Thursday, November 1, 2007

Mr. President, I am pleased today to be introducing legislation, the Small Business Contracting Revitalization Act of 2007, designed to protect the interests of small businesses in the Federal marketplace.

As the Chairman of the Senate Committee on Small Business and Entrepreneurship, I have focused a considerable amount of energy promoting the interests of small businesses in the Federal marketplace. The legislation that we are introducing today marks a critical step forward in this process.

It is no secret that the Committee on Small Business and Entrepreneurship places a great deal of importance on moving legislation forward in a bipartisan manner, the members of my Committee understand we represent the interests of all of our Nation’s small businesses, the most important and dynamic segment of our economy. And nowhere is the bipartisan consensus stronger than in the area of Federal procurement and ensuring that our Nation’s small businesses receive their fair share of procurement opportunities. I am pleased to once again be introducing bipartisan legislation with the Committee’s ranking member, Senator Olympia Snowe. Regardless of who has chaired the Committee during our tenure together, we have both worked hard to improve small business Federal procurement opportunities.

The legislation we are introducing today has one ultimate purpose, to expand opportunities for small businesses to contract with the Federal government. And the reality is that small businesses need all the help they can get with respect to accessing the Federal marketplace. In fiscal year 2006 according to Eagle Eye Publishing, the Federal Government missed its 23 percent contracting goal by 3 percent. That 3 percent represents more than $12 billion in lost contracting dollars for small businesses. Service-disabled veterans fared the worst when it came to Federal contracting with only 0.87 percent of Federal dollars going to their firms. Women-owned firms only took in 2.57 percent of Federal dollars while they make up more than 30 percent of all privately held firms.

Minority-owned firms continue to face barriers to Federal contracting. The SDB and 8(a) program only accounted for 6.75 percent of Federal contracting. These numbers tell the stark story of why this legislation is so important. If small business is the engine that drives our economy when it comes to Federal procurement that engine needs an overhaul. Our bill looks to make that overhaul as we look at making improvements in five key areas. The first area we attempt to make improvements in is the area of contract bundling. Although contracting bundling may have started out as a good idea it has now become the prime example of the old saying that too much of a good thing can be very, very bad. The proliferation of bundled contracts coupled with a decimation of contracting professionals within the Government threatens to kill small businesses’ ability to compete for Federal contracts. In our hearing on July 18, 2007, on contracting, we heard testimony about the damage to opportunities for small businesses because of the lack of oversight and contract bundling.

Our bill looks to address those issues by ensuring: accountability of senior agency management for all incidents of bundling; timely and accurate reporting of contract bundling information by all Federal agencies; and improved oversight of bundling regulation compliance by the Small Business Administration.

The bill also ensures that contract consolidation decisions made by a department or agency, other than the Defense Department and its agencies, provide small businesses with appropriate opportunities to participate as prime contractors and subcontractors.

The second area that this bill attempts to address is subcontracting. The Committee heard in the July 18 hearing and in a May 22, 2007, hearing on minority business about the challenges that many small business subcontractors face when dealing with prime contractors. Witnesses related that the way subcontracting compliance is calculated creates opportunity for abuse. They also related that many small businesses will spend time, money and effort preparing bid proposals to be a part of a bid team and that once the contract is won they never hear from the prime contractor again. Many also complain about lack of timely payments after they have completed work.

This bill attempts to deal with some of these issues by including provisions designed to prevent misrepresentations in subcontracting by prime contractors. To accomplish this, the bill: provides guidelines and procedures for reviewing and evaluating subcontractor participation in prime contracts; authorizes agency pilot programs that will grant contractual incentives to prime contractors who exceed their small business goals; and requires prime contractors who fail to comply with subcontracting plans to fund mentor-protégé assistance programs for small businesses.

The third area that our legislation attempts to address is the updating of the socioeconomic programs administered by the SBA. In our first hearing of the year on January 31, 2007, we heard veterans with service connected disabilities speak about the difficulty that they are having accessing the Federal marketplace. It is clear that the Government is not doing enough. In fiscal year 2006, service-disabled veteran-owned businesses only got 0.87 percent of all Federal procurement—well short of the 3 percent statutory goal.

Our bill will assist service-disabled veteran-owned small businesses in obtaining Government contract and subcontract opportunities by expanding the authority for sole-source awards to SDV firms. In addition, the bill will allow: the surviving spouse of a service-disabled veteran to retain the business’s SDV designation for up to 10 years following the veteran’s death; the SBA to accept SDV firm certifications from the Department of Veterans Affairs; and the establishment of an SDV mentor-protégé program by the SBA. Our veterans are returning from Iraq and Afghanistan, and we owe it to them to give them every opportunity at fulfilling the dream of entrepreneurship.

We heard from women business owners in our September 20, 2007, hearing, on women’s entrepreneurship that the time has come to implement the women’s procurement program. The administration has continually postponed implementing a women’s procurement program that became law 7 years ago. This bill tells SBA to get it done within 90 days.

Another program sorely needing our attention is the 8(a) program. This program was created to assist socially and economically disadvantaged small businesses, but, as we heard during the May 22, 2007, hearing, the financial threshold for inclusion in the program is out-dated and too restrictive. The net-worth thresholds have not been updated since 1989. This bill allows for an inflationary adjustment to be made to the threshold and it excludes qualified retirement accounts from consideration while calculating the threshold so that businesses that belong in this program won’t be shut out.

This bill also makes a number of changes to the HUBZone program. The bill would expand HUBZones to areas adjacent to military installations affected by BRAC. It will also make other changes that will expand the HUBZone program to subcontracting as well as creating a mentor protégé program. I understand the stated goal of this program is to develop areas of poverty through government contracting. And while I agree that this is a laudable goal I also remember the controversy that surrounded the creation of this program in 1996. I am keenly aware that the HUBZone program was created to supplant race-conscious programs like 8(a) and the small disadvantaged business program. I fought hard to preserve those programs then and I will continue to preserve and strengthen those programs in the future. In the interests of moving this bill forward and improving all of the programs I have agreed to include these priorities for Ranking Member Snowe. I look forward to working with her to move the priorities that are important to all of the socio-economic groups in this legislation.

The fourth area that we intend to update is the acquisition process. This bill aims to increase the number of small business contracting opportunities by including additional provisions to reduce bundled contracts and by reserving more contracts for small business concerns. The bill accomplishes this by: authorizing small business set-asides in multiple-award, multi-agency contracting vehicles; and requiring that agencies include advance plans on small business spending in their budgets and submit a report describing the impact of each bundled contract awarded by an agency. The bill also directs the SBA to annually report to Congress on small business participation in overseas Government contracts.

The last area that we tackle in this legislation is small business size and status integrity. The Committee has heard from a number of small businesses about large businesses parading as small businesses. During our July hearing we looked at the list of the top 25 small businesses doing Federal contracting. On that list at least six clearly recognizable multi-billion dollar corporations were among the top 25 small businesses listed including SAIC at number two. I have been adamant that small business contracts must go to small businesses. Small businesses are losing billions of dollars in opportunities because of these size standard loopholes.

This bill attempts to address these issues by adding a new section, Sec. 38, to the Small Business Act that is designed to strengthen the Government’s ability to enforce the size and status standards for small business certification. To achieve this, the new section establishes procedures for protests, through the SBA, of small business set-aside awards made to large businesses; requires the development of training programs for small business size standards; requires a government-wide policy on prosecutions of size and status fraud; and requires a detailed review of the size standards for small businesses by the SBA within 1 year.

In closing, I want to reiterate that this has been a truly bi-partisan effort and we look forward to working with the rest of the Senate as we move this legislation forward. It is well past time to provide greater opportunities for the thousands of small business owners who wish to do business with the Federal government. I believe that this legislation is a good step toward opening those doors of opportunity.

I hope all of my colleagues will join us in supporting this bill Mr. President, ask unanimous consent that the text of the bill be printed in the record.