, Contemporaries, Inc., Silver Spring, MD .......... 55
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
Airport Minority Advisory Council (AMAC) ................................................... 60
Global Small Business Sustainability Coalition ............................................ 63
(III)
UNDER THE MICROSCOPE: REVIEWING THE
SBA’S SMALL BUSINESS SIZE STANDARDS
TUESDAY, FEBRUARY 6, 2024
HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
Washington, DC.
The Committee met, pursuant to call, at 10:08 a.m., in Room
2360, Rayburn House Office Building, Hon. Roger Williams [chair-
man of the Committee] presiding.
Present: Representatives Williams, Stauber, Meuser, Molinaro,
Alford, Crane, LaLota, Maloy, Velázquez, McGarvey, Gluesenkamp
Perez, Scholten, Thanedar, Davids, and Pappas.
Chairman WILLIAMS. Before we get started, I want to recognize
Congressman Stauber from the great state of Minnesota to lead us
in the Pledge and a prayer.
Mr. STAUBER. Dear Lord, thank you for this wonderful day.
And thank you for this Committee, the good work they do. And I
want to thank you for my colleagues on both sides of the aisle that
are doing your work and trying to make this nation an even better
place. And let us share our love with one another, even when we
disagree. It is your commandment, Lord. In your name we pray.
Amen.
And join me in the Pledge. I pledge allegiance to the flag of the
United States of America. And to the Republic for which it stands,
one nation under God, indivisible, with liberty and justice for all.
Chairman WILLIAMS. Good morning, everyone, and I want to
thank all of you for being here this morning. Appreciate it. And I
now call the Committee on Small Business to order. Without objec-
tion, the Chair is authorized to declare a recess of the Committee
at any time.
I now recognize myself for my opening statement.
Welcome to today’s hearing, where we will be taking a close look
at how the SBA defines small businesses and the impact it has in
the federal contracting marketplace. To start off, I would like to
thank our witnesses for attending today’s hearing. We know that
you have other work you could be focusing on, and we greatly ap-
preciate your input.
Size standards were established over 70 years ago to protect
small businesses by ensuring that only small business firms re-
ceived SBA assistance in addition to determining eligibility for fed-
eral contracts. While size standards may seem like a topic that
shouldn’t garner too much attention, it is no secret to anyone here
that determining what classifies as a small business is more com-
plicated than it seems. And accurate size standards from the SBA
(1)
2
are critical because they impact the eligibility of small businesses
for contracts across the entire government, not just one specific
branch or agency.
At the beginning in 2010, it was decided the SBA would reassess
their size standards, industry by industry, every 5 years. While
there are many different opinions about whether the standards are
too low or too high, one thing is abundantly clear, the SBA’s size
standards have a drastic impact on who can compete in the small
business market.
A common issue this Committee has observed is the boxing out
of small businesses from the federal procurement space. Since
2010, the number of small businesses winning federal contracts has
decreased by 50 percent, which is unacceptable and an issue we
cannot and we must correct.
Moreover, like anything in the federal government, the federal
procurement space is home to fraud. Despite being faced with
harsh penalties, fraudsters misrepresent themselves as small busi-
nesses to gain access to lucrative contracts.
The other larger concern is a real small business losing their
small status. Many agencies is a receipt-based standard, and if it
is too low, it may prevent the business from fully participating be-
cause they can lose their size status due to high revenue. Gener-
ating contracts in today’s dollars is all what it is. This is nothing
more than punishment for a business succeeding which is antithet-
ical to the American dream.
Additionally, small businesses that lose their status are often left
to compete with large firms that dominate the industry. We must
ensure the SBA standards are not so rigid that they exclude thou-
sands of small businesses.
Outside of size standards, the theme of today’s hearing is ensur-
ing the small businesses are not left behind. At the end of the day,
the federal government is the largest customer in the world. Our
small businesses deserve to compete fairly in this lucrative market.
Federal procurement is incredibly complex and any small business
can get lost in it. It is the job of this Committee to give main street
a voice at the table. And exactly what we are here to do today is
that.
I would like to once again thank our witnesses for being here
with us. I look forward to today’s discussion. It is my hope we can
find some common ground so as we can best help our nation’s small
businesses during this time.
And with that, I will yield to our distinguished Ranking Member
from New York, Ms. Velázquez.
Ms. VELÁZQUEZ. Sorry, I was at the financial services hearing
but I am here now. Thank you. Thank you, Mr. Chairman, and
thank you to our witnesses for traveling here today.
The demands on a small business owner’s time are already im-
mense. I appreciate that you are using some of your time to help
this committee address these important issues.
How the Small Business Administration defines ‘‘small’’ can have
an enormous impact on the success of an individual small business,
as well as the collective success of small businesses across the
country. This hearing gives us an opportunity to better understand
the standards, their application for government contractors, the en-
3
vironments that they create, and the challenges for small busi-
nesses who approach or exceed their industry’s standard. Right
sizing the size standard is critical to ensure fairness, promote com-
petition, and encourage small businesses to enter and remain in
the industrial base.
The federal government needs to both recruit and retain small
businesses like those on our panel. Yet both tasks are becoming in-
creasingly challenging. Fewer small businesses are signing up to
work with the government, and many more are exiting the market
sooner than expected. This is increasingly prominent in the small
business market. The government has roughly 40 percent fewer
small businesses in its ecosystem than it did a decade ago, and it
has always been a challenge in the mid-tier.
A GAO report I requested in 2019 found that most small busi-
nesses do not successfully graduate. Only 2.5 percent of former
small businesses receive contracts as mid-tier companies nine years
later. This Committee has regularly reviewed the size standards
and tried to ensure that companies that want to grow can.
We have at times provided additional runway to do it, to give
small businesses additional time to build their capacity, portfolio,
and workforce for long-term success. Yet changes to small size
standards and policies can be a double-edged sword if not done cor-
rectly. We do not want to disincentivize or punish growth, but must
also carefully ensure we do not prematurely push small businesses
into a market where they cannot compete.
The stability of contracting with the federal government provides
smaller businesses with the opportunity to plan, grow, and hire at
a pace that is appropriate for them. It is important to ensure any
changes to government policies account for the impact on all small
businesses.
As we will hear today, the federal government imposes unique
and complex requirements on government contractors. These rules
impact small business structure, cash flow, and workforce, as well
as strategic decisions about size growth and ultimately whether to
continue to participate in the federal marketplace.
I look forward to hearing from the panel on past performance re-
quirements, subcontracting processes, and bundling policies that
will help improve the environment for small business government
contractors. I again thank all of the witnesses for joining us today.
I yield back.
Chairman WILLIAMS. Yields back. And I now will introduce our
witnesses.
Our first witness here with us today is Mr. Jay Lambke. Mr.
Lambke is the president of Government Acquisitions, Incorporated,
located in Cincinnati, Ohio. At Government Acquisitions, Mr.
Lambke is responsible for leveraging his over 20 years of experi-
ence leading the organization specialized in the IT needs of govern-
ments to guide the company through its ongoing needs.
Prior to joining Acquisitions, Mr. Lampke was president of the
Prism Pointe Technologies as well as GovConnection, where he was
responsible for turning around the company following the loss of
their federal GSA schedule and negative earnings. He has also held
executive roles at Gateway, Ingram Micro, and Tech Data.
4
Mr. Lambke attended Central State University for 2 years,
where he studied business management before dropping out to help
his parents save their business. Despite being unsuccessful in that,
he managed to grow quickly through the ranks of larger companies
thanks to the entrepreneurial thinking and strict business dis-
cipline.
Thank you for joining us today. We look forward to the conversa-
tion ahead.
Our next witness here with us today is Mr. Brad Moore. Mr.
Moore is the CEO of Sterling Computers, located in North Sioux
City, South Dakota. I have been there. It is cold. Founded by Mr.
Moore’s cousin in 1996, Mr. Moore joined Sterling Companies in
2004, after over a decade at his previous job, where he served as
vice president of sales.
From early on, Sterling Companies focused on contracting with
the federal government because they knew the government would
always pay when the work was done. Now, government entities
from the three letter agencies down to local governments make up
the majority of the company’s business. Federal government con-
tracts alone represent 75 percent of their business. Sterling Compa-
nies now has nearly 300 employees, with over half of them working
locally in North Sioux City.
Mr. Moore attended Dana College where he earned his Bachelor
of Arts in business marketing. Thank you for joining us today. We
look forward to speaking with you.
Our next witness who is here with us today is Mr. Andrew
Christ. Mr. Christ is COO of Compass Constructors located in Kan-
sas City, Missouri. Prior to joining Compass Constructors in Sep-
tember of 2020, Mr. Christ worked for two large general con-
tracting and roofing firms where he worked as a project manager
and field superintendent.
Mr. Chris has extensive experience with the U.S. Army Corps of
Engineers and National Guard, including as a Member of the lead-
ership team which oversaw construction of over $350 million in
new barracks buildings at Fort Riley. He also is the president of
the American Subcontractor Association of Greater Kansas City
and is also a Member of the Executive Committee of the National
Organization of the American Subcontractors Association.
Mr. Christ attended Kansas State University, home of the Wild-
cats, where he earned his Bachelor of Science in construction
science and management. Thank you for joining us today. We look
forward to conversing with you.
And I now recognize the Ranking Member from New York, Ms.
Velázquez, to briefly introduce our last witness appearing before us
today.
Ms. VELÁZQUEZ. Thank you, Mr. Chairman.
It is my pleasure to introduce Ms. Erin Allen, the President of
Contemporaries, a Maryland-based company providing human cap-
ital solutions for federal agencies focused on public health. Ms.
Allen has grown her women-owned and family-run company since
taking over for her parents, who started the company in 1991.
Under her leadership, Contemporaries, Inc. has consistently served
as the largest provider of staffing services to the National Institute
of Health under their small business program and grown to become
5
one of the most successful staffing suppliers to the Department of
Health and Human Services.
They are also ranked as one of the top 10 vendors in their re-
spective GSA schedule and have been recognized as one of the top
100 small businesses of the year by the state of Maryland.
She co-chairs the Small Business Committee for the Montgomery
Chamber of Commerce and volunteers with the Women President’s
Educational Organization.
Thank you for participating today, Ms. Allen. We look forward to
your testimony.
Chairman WILLIAMS. Thank you, Ranking Member. And we ap-
preciate again all of you being here today.
So before recognizing the witnesses, I want to remind them that
their oral testimony is restricted to 5 minutes in length. That is a
big number here, 5 minutes. Okay?
If you see the light turn red in front of you, it means your 5 min-
utes have concluded and you should wrap up your testimony. If you
try to go over, you will hear me do this. That means shut it down.
Okay?
And so with that being said, I now recognize Mr. Lambke for 5-
minute opening remarks.
STATEMENTS OF JAY V. LAMBKE, PRESIDENT, GOVERNMENT
ACQUISITIONS, INC.; BRAD MOORE, CHIEF EXECUTIVE OFFI-
CER, STERLING COMPUTERS; ANDREW V. CHRIST, CHIEF OP-
ERATING OFFICER, COMPASS CONSTRUCTORS; AND ERIN
ALLEN, PRESIDENT, CONTEMPORARIES, INC.
STATEMENT OF JAY LAMBKE, PRESIDENT, GOVERNMENT
ACQUISITIONS, INC.
Mr. LAMBKE. Thank you. Chairman Williams, Ranking Member
Velázquez, and Members of the Committee, it is an honor to appear
before you today on behalf of my firm, Government Acquisitions.
Most people call us GAI.
My name is Jay Lambke. I am the president of GAI. We are a
HUBZone-certified small business that has been providing the gov-
ernment with IT services and solutions for over 30 years. GAI is
a Member of GovEvolve, an advocacy organization for small and
midsized businesses that promote public policies encouraging inno-
vation and competitiveness in the IT industry.
At GAI, we have built a special company. And I don’t just say
that as the president. I say that because I believe we embody ev-
erything that is great about American small businesses. Our suc-
cess is the result of deliberately building a strong family culture
full of people who are heavily involved in supporting their local
communities.
We also all share a powerful commitment to serving the most im-
portant customer on planet Earth, and that is the U.S. federal gov-
ernment. We understand the unique needs of each of our federal
customers, and we work to leverage best of breed technologies, such
as AI, robotic process automation, and cybersecurity, to better en-
able them to deliver their mission. My personal aspiration is to
build this company into the best the industry has ever seen.
6
Now, over the course of my years at GAI, I have seen how acqui-
sition policies shape the environment for small businesses in both
positive and negative ways. GAI has experienced great success as
a federal IT value-added reseller, or VAR, but we have also faced
continual challenges regarding size standards for the industry. So
let me set the stage for the enormous shift that has happened in
government purchasing of technology over the past two decades,
which is when our current NAICS code was put in place.
Twenty years ago, an ITVAR sale to the federal government was
basically buy a box, sell a box. It was not a very complicated busi-
ness, required far fewer employees than it does today. And the
business is so much—and today the business is so much more com-
plex, requires far more people and cost. And I will try to dem-
onstrate.
Nearly everything we do for our customers as a small business
innovator involves providing complex solutions that require numer-
ous hardware and software technologies that have to be integrated
together. This requires large numbers of very specific engineering
resources. Twenty years ago, we did not have teams of people who
had to go onsite to deploy these systems. Today, we employ large
teams of people who go onsite, install the solution, integrate it with
customers’ existing systems, and then remain onsite, often for
many years to continue development inside of those systems.
Twenty years ago, the contracting environment was also very dif-
ferent. There were far fewer contracts to bid on and the bids were
fairly straightforward. Today, our proposal efforts are often ex-
tremely large and very complex and require a significant proposal
staff in order to be successful.
Also, the contract opportunities in the industry today are regu-
larly for 5 or 10 years. So if you don’t win a slot on one of those
contracts, you are probably not doing business with that agency for
many years. Because each contract these days are so long, they are
that much more important for companies like ours, which has led
to an incredible increase in protests. This causes delays in con-
tracts for many years.
All of this to say, the stakes today are much higher. The con-
tracting complexities I described create the need for more govern-
ment contracting professionals on our staff, including lawyers, tech-
nical writers, and subject matter experts. Not only does this add
significant expense to the business, but it also adds a number of
employees, which is the significant challenge in a headcount-based
NAICS code.
To protect against the ever present cyber threats and ensure se-
cure supply chains, federal contractors are required to comply with
a number of ongoing specific requirements. While we believe these
are great moves from the government and it is doing the right
thing to protect the defense industrial base, these requirements
and certifications, like others, also add significant cost, complexity,
and people to the business.
The method of calculating whether a small business is small you
would think would be pretty straightforward in our industry, but
it is not. For IT resellers there is only one NAICS code that easily
fits all the products and services we provide. Often a contract for
7
IT-related acquisition involves both products and service. Checking
my time.
For each contract, the contracting officer can only assign a single
classification code for the component that accounts for the greatest
percentage of the contract value. Recognizing traditional rules and
regulations cannot properly be applied to ITVAR procurements; the
federal agencies seek numerous workarounds. The rules have not
adapted to the quickly changing technology related procurements,
and ultimately this piecemeal approach is failing. It is time for the
system to change.
If the federal government intends to continue to leverage innova-
tive and cutting-edge technologies, which it must, the size stand-
ards and corresponding NAICS codes must be modernized to ad-
dress small ITVARs.
I greatly appreciate you holding the hearing today, and its focus
on critical component of determining success in selling to the fed-
eral government. Thank you again for having me. I am happy to
answer any questions.
Chairman WILLIAMS. Let the record show you talked for 5 min-
utes.
Mr. LAMBKE. Exactly, right? Yes.
Chairman WILLIAMS. Let me inject one thing, too. You are
going to see some of my colleagues on both sides of the aisle move
in, move out. It is because we have other hearings we will go to
and no reflection on this.
Now I recognize Mr. Moore for his 5-minute remarks.
STATEMENT OF BRAD MOORE, CEO, STERLING COMPUTERS
Mr. MOORE. Chairman Williams, Ranking Member Velázquez,
and esteemed Members of the Committee, thank you for your op-
portunity to testify—my opportunity to testify before you today. My
name is Brad Moore and I am the CEO of Sterling Computers Cor-
poration, an information technology value-added reseller also
known as an ITVAR.
As a family owned and operated company headquartered in
North Sioux City, South Dakota, we serve an intermediary between
our customers and the wide-ranging manufacturers of IT hardware,
software, and services, the largest of whom are Dell, Cisco, and
Microsoft. We serve as a reliable, nimble, and secure partner for
our government customers in their quest for operational excellence
through the use of modern technology.
My aim today is to present testimony regarding a select issue
within the ITVAR industry, namely around the 541519 size stand-
ard, and to propose the adoption of a new NAICS code, one specific
to ITVARs, allowing for a new size standard of 500 employees.
Twenty years ago, when the SBA first established the industry
standard of 150 employees for ITVARs, the IT landscape was vastly
different than it is today. Our industry has, of course, evolved,
some might say exploded, in the years since. Alongside such an
evolution has come an increase in the breadth and complexity of
the compliance burdens placed upon ITVARs, including the en-
hanced focus on supply chain risk management, ISO certifications,
and the cybersecurity maturity model certification.
8
To meet those requirements, ITVARs must now hire specialist
employees who can effectively manage the growing slate of compli-
ance obligations. For example, today Sterling employs 35 individ-
uals who are dedicated solely to government program management
and compliance, and another 130 other individuals who hold over
400-plus required certifications from the technology manufacturers
we represent. It quickly becomes evident that the allocated 150 em-
ployees is an insufficient headcount when stacked against the com-
plex demands of the federal government.
As such, there is currently a trend of consolidation in our indus-
try. It is common for ITVARs, once they have exceeded 150 employ-
ees, to sell their business, typically to large companies or private
equity firms, thus eroding the supplier base of highly qualified and
experienced VARs who have so valuably serviced the government.
Why? Because to go from successfully competing as a small busi-
ness to suddenly going up against companies with tens of thou-
sands of employees is an improbable endeavor.
The number of small businesses receiving government awards
has steadily decreased from 121,000 companies in 2010 to less than
half that number in 2022. This is an indication, in part, that the
complexity of government contracting and compliance is making
the barrier to entry much more difficult than it was 10 to 15 years
ago.
Furthermore, 541519 is at its core of services code, which means
ITVARs are lumped into the same designation as IT services com-
panies, even though the two business types are vastly different,
with dramatically varying solutions and employee headcount needs.
It is a square peg for a round hole.
Compounding the issue is the fact that ITVARs often don’t
charge separately for their value-added services, meaning the build
services generally do not account for 15 percent of the total con-
tract price, a threshold outlined by code 541519. We estimate as
few as 2 to 5 percent of ITVARs are able to achieve this bench-
mark.
While there are a number of possible solutions, I believe the most
sensible to be the creation of a new NAICS code, one that accu-
rately captures the core competency of ITVARs and includes the in-
troduction of an appropriate SBA size standard of 500 employees,
thus eliminating the exception under code 541519, at footnote 18,
assigning a new, applicable and more appropriate code will solve
the aforementioned issue. It will also increase small business par-
ticipation, enhance supplier qualifications, and benefit federal gov-
ernment customers through more competitive pricing.
Once again, I appreciate the opportunity to speak to you today,
and I am grateful for the Committee’s thoughtful consideration.
And I look forward to answering any questions today or in the fu-
ture. Thank you.
Chairman WILLIAMS. Thank you, Mr. Moore.
And I now recognize Mr. Christ for his 5-minute opening re-
marks.
9
STATEMENT OF ANDREW CHRIST, COO, COMPASS
CONSTRUCTORS
Mr. CHRIST. Chair Williams, Ranking Member Velázquez, Mem-
bers of the Committee, thank you again for the opportunity to tes-
tify in front of you today. My topics are going to include federal
government requirements for past performance and qualifications,
the use of payment and performance bonds, the impact of con-
tinuing resolutions on small business, and the bundling of con-
tracts into MATOCs and SATOCs, which are multiple award task
order contracts and single award task order contracts.
My name is Andrew Christ. I, along with my business partner,
Mr. Allan Arias, operate Compass Constructors. We are a small
construction business located in Kansas City, Missouri, that deliv-
ers high-quality and efficient construction projects to the federal
government. A lot of our current clients are the Corps of Engineers,
the Air Force Civil Engineering Center, the Naval Facilities Engi-
neering Systems Command, or NAVFAC, and GSA.
I am testifying not only as the COO of Compass Constructors,
but also as an Executive Board Member for the American Sub-
contractors Association. We are an association of trade and sup-
pliers that represent over 3,800 individuals since 1966.
Compass Constructors views the strict requirement for past per-
formance and qualifications as the largest hurdle for small busi-
nesses to enter the federal market. We have witnessed unfair com-
petition toward private contractors who are outside of the federal
construction space that have similar past performance not receive
a similarly favorable rating for federal government. This makes it
extremely difficult for a new contractor to enter into the market.
Through this experience, we have learned the value of the myr-
iad of SBA resources offered to small businesses to operate within
the federal government’s contracting system. federal contracts re-
quire often a detailed management plan. They offer specific project
staffing and qualifications of key members of the execution team,
and if the company does not have these individuals or qualifica-
tions, it forces them to enter into the market for additional employ-
ees with federal construction experience. This can be a significant
and very cost-prohibitive barrier of entry into the federal market.
All federal projects, all federal projects, are mandated to have
payment and performance bonds. These must be in place in order
for a contract to be executed as required by the Federal Miller Act.
The surety, they are going to evaluate many factors when deter-
mining whether or not to issue a guarantee to the obligee. This
often includes operating capital, income statements, cash flow,
debts, work in progress. You’ll see that there are many parallels to
the considerations that a surety recognizes versus what the federal
government is evaluating from a performance and financial stand-
point.
We purport that the rigorous evaluation that the surety performs
is far greater than what the government is going to evaluate in a
small business’ solicitation response. So we would recommend that
less emphasis be placed on documented past government perform-
ance and more emphasis placed on whether or not the contractor
can perform a bid, payment, or performance bond.
10
ASA supports House Bill 1740. It is bipartisan legislation au-
thored by Representatives Bost and Pappas that would ensure
these bonding protections are applied to water infrastructure
projects where federal funds are being allocated to government con-
tracts.
The instability caused by continuing resolutions also make it dif-
ficult for federal agencies to have certainty on funding for projects.
There are many times that we put together solicitation responses,
submit them, only to find out that the funds are no longer avail-
able. We put together these large proposals that can be tens of
thousands of dollars. That is cash right out of our pocket. And then
all of a sudden, due to a continuing resolution, the money is gone.
The project no longer executes.
My final concern is bundling of contracts into MATOCs and
SATOCs. This can be where a 5- to 10-year project that they are
going to award to four to five contractors. Now, again, the empha-
sis on past performance is often scrutinized. And if those small
businesses don’t have that, they are not going to be allowed to be
a part of those MATOCs and SATOCs, which can be 5 to 10 years.
I would like to conclude my testimony by recognizing Representa-
tives Stauber and Scholten, both Members of this Committee, for
their leadership as co-chairs of the Construction Procurement Cau-
cus. Again, I thank everyone at this Committee.
Chair Williams, Ranking Member Velázquez, I will now take any
questions. Thank you.
Chairman WILLIAMS. Thank you very much.
I now recognize Ms. Allen for her opening remarks.
STATEMENT OF ERIN ALLEN, PRESIDENT, CONTEMPORARIES,
INC.
Ms. ALLEN. Thank you. Thank you, Chairman Williams and
Ranking Member Velázquez and Members of the Committee.
Thank you for the opportunity to testify today.
My name is Erin Allen. I am the president of Contemporaries.
We are an SBA-certified woman-owned small business located in
Silver Spring, Maryland. I also serve as the Chair of the Mont-
gomery County Chamber of Commerce, where I am proud to rep-
resent the many businesses that make up our robust Maryland
economy.
As a Member of the Women’s Procurement Circle, which is a
group that advocates for policies that strengthen women-owned
businesses that do business with the federal government, I appre-
ciate the Committee’s focus on the topic of size standards and path-
ways to growth for small businesses. This issue is one that has be-
come increasingly relevant to my company as we have grown sig-
nificantly over the last several years.
So I am a second-generation business owner. My parents started
a company back in ’91 when they cashed in their retirement and
took out a home equity line of credit and started the business. As
a family, we have worked really hard to grow our business,
bootstrapping every piece of it. And now we find ourselves teetering
on the edge of our small business size standard, which puts our
business in a very difficult position. I only see really two options.
One is that we sell off part of our business or we find a small busi-
11
ness to team with, but teaming means giving away 49 percent of
our business that we have worked so hard for.
By every measure, we are still a small business and only have
95 employees. Now, that might seem like a large for a local mom-
and-pop, but in my industry, that is still teensy.
If we lose our small business status, I anticipate we will have to
lay off about 30 percent of our employees. And while some might
get picked up by another contracting firm, others may not.
Our size standard is revenue-based. And however, revenue is not
really an indicator of present competitiveness, but really one of fu-
ture competitiveness.
A challenge in the federal market is that size standards vary
widely across the different NAICS codes. We primarily win con-
tracts under a code with $12.5 million size standard, but there is
other NAICS codes in my industry that have a $34 million size
standard. So this wide disparity means that I can be a small busi-
ness in one and large in another, doing exactly the same work.
So bigger small businesses that are about to graduate from the
set-aside world need time to build their infrastructure to compete
against the mammoth companies that are in there. A firm like
mine simply cannot compete with large federal contractors over-
night.
Government contractors experience a unique pattern in their
growth, which is causing an industry-wide midsized business crisis.
This pattern of sudden growth is increasingly common because the
government’s frequent use of large contract vehicles due to contract
management.
The SBA program that I have been able to utilize is the WOSB
program. It allows agencies to set aside contracts exclusively for
small women-owned businesses. The government has the goal of
awarding just 5 percent of all prime contracts to WOSBs, and yet
since 2011, they have only met that goal twice.
Agencies are authorized to sole source contracts to WOSBs. How-
ever, these awards are few and far between. And as I teeter on the
edge of sizing out of being small, increased effectiveness of this pro-
gram would really, really help. It would enable me to secure con-
tracts faster, thus allowing me to be in a better position to make
the transition into the full and open marketplace.
So SBA is required to review all size standards every 5 years. I
feel like the SBA should look at industries more holistically and
seek engagement through live forums with businesses. This in-
creased engagement would give the agency a more accurate picture
of how federal buying is really impacting small businesses in the
market, rather than just using a formula to determine the size.
While there are many policies that contribute to small business
success, there are also many, many areas where the federal govern-
ment really could improve.
I don’t pretend to have all the answers to this problem. All I
know is that I cannot compete with large contractors like Booz
Allen. I am way too young to retire and way, way too old to start
over.
Adjusting the size standards isn’t about maintaining my busi-
ness. It is about helping my employees earn a sustainable living in
the middle class.
12
I appreciate the Committee’s continued efforts to support small
businesses, and I am so grateful for the opportunity to share my
experience today and thank you. And I look forward to answering
any questions.
Chairman WILLIAMS. Thank you, Ms. Allen.
And now we recognize myself for 5 minutes.
Mr. Lambke, small businesses are disproportionately affected by
the government’s increased compliance burdens. We have talked
about that. The staffing costs alone to navigate tens of thousands
of pages of regulations, in addition to abiding by contract rules, can
be extremely difficult and expensive. In some industries, compli-
ance officers end up being a built-in cost to doing business.
So my question is, can you discuss how compliance requirements
and navigating red tape can impose a burden on your business?
Mr. LAMBKE. Happy to. Thank you.
Compliance for us comes in many forms. One of the most recent
ones is the CMMC, the cyber maturity model certification, which
I referenced in my opening remarks, which we, the industry, be-
lieve is the right thing to do. The threat has never been higher at
the defense industrial base. We are obviously being attacked daily.
And so it is really important that we have the right infrastructure
and protections in place from a cyber standpoint and for our
cleared personnel and so forth.
The challenge is that—so I will give you an example on our side.
My IT staff has gone from a few people 3 or 4 years ago to a small
army today. And the cost and complexity and that headcount is
going to increase as CMMC actually starts to take place. Right? So
we are in a ramping phase. It hasn’t been fully implemented. So
great requirement, but adds people and complexity to the business.
That is just one.
We have ISO certifications. We have all of those. And then there
is the certifications that go with many of the bids will come out
with requirements for, Brad mentioned Dell and Cisco, and those
manufacturing partners that we have, many of the bids will come
out and say you have to have this many certified engineers at this
level to bid on this contract and so forth. And if you are in a cer-
tain size standard, there is just no way you can have those num-
bers of certified engineers on staff. Thank you.
Chairman WILLIAMS. This is a sunk cost that could be better
spent elsewhere in their operations. I am concerned that for small
businesses in the contracting space, the effect of additional compli-
ance officer is even worse. So not only does it add a cost to busi-
ness, but also takes away a spot in the business size standards
metric that puts them on one more employee away from not being
able to compete for small business set-aside contracts.
So I am going to just go down the line and ask each one of you
this, starting with Mr. Lambke. Do you see initial reactions to an
idea that is this, do you think we should exempt compliance offi-
cers from a business employee count when the SBA examines their
size?
Mr. LAMBKE. That would be wonderful.
Chairman WILLIAMS. Okay. Mr. Moore?
Mr. MOORE. Yes, that would be great, but compliance is going
to be a lot more than one person. It is going to be dozens of people.
13
Chairman WILLIAMS. Thank you. Mr. Christ?
Mr. CHRIST. Yes, I agree. I believe the definition of compliance
officer will be something that could be scrutinized and would offer
up that a clear definition is present.
Chairman WILLIAMS. Okay.
Ms. ALLEN. For my business it wouldn’t really make a big im-
pact because we are not really in the IT space. We don’t have a lot
of—other than, though, the normal reporting that we have to do,
you know, or outsource to maybe an attorney or a CPA, and some
of my staff will sort of share the roles and responsibilities for that.
But I would agree with Andrew that there might be some com-
plications in what is the definition of a compliance officer? Because
you could say, really, that all of my headquarters staff are in some
way involved in headquarters—or in compliance. So then you get
into, like, well, what percentage of the time are they doing compli-
ance? And so that would be the challenge.
Chairman WILLIAMS. That is if we make it hard on you. We
want to make it easy on you.
All right. Real quick, from time I have remaining. Mr. Moore,
well, your firm is less than 500 employees. The SBA size decisions
determined that you are not a small business. For any small busi-
ness owner, you never want to cap your success. If business is
booming, you want to capitalize on it as much as possible and not
think about how growth could negatively affect your business. So
getting big and growing is good?
Mr. MOORE. Yes.
Chairman WILLIAMS. So, can you discuss quickly the challenges
that you face when your business outgrew the SBA small size
standards? And do you feel that the SBA size standards accurately
reflect your industry’s needs?
Mr. MOORE. Thank you. So the size standard in our industry is
150 employees. So once you are at 151, you become large and you
are competing against IBM and Dell and everyone else with 10,000
employees. You know, there are very few businesses in our indus-
try between 151 and 500 employees. And you do the best you can
to compete, but, in actuality, 60 percent to 70 percent of the oppor-
tunities that you were once working on are no longer available.
Chairman WILLIAMS. Thank you very much. My time is up.
I now recognize the Ranking Member for 5 minutes for questions.
Ms. VELÁZQUEZ. Thank you, Mr. Chairman.
Ms. Allen, you state that you have teetered on the edge of grad-
uation a number of times, and it appears largely due to factors that
are outside of your control. What would the appropriate size stand-
ard policy be that would bring you and other small businesses suf-
ficient predictability and allow you to plan and grow if you choose?
Ms. ALLEN. That is a complex question. So it depends. I know
in my industry, you know, as I mentioned in my testimony, that
there are several different NAICS codes that we could use. One is
teensy, $12.5 million, but another one is $34 million, which, you
know, for the work that I am doing in support services, is maybe
reasonable. But if I were doing, you know, some of the work that
these guys are doing in the IT space, those salary ranges are crazy
high.
14
And so it is sort of like—it is almost like if you look at a car deal-
er, like, are you large because you have sold, you know, $10 million
worth of cars? Well, what if you are selling a Ford versus if you
are selling Lamborghinis? Right. What is your profit margin in
those, right? So it becomes a complex question in that and how do
you work that out. Yeah.
Ms. VELÁZQUEZ. Thank you. In your testimony, you highlight
that a more effective WOSB program would have put you in a bet-
ter position to make the transition from small to midsized. Do you
think that contracting officers understand how to use the existing
authorities to maximize awards through WOSB?
Ms. ALLEN. Not even kind of. When I am talking to a lot of my
clients, I am having to educate them on the WOSB program. A lot
of them don’t understand it, haven’t been educated on how to uti-
lize it. And those that have been educated, you know, it is more
cumbersome than some of the other programs, so it makes it hard-
er for them to utilize.
Ms. VELÁZQUEZ. Do you think that if we require federal agen-
cies to only count certified WOSB toward their small business goal,
more contracting officers might be compelled to learn how to use
the authorities?
Ms. ALLEN. For sure, yeah. Yeah.
Ms. VELÁZQUEZ. Mr. Christ, you write that continuing resolu-
tions can cause instability. How damaging are CRs or government
shutdowns?
Mr. CHRIST. They are extremely damaging. Thank you for the
question, first of all.
And the challenge is, you know, keeping projects in the pipeline,
keeping consistent revenue. We live every day off of that revenue.
That is how we pay our employees. And if we get into a scenario
where the faucets all of a sudden shut down, and we have been
providing a lot of front end work, whether it be design or whether
it be budgetary estimates, we are out that money and we can’t re-
coup it. And so that is really the damage, is that we need to have
that consistency in the revenue and allowing the contracts to be ex-
ecuted.
Ms. VELÁZQUEZ. You cite a loss of $10,000 per proposal based
on instability. Does the government reimburse you?
Mr. CHRIST. No, ma’am.
Ms. VELÁZQUEZ. Does the agency have to tell you anything
about why it canceled the solicitation if the work is moved or if
there are similar opportunities for which you might be qualified?
Mr. CHRIST. No, ma’am.
Ms. VELÁZQUEZ. Ms. Allen, the Rule of Two has been critical
to leveling the playing field for small businesses. Will you elaborate
on the changes you mentioned in your written testimony and how
they will impact small businesses?
Ms. ALLEN. Yeah. So the Rule of Two currently only applies to
a very small percentage of the acquisitions that are happening in
the world in the federal space. If that Rule of Two was expanded
to, you know, things well above the simplified acquisitions, of
which small businesses are able to compete in and are qualified for,
it would really open so many doors and really be a game-changer.
Ms. VELÁZQUEZ. Thank you. I yield back.
15
Chairman WILLIAMS. Yields back.
I now recognize Representative Stauber from the great state of
Minnesota for 5 minutes.
Mr. STAUBER. Thank you very much, Mr. Chair.
And Ms. Allen, between a Lamborghini and a Ford, I will take
the Ford pickup all day long in northern Minnesota.
Minnesota’s and this country’s small businesses are powerhouses
of innovation and resilience. They create jobs, fuel our local econ-
omy, and contribute to the unique character of our states and na-
tion. Yet when it comes to federal contracting, their potential is
often stifled by a complicated process that favors large corporations
with the vast resources.
Mr. Christ, as you mentioned in your testimony, there are con-
cerns with how small businesses are paid following change orders
or modifications to the original contract. How do these changes af-
fect your businesses differently than a large business?
Mr. CHRIST. Thank you for that question. You know, as far as
change order work goes, oftentimes the change order is executed by
the contracting official. Contractually, we have to then begin on
that work. We don’t necessarily sit there and have to say, oh, here
is upfront costs to go ahead and cover all the work that you have
done and completed to date. A lot of times those change orders and
contract modifications, they can take many, many months to go
through.
Mr. STAUBER. Do you hold the monies, then?
Mr. CHRIST. We do, yes, sir. Yes, sir.
Mr. STAUBER. What does that cost you?
Mr. CHRIST. We are working on one right now that we have got
probably $250,000 that we are holding. We have expended the
monies, but we have no contract vehicle to actually bill for the
funding.
Mr. STAUBER. Well, we are working on that.
Mr. CHRIST. Thank you.
Mr. STAUBER. You know, the various issues that you have high-
lighted encapsulate why I introduced the Small Business Payment
for Performance Act, and you are well aware of that. This legisla-
tion is not just about protecting individual businesses. It is about
safeguarding the future of our infrastructure and our small busi-
nesses.
When small contractors go bankrupt, the impact is far-reaching.
Projects stall, skilled workers leave the industry, and the very
foundation of our nation suffers. Similarly, when small businesses
outgrow their small status and are recategorized as a large busi-
ness, they are forced to compete with big corporations, sometimes
with a disproportionate gap in total employees.
Mr. Moore, having experienced the transition after outgrowing
your small business status, could you elaborate on some of the dif-
ficulties and regulations you have seen since your transition?
Mr. MOORE. You know, the majority of the difficulties are you
work at a lot lower margin than the large businesses. We are in
a very low-margin business. And with the increased government
regulations, that takes a bigger percentage of your net profit, which
makes it harder to really scale and hire your employees. So you are
16
caught in this no man’s land of you are not small, but yet you are
not big, you are not able to compete.
So the size standards and the regulations are very impactful on
U.S. midsized businesses.
Mr. STAUBER. You know, some businesses view their status
changes as the government penalizes them for growth. Would there
have been a benefit to your company to restrict growth and remain
classified as a small business, Mr. Moore?
Mr. MOORE. Yes, for sure. It would have helped us stay more
profitable. But we just felt like to our employees, we couldn’t tell
them to now forevermore be stagnant. So we broke through the
barrier. But there is definitely—that line in the sand of that small
business size standard is definitely motivation not to grow your
business.
Mr. STAUBER. Right, right. In 2019, the House passed my bill
clarifying the Small Business Runway Extension Act. The SBA uti-
lizes a 3-year average of gross receipts to determine whether a
company should be classified as small and considered for SBA ben-
efits.
The Small Business Runway Extension Act extended the 3-year
average to the 5 years. And thankfully, the SBA took it upon them-
selves to do the right thing, and they did not need further congres-
sional action. However, as many of you mentioned is clear, we need
to really foster an environment of growth, and, you know, I look
forward to this Committee doing just that.
Mr. Christ, I have to say that you, as a business, you are holding
a quarter of a million dollars because a change order that the fed-
eral government forced upon you, it is almost like you have got to
do that. I don’t know how many businesses across this nation that
would have the capability to do that, and it is simply just wrong.
And thank you for your testimony, all of you.
And I yield back, Mr. Chair.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Representative McGarvey from the great state of
Kentucky for 5 minutes.
Mr. MCGARVEY. Thank you, Mr. Chairman.
And I am fond of saying on this Committee, small businesses do
big things, and the work you all do is so important. But what is
a small business? Small businesses come in all different shapes
and sizes. And so what we are trying to do on this Committee is
give all these different entrepreneurs the support to start busi-
nesses and the tools that they need to help them grow. That is
what we want to have with our small businesses. So I am glad to
have the opportunity to discuss these size standards today with
this panel.
I can tell you I have heard from people in my district on this
very issue who just grow frustrated. They are trying to do a good
job with their business. What happens when they are dealing with
these standards from the SBA, and how can we make it better?
We know the current structure of small business contracting pro-
grams, while necessary to ensure entities can compete for appro-
priate federal contracts, can sometimes be discouraging, especially
for the more advanced small businesses that are ready to grow to
that medium size or maybe a little beyond. So these concerns stem
17
from the fact that surpassing their size standard will lead to a loss
of eligibility for set-aside contracts, increase compliance obligations,
and direct competition against billion-dollar companies.
So, given these realities, not enough companies successfully
make that transition from small, again, whatever that means, to
other than small business status. The Department of Defense has
referred to this as the ‘‘Valley of Death’’ for small firms that want
to grow.
According to a 2019 GAO report, over 93 percent of businesses
that received only set-aside contracts in fiscal year 2008 and were
still federal contractors by year 2017 remained small. Only about
2-1/2 percent of those businesses managed to graduate to midsize
by fiscal year 2017.
So, Ms. Allen, I will start with you. You mentioned that your
company teeters on this edge of small to medium-sized business
standard. Are there adjustments to the size standard rules or
methodology that would ease the transition for small businesses
like yours that are ready to move away from that kind of smallish
business standard?
Ms. ALLEN. Yeah, you know, the Runway Act was a really great
start, so thank you for that. There are several things.
I think, making the size standard more consistent in the indus-
try, in my industry in particular, because there are multiple
NAICS codes that I could operate under, and it really varies wildly.
But additionally, the number just needs to be higher across the
board.
I think that, you know, as these gentlemen have pointed out, you
can’t go from 500, even 150 employees to 10,000 employees over-
night. And that is what it takes to really be competitive.
And so the numbers, whether it be dollars or people, that num-
ber just needs to be increased.
Mr. MCGARVEY. Is it possible to incentivize growth given the
current framework?
Ms. ALLEN. No, it is completely not incentivizing growth. It is
doing completely the opposite of figuring out how do I, you know,
operate in this really limiting environment.
Mr. MCGARVEY. Got it. Mr. Moore, I am going to come to you
with the next question. Before I do that, though, I do just want to
say to Mr. Christ, I married a Missouri girl and have a 12-year-
old daughter, so there is some interest in the Super Bowl this up-
coming weekend.
Mr. CHRIST. I may be wearing my Patrick Mahomes socks.
Mr. MCGARVEY. There we go. I figured that might be the case.
Mr. Moore, in your testimony, you spoke to the challenges your
company faced when you began to outgrow the small size category
under that definition. Do you feel that an off ramp program dedi-
cated to making the transition out of small business, again, as it
is defined, making that less burdensome and daunting could have
helped your business?
Mr. MOORE. Definitely.
Mr. MCGARVEY. You know what? My grandpa said, don’t sell
past the close, so definitely is the answer.
Mr. Chairman, I yield back.
Chairman WILLIAMS. The gentleman yields back.
18
I now recognize Representative Alford from the great state of
Missouri for 5 minutes.
Mr. ALFORD. Thank you, Mr. Chair. Good to have everyone here
today, especially Mr. Christ from Kansas City.
I tell you what, it is an honor to be on this Committee working
to really help the fabric of America. As a former small business
owner in the Kansas City region, I understand some of the hurdles,
nowhere near the size of your business or some of the issues you
are dealing know.
You know, we are here to help champion Main Street America
under the direction of our Chairman Williams, to lower the barriers
to creating small businesses, and to support small businesses that
already exist. However, we know that federal procurement is in-
credibly complex, leading to massive compliance costs, as you guys
have spelled out here, can prevent small businesses from even try-
ing to compete for bigger contracts. And beyond the burdensome
compliance cost, out-of-date SBA size standards and agency deci-
sions can also leave small businesses behind.
While small businesses are supposed to have unique contracting
opportunities, agency decisions can prohibit qualified small busi-
nesses. I want to get right into the questions here. I want to start
with you, Mr. Moore.
Since 2010, the number of small businesses winning federal con-
tracts has dropped by 50 percent. That is a stark decline, and I
think it can be attributed to several factors, including the sizing
standards. The great thing about it, I hear from both sides of the
aisle here, these standards are out of date. We need change on
page 15 and 16.
By the way, your testimony is unbelievable. I encourage everyone
to read it very thorough. On 15 and 16, you offer some solutions.
Run through those real quick, just thumbnail solutions for us,
please.
Mr. MOORE. I don’t have that in front of me, but the solution
has got to be either a ramp off or several things that we have
talked about, getting credit for certain compliance people. But I
think really an increased size standard, if we have gone from
half—121,000 down to less than half that, small businesses, some-
thing is not working. You know, the businesses are going out of
business, and the small businesses are not surviving long term. So
there is got to be some sort of change in the NAICS codes, the size
standards, or there is got to be an off ramp.
Mr. ALFORD. So I am trying to wrap my head around this.
What would be the opposition to this? What do you think?
Mr. MOORE. If you go ask very small businesses, they are all
against expanding the size standards, and I think they are the
loudest. And there hasn’t been detailed industry studies around
some of these NAICS codes.
Mr. ALFORD. Thank you. Mr. Christ from Kansas City, con-
gratulations on becoming the National Vice President for the Amer-
ican Subcontractors Association.
Mr. CHRIST. Thank you.
Mr. ALFORD. Great work in our region. In your testimony, you
talked about how strict requirements for past performance and
qualifications are the largest hurdle for small businesses to enter
19
the federal construction market. What are some of your rec-
ommendations? How do we fix this?
Mr. CHRIST. So, in our industry, small business is classified
based off of a revenue basis. We are one of those very small busi-
nesses. And our concern with raising the small business threshold
is that it creates a glass ceiling still. Right now that is one of the
issues that we see, is that there is a glass ceiling and no transition
period.
If there was a transition period outside of the small business des-
ignation, we feel that that would be successful. If you just raise the
size standards, all you have done is raise that glass ceiling. People
want to get right up to it, but they never want to make that jump,
because the jump from small business to open competition is so
drastic that you are going to get smothered. And that is why only
2-1/2 percent of businesses that graduate small business don’t go
on to get another contract. You know, it is insane. We are playing
with the thousand-pound gorilla at that point, and we can’t com-
pete.
Mr. ALFORD. All right. Real quick.
Mr. CHRIST. Yes, sir.
Mr. ALFORD. We got about a minute left. I know you do private
projects as well as federally funded. If you build a private project
in the Kansas City region, it is X dollars. If you are building pretty
much the same project on the federal level, what is the added cost
for that, for compliance and other factors?
Mr. CHRIST. You know, on average, it is probably about 25 per-
cent to 30 percent.
Mr. ALFORD. More?
Mr. CHRIST. Yes.
Mr. ALFORD. Plus 30 percent?
Mr. CHRIST. Yes, sir.
Mr. ALFORD. That is incredible.
Mr. CHRIST. Yes, sir.
Mr. ALFORD. Because the taxpayers are paying for that.
Mr. CHRIST. Yes, sir. However, on that, they do have a proven
three-phase quality control program that, I can attest, does work.
Right now, the Corps of Engineers and their quality control re-
quirements and program, it does mandate quality on those projects.
Mr. ALFORD. All right. In your professional opinion, who will
win the Super Bowl?
Mr. CHRIST. Kansas City Chiefs.
Mr. ALFORD. Go, Chiefs.
Mr. CHRIST. Yes, sir.
Mr. ALFORD. Thank you. I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Ms. Scholten from the great state of Michigan
for 5 minutes.
Ms. SCHOLTEN. Thank you so much, Mr. Chairman. And thank
you to all of our witnesses for being here today.
As the Ranking Member on the Subcommittee on Contracting
and Infrastructure, I see how small businesses get boxed out of the
federal marketplace by agency size standard decisions. Everything
you are talking about here today, spot on.
20
I am particularly concerned with the ability of women-owned
small businesses, WOSBs, to compete and be prepared to succeed
if they outgrow these size definitions. That jump is so extreme.
In my home state of Michigan, as our recently departed football
coach Jim Harbaugh would say, business is booming. It is particu-
larly booming for WOSBs, which represent over 40 percent of busi-
nesses in our state. Can you believe that? Isn’t that incredible? I
am thrilled that last week this Committee passed bills to support
the WOSB program, but there is still so much more to be done.
My first question for you, Ms. Allen. As a certified WOSB, can
you discuss your experience with the program and if there are any
tools that Congress can facilitate to help businesses like yours with
growth and the graduation.
Ms. ALLEN. Yeah. So, you know, recently I was thinking about
this. We went after a solicitation, and I will be really brief as I can,
that was a small business set-aside. But it had a scorecard that we
had to self score, and it was things like ISO certification. Have you
had a DCA audit? Do you have a security clearance? Also, the
threshold insofar as the size of the contracts was huge, and yet it
was still a small business set-aside.
And so I feel like it might be useful not only if the SBA were out
helping to educate contracting officers, that would really go a long
way to helping the program, but also, you know, if there was some
sort of education insofar as—or training or something to help small
businesses get those DCA audits, get our ISO certifications, get,
you know, all those different pieces that would enable us to get a
higher score because we are qualified to do the work. I don’t need
a DCAA audit to say that I am—you know, my CPA is auditing me
all the time. I promise we are good. Right, whole other conversa-
tion.
So I think that that would really go a long way to help insofar
as small businesses. And that would help teensy, tiny companies
and, you know, larger smalls.
Ms. SCHOLTEN. Thank you. It is almost too practical, almost
too commonsense. Thank you very much. Very, very helpful.
Another concerning barrier to entry that I see in the contracting
space is the absolute muck of ambiguity that small businesses are
forced to navigate in applying for project funding. While the federal
government is operating under continuing resolutions in particular,
so unclear, no guidance. If we make small businesses complete a
lengthy and costly application process, we should be able to provide
some certainty around the funding, regardless of the threat of a
shutdown. We feel this is a keen and pressing need for a lot of our
small businesses.
This question is for Mr. Christ. Can you please speak to your ex-
perience competing for contracts under a CR? And what recourse
could the SBA implement for firms to weather the uncertainty of
a shutdown?
Mr. CHRIST. We would love to be able to have some sort of com-
pensation guaranteed, but we understand that that is probably
very far-reaching.
We do understand that the costs involved with procurement is
simply the cost of doing business. However, what has become ever-
changing and increasing are the requirements for these solicita-
21
tions, you know, the vast information that has to be provided, and
it takes having to hire a graphic artist. We build buildings, we
don’t do pretty proposals, right? And so now we have the added
costs of this additional individual, and we don’t even know if the
projects are going to be funded. And that is a challenge. It really
is.
But again, we understand it is a cost of doing business, but it
has become a substantial cost at a risk of, potentially, projects not
even being funded.
Ms. SCHOLTEN. Thank you. Very helpful and informative.
I yield back.
Chairman WILLIAMS. Yields back.
I now recognize Representative Crane from the great state of Ari-
zona for 5 minutes.
Mr. CRANE. Thank you, Mr. Chairman. I appreciate the oppor-
tunity to participate in this important hearing.
Does anybody on the panel know what the national debt of the
United States is? Mr. Moore, you look like you were hitting your
button first.
Mr. MOORE. It is a lot, 37 trillion, maybe.
Mr. CRANE. Thirty-four trillion. You guys know that we spent
about a trillion dollars in the last 90 days that we don’t have? You
guys know what the annual deficit is every single year up here?
Two trillion dollars-plus, about 200 billion a month.
So when you hear, excuse me, one of my colleagues just talked
about continuing resolution. Does anybody know what that means?
What does it mean, Mr. Lambke?
Mr. LAMBKE. It means that the agencies get funded at a base
level from the previous year——
Mr. CRANE. Yep.
Mr. LAMBKE.—with no incremental funding.
Mr. CRANE. So you guys—right. So basically, funding at the
same level, right? So you guys are all business owners, right? You
guys understand budgeting. If you had something similar to a $2
trillion deficit annually, what do you think you would be doing as
a business owner?
Mr. LAMBKE. That is pretty easy. If you——
Mr. CRANE. Would you continue funding your business at the
same level you were last year?
Mr. LAMBKE. Absolutely not.
Mr. CRANE. What about you, Mr. Moore?
Mr. MOORE. Definitely not.
Mr. CRANE. Mr. Christ?
Mr. CHRIST. No, sir.
Mr. CRANE. Ma’am?
Ms. ALLEN. No.
Mr. CRANE. Why do you think we do that up here? Because it
is so easy to spend your money. Nobody wants to say no. Right?
A lot of you rely on government contracts, is that correct?
Mr. LAMBKE. We are 100 percent federal contractor.
Mr. CRANE. When this whole thing goes bust, how many gov-
ernment contracts do you think you are going to get?
Mr. LAMBKE. I am guessing zero.
Mr. CRANE. Yeah. What about you, Mr. Moore?
22
Mr. MOORE. None.
Mr. CRANE. Do you think that is possible or do you think we
can just continue to print money that we don’t have?
Mr. MOORE. I hope that we don’t continue to print money that
we don’t have.
Mr. CRANE. Well, do you see that changing? Do you guys spend
any amount of time up here on Capitol Hill?
Mr. MOORE. A Little bit, yeah.
Mr. CRANE. Do you see that changing, Mr. Lambke, with the
conversations you have had?
Mr. LAMBKE. I haven’t seen a change in the time I have been
watching.
Mr. CRANE. I have meetings all the time. Nobody ever asked
that we quit giving them money or give them less money.
Mr. LAMBKE. No, sir. The hole gets bigger.
Mr. CRANE. The only reason I bring that up is because there is
obviously—you know, I honestly wish the best for you and your
businesses and your employees. I really do. As a small business
owner myself, and a very small business owner, probably about 20,
30 employees, I think 50 or 60 at most, I understand how tough
it is to start a small business, maintain it, you know, make sure
my employees are taken care of. But there is a bigger problem up
here that very rarely gets talked about, and that is our spending
problem up here.
And it concerns me because, you know, when I look at business
owners like you that rely on the government and government con-
tracts, because what we do up here is not sustainable. It is just not
sustainable. And you even hear when people talk about, oh, these
CRs, these continuing resolutions, with disdain, right? The problem
is these CRs are spending at the same level. And you just had four
business owners that have all been successful say that is not sus-
tainable. We couldn’t do that in our own business. Yet we arro-
gantly do that every single time up here.
Go ahead, sir.
Mr. LAMBKE. May I add something? CRs are one thing, shut-
downs are another.
Mr. CRANE. Yeah.
Mr. LAMBKE. CRs are easier to deal wiyh, we have operated
under CRs for so long, so many years. That is one thing. But it is
the shutdowns that scare us to death. Right? Because then we are
having to make really hard decisions about what we do with the
families that rely on our companies, you know, to feed their fami-
lies. Right?
Mr. CRANE. Right.
Mr. LAMBKE. And so those are testy times. And the longer they
go, and there is been a few good ones, those are the ones, I think,
that bother us the most. Scare us.
Mr. CRANE. Well, on this same train of thought, if you guys had
one bit of advice that you could give us on how to make sure that
we don’t completely destroy our national economy and cause your
businesses to go completely under because there is no more govern-
ment contracts, do you guys have anything that you would like to
say to the Members of Congress on this panel? Go ahead, Mr.
Lambke.
23
Mr. LAMBKE. Oh, not in 5 seconds. No.
Mr. CRANE. Go ahead, Mr. Moore. Anything? Mr. Chairman
might give us a few extra seconds.
Mr. MOORE. Create more jobs, more prosperity, bigger tax base
would be my advice.
Mr. CRANE. Pro growth?
Mr. MOORE. Pro growth.
Mr. CRANE. Gotcha. Mr. Christ?
Mr. CHRIST. I would recommend taking a look at the small
business standards and distributing some of that revenue through-
out that organization reasonably, not to the gorillas in the room
that are just underneath that glass ceiling that I mentioned——
Mr. CRANE. Yep.
Mr. CHRIST.—that can destroy these small businesses. You can
imagine——
Mr. CRANE. Yep.
Mr. CHRIST.—us going up against $200 million a year company.
Mr. CRANE. Okay.
Mr. CHRIST. We are never going——
Mr. CRANE. I think we ran out of time. Sorry, ma’am. We would
have given you time, but we ran out of time.
Thank you, Mr. Chairman, for letting me go over.
Chairman WILLIAMS. Thank you. Yields back.
I now recognize Mr. Meuser, Representative Meuser, from the
great state of Pennsylvania for 5 minutes.
Mr. MEUSER. Thank you, Chairman. Thank you all very much
for being here with us today.
So I spent about 25 years helping grow a small business into a
larger business. And what was interesting as well, 90 percent of
our customer base were all, you know, mom-and-pop size small
businesses. So I have real good understanding of things, private
sector contracting, primarily, but some federal government.
And as my colleague was bringing out, you know, it has actually
been remarkable where you mentioned, Mr. Moore, the pro growth
initiatives. Our revenues in the United States of America have in-
creased almost 40 percent in the last 5 years, $5 trillion versus 3.5
trillion. But we are spending 6.5 trillion. So that is a little bit of
a disparity, a little bit of a problem that would, you know, wipe any
of your businesses out likely in a hurry. I don’t think your bank
would last too long there.
So it is certainly a combination of just good business manage-
ment. Right? I mean, effective reductions, but pro growth. Pro
growth. That is what brought the United States out of the debts
that we had after World War II. And we can do it again.
So on this, your businesses are based upon federal contracting.
The size of the federal government is not your fault. I mean, every-
thing you see around here is contracted. I mean, the size of our fed-
eral government is wildly excessive, and supplies and computers
and you name it, need to be provided to it. So that is just the way
it is.
And it is great that the SBA works towards making small busi-
nesses receive their fair share so you don’t have to compete against
those that are hundreds of millions of dollars and such. So I am
listening very closely to everything taking place here.
24
Clearly, the formula for small business contracting needs to be
reviewed, right? A hundred and fifty if the revenues are worked
into that as well, based upon the different NAICS codes, it could
be what, computer sales could be different than desks or furniture
and such. And you all expressed a fair amount of ideas.
I will just start, though, what should be done with the formula?
Okay, you said just raise the standard from 150 up. Now that is
fine, but then that could encroach upon small business startups.
Now, let’s face it as well, some businesses like yours could go
from, you know, as soon as you hit 140 employees, you say, my new
marketing department is now going to be under a new LLC, and
they’re not going to have to necessarily count towards my revenues.
I will serve as a customer to them and they will be a vendor.
You are shaking your head, so I am sure that is one of the oldest
tricks in the book, so that is prohibited. But I wouldn’t doubt that
goes through people’s minds as you are considering how to handle
all this.
So, a couple of questions. One, how do you think the formula
should be better set up, revenues, size? And as well are you asked?
Did the SBA ask you? Do you do surveys?
And also consider this. When you are at a—you receive a con-
tract, and as you stated again, that it takes time to grow, there
should be in the formula maybe a 3-year or 4-ear, and these are
things that I look forward to speaking with the Chairman of this
Committee on, of assurity. Right? If you do grow to 200 employees,
you don’t lose the contract that year. There is at least a 3-, maybe
even 4-year statute which permits you to continue serving in that
way.
So, Mr. Lambke, I will start with you.
Mr. LAMBKE. Yeah. So I am fine with the headcount-based
NAICS codes for our industry personally. I think that the number,
though, has got to look at what has happened to the complexity of
the business over the last 20 years, and so 500 to me is the right
number.
If you look at what is happening in AI and large language mod-
els and robotic process automation, it is a team sport. It is a very
complex business. It requires a lot of very smart people working to-
gether across multiple systems and platforms. And so it is really
just if the government intends, and I know they do, to continue to
compete with our adversaries, both offensively and defensively,
then you have got to be able to have small business innovators that
can get to a sufficient size that they can still innovate.
I would argue that many of the larger businesses are not as mo-
tivated by innovation. If we don’t innovate, we are out of business.
I think when you get to a certain size, you cannot innovate as
much.
Mr. MEUSER. They look at it only every 18 months. I ran——
Mr. LAMBKE. Yes, sir
Mr. MEUSER.—our of time. My apologies for speaking too long.
I wanted to hear from you, but perhaps we can continue this con-
versation.
I yield back, Mr. Chairman.
Chairman WILLIAMS. Yields back. I now recognize Representa-
tive Maloy from the great state of Utah for 5 minutes.
25
Ms. MALOY. Thank you all for being here. I want to start with
Ms. Allen.
Rep. Scholten talked about a bill we are working on together to
protect WOSBs. And the businesses already have to certify that
they are women-owned, but they don’t have to certify that they are
small. And what I am hearing from you is that could be very con-
fusing. A business may not even know if they qualify as small, de-
pending on which contract they are going for.
And I have sat here listening, trying to decide what to ask all
of you, because you have defined the problem very clearly, and we
have asked a lot of follow-up questions. So I just want to give each
of you a minute. Is there anything you were prepared to tell us as
part of a solution that you haven’t had a chance to talk about yet?
I will start with Mr. Lambke and work my way down.
Mr. LAMBKE. Look, I think it obviously takes time, energy, and
resources on behalf of the government, but look at the industry.
Spend some time with the companies that do what we do specific
to IT and recognize that there needs to be something very specific.
But you can spend some time with each of us, look at our receipts,
look at our business, look at how we get things done and the re-
sults we deliver for the customer. I think you can quickly deter-
mine where the size standards should be.
Ms. MALOY. Thank you.
Mr. LAMBKE. Yes, ma’am.
Ms. MALOY. Mr. Moore?
Mr. MOORE. So our business is changing at lightspeed. And in
our primary NAICS code 541519, we are basically providers of
technology. There is a limitation on the subcontracting rule which
says that we can only subcontract 50 percent or less of the value
of the contract.
There is a nonmanufacturing rule which says that, OEM—if we
are awarded a contract and it is small business set-aside, then you
have to procure that product from a small business, which is a
manufacturer that is small, which there are none.
Footnote 18 says that in our code there needs to be 15 to 50 per-
cent of services, 15 to 50 percent of contract value, and that is
never the case. Product is usually the greatest value.
So, in my opinion, I just think that the SBA has come together
with industry. We are put in an impossible position. There is a lot
of regulations that there is no way that we can meet. So I just
think it takes more dialogue and understanding, truly, what it is
that we do.
Ms. MALOY. Thank you. Mr. Christ?
Mr. CHRIST. Thank you. So what I would encourage, again, I
had mentioned a transition period. I feel that the transition period
promotes continuous growth for businesses. Do I have a definition
on that transition period and what it looks like? No, that is for ad-
ditional conversations and I would love to have those conversations
with you.
But the goal is, to promote innovation, is for businesses to con-
tinue to grow, and without that transition period, there is no incen-
tive for growth. They want to get right to that point, be the large
gorilla in the room, and they don’t want to get out of there.
26
So one other thing that that forces is small businesses to—very
small businesses to look to team up with larger ventures and cre-
ate a joint venture agreement. Right? These can be fantastic men-
tor-protégé agreements. we are living proof that they work, because
we are in one right now.
However, there are some bad characters out there that will uti-
lize those joint ventures and those mentor protege agreements to
just have an avenue to continue to play in that small business. So,
you know, being very diligent and scrutinizing that, we feel, is also
another thing that could be extremely helpful. Thank you for your
question.
Ms. MALOY. Thank you. Ms. Allen?
Ms. ALLEN. Thank you very much for this question. So, for us,
these guys, I think that their NAICS codes are all based on the
number of employees that they have, whereas mine is based on
revenue, which to me, doesn’t make any sense, because for me, my
cost of goods sold is huge, right? I mean, my biggest cost is my
labor. So, you know, I am paying this much money, but my mar-
gins are a little, teeny tiny.
And so when you are looking at my revenue as whether or not
I am large or small, my revenue might be up here, but if, you
know, my margin is this little, teeny tiny bit, it doesn’t make a lot
of sense to me personally in those labor categories.
I agree with Mr. Christ that I think that a transition period
would be hugely helpful. As I mentioned, helping small—especially
WOSB companies, close to my heart, to get their DCAA audits
done, to be able to get security clearances, to be able to the ISO
certifications, helping them with that process, I think would be
huge insofar as helping them to make those transitions that is in-
credibly expensive and time-consuming for us.
Ms. MALOY. Speaker B: Thank you. My time has expired. I yield
back.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Representative Gluesenkamp Perez from the
great state of Washington for 5 minutes.
Ms. GLUESENKAMP PEREZ. Thank you, Mr. Chairman, and
thank you all to the witnesses for being here today.
So we know that the SBA is tasked with ensuring that small
businesses are given a fair shot at competing for federal con-
tracting dollars. These federal contracts can be an incredible oppor-
tunity for small businesses and our entrepreneurs. And Congress
has established goals to award a percentage of all prime and sub-
contracts to women-owned small businesses, small disadvantaged
businesses, service-disabled veterans-owned small businesses, and
HUBZone certified small businesses.
I want to make sure that we are holding agencies to these stand-
ards, which is why I cosponsored the Corrective Action Report
Oversight and Accountability Act with Representative Meuser,
which would hold agencies accountable for actually hitting these
benchmarks. But today, I am really interested in how we make
sure that the benefits of these important programs that give small
businesses opportunity to compete for federal contracts are actually
going to small businesses.
27
Mr. Christ, I am interested in one of the problems you mentioned
in your testimony. You talk about acquisitions where small busi-
nesses are solicited by larger firms to join joint ventures in which
the small business holds 51 percent and the big guys hold 49.
You mentioned that these joint ventures can be extremely bene-
ficial for small businesses to tap into the larger firm’s bonding pro-
gram, employee pool, previous government network, but you also
know the problems arise when these big guys simply utilize the
small businesses as a vehicle to get federal work otherwise set
aside for small businesses. This is concerning to me because it
means large businesses are getting this advantage that Congress
intentionally set aside for the small guys who can’t otherwise com-
pete.
So in your view, how should we improve the program to make
sure that the small businesses receiving these benefits are actually
small?
Mr. CHRIST. That is a very great question and it is difficult to
answer because there is always going to be bad characters no mat-
ter what we do. And I feel that the program itself is established
in a very good manner, but examining the ownership structure of
the joint venture is extremely critical.
We know personally of several firms where the larger businesses
have actually required them to give up ownership in some of the
smaller business. So now they are not getting 49 percent. They
may be getting 54 percent of the revenue, because from the joint
venture entity standpoint, they may only be 49. But when you fac-
tor in the ownership in the small business, it is more than that.
So I feel that, you know, examining the ownership structure of
both companies and making sure that there is no cross-pattern or
cross-pollination in there, I feel that that is one way that you can
help kind of clean that up.
Ms. GLUESENKAMP PEREZ. Thank you. Mrs. Allen, you also
mentioned some of these issues in your testimony, including the
problems that arise when certain companies fraudulently claiming
to be women-owned to benefit from these set-asides. Can you ex-
pand on this process for self-certification, how that works and how
you think it could be improved?
Ms. ALLEN. Yeah, self certification, I mean, you can just check
a box and say, oh, yes, I am woman-owned. You really need to
have, you know, as Mr. Christ is saying, as with small businesses,
also women and small businesses, to look at the structure, who is
doing what, who is actually day-to-day? You know, is—you know,
Joe Jim Bob’s wife, the one who is the figurehead, but she has
nothing to do with the business. She is not involved. She is not
running it. That really does a disservice to women like me who are
out there, you know, doing the things every day and really, you
know, slugging it out with companies that are not woman-owned
and not always small.
Ms. GLUESENKAMP PEREZ. Yeah. Thank you.
Before coming to Congress, I ran an auto repair and machine
shop. And COVID, obviously, we were largely impacted. And that
year, I had a bunch of different projects running. We worked on air
improvement quality projects. We worked on taking our intake
process online, all these big projects. Some of our good friends who
28
own an auto body repair shop, that whole year her entire project
was figuring out how to navigate a city’s contract process, you
know.
And when you see these big hurdles, you really grasp like when
the bureaucracy becomes so extreme, it is the small business, it is
actually the women-owned that create these issues.
So I sincerely thank you all for being here today. I thank the
Committee for your attention to this.
Chairman WILLIAMS. Yields back.
I now recognize Mr. Molinaro, Representative Molinaro, from the
great state of New York for 5 minutes.
Mr. MOLINARO. Thank you, Mr. Chairman, and thank you all
for being here this morning still.
I think I am going to continue in sort of that line of questioning,
only to acknowledge that in my previous life in local government,
we certainly recognized that small businesses were so much more
ably—or able to navigate the local procurement policies and, of
course, state and federal becoming much more complex. We recog-
nize that the bureaucracy is too overwhelming in many cases.
Small businesses, by definition, have lesser resources and time to
make the commitment to navigate that labyrinth of regulatory
oversight and outdated standards that I think this Committee has
been fairly earnest in attempting to address.
The problem hasn’t been that small business is too small, it is
that big government is too big, and navigating that field has be-
come even more challenging. And yeah, big business has found
ways to circumvent.
And I would also offer the certification of women- or minority-
owned businesses are challenging for those who earnestly and ap-
propriately qualify, and far too easy for those who wish to act in
a nefarious way.
Obviously, so I want to get to NAICS codes in a moment. I do
want to reference, however, the posted act, which this Committee
unanimously adopted. It is a bill I sponsored, passed the House,
meant to demand the SBA open up a more greater transparency
for small businesses to know regulation and how to navigate that
regulation. All of you have testified to this to some degree, but I
would like to just narrow it into or at least like to focus in on the
issue of transparency.
Given your experience, the work you have done, obviously inter-
acting with the federal regulatory oversight and your own work
with the federal government, what should we do to appropriately
address the issue of lack of transparency? That is where it starts.
What would be a good first step for actual transparency to make
it easier for you all small businesses across this country to navigate
the SBA?
Not a single thought?
Mr. MOORE. I just think that the SBA has been wonderful and
very helpful during our 8(a) certification. There is many programs,
a lot of assistance, and, you know, a lot of learning sessions, edu-
cational sessions, and I think that is all great.
Once you move out of the small business category, there is very
little, if no, support. And I would like to see more collaboration con-
tinuing between the small business administration and industry.
29
Mr. MOLINARO. So greater collaboration. Anyone else?
Mr. CHRIST. Utilization of the business opportunity specialists.
It is amazing to me that these small businesses don’t know that
that resource is out there. And Our business opportunity specialist
has been fundamental in helping us navigate through all of these
programs and really helping us understand what is required and
expected of us as a small business.
So, you know, getting that out there and getting small businesses
to participate with their business opportunity specialist, and prob-
ably looking at extending that and making it a little larger, be-
cause I know just in our region, we have had issues with turnover
on the business opportunity specialists and not having enough of
them to take the need that is out there. Thank you.
Mr. MOLINARO. Thank you.
Ms. ALLEN. I would agree. And you can imagine we are here in
Maryland and, you know, we are kind of a company town. So you
can imagine how many government contractors there are that
could really benefit from those small business specialists, and there
just are not enough of them to really be able to make an impact.
If Kansas City is struggling, the Maryland-D.C. area, those guys
are overwhelmed.
But there is just not enough to be able to really make a dent in
the amount of help that small businesses could use insofar as, you
know, getting themselves off the ground and also making that tran-
sition, that they have a lot of knowledge and just, they are up to
their eyeballs.
Mr. MOLINARO. Let’s do this, Mr. Lambke. I am going to let
you jump in, but it will be my last question. Hopefully, with 20 sec-
onds, you will be able to get to it. But you speak and you all have
dealing with the challenges that businesses not quite fitting neatly
into the NAICS codes offered by the SBA.
You obviously referenced the continuing resolution. The SBA has
found is to continue to add footnotes to types of businesses that are
emerging. And as a result, we all recognize there are now over 41
pages of different NAICS codes, which indicates, obviously, the on-
going problem.
Based on your experience, do you feel the current rigidity of the
system can shut out innovative companies, I think you do, and ulti-
mately, limit competition for government contracting? And you may
have to answer that in writing later.
Mr. LAMBKE. Indeed.
Mr. MOLINARO. Thank you.
Chairman WILLIAMS. Thank our witnesses for their testimony
for appearing for us today. And I think you can see that at least
there is one Committee, truly is bipartisan. We get it. We are going
to fix it.
And without objection, Members have 5 legislative days to sub-
mit additional materials, written questions for the witnesses to the
Chair, which will be forwarded to the witnesses. So I ask the wit-
nesses to please respond promptly. If that happens.
If there is no further business. Without objection, the Committee
is adjourned and thank you.
[Whereupon, at 11:35 a.m., the committee was adjourned.]
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