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NOW: Rubio Chairs Hearing on the Small Business Administration’s Contracting Programs
Washington D.C. — U.S. Senator Marco Rubio (R-FL), Chairman of the Senate Committee on Small Business and Entrepreneurship, convened a hearing titled, “Reauthorization of the SBA’s Contracting Programs.”
A live-stream of the hearing can be found on the committee’s website here.
Chairman Rubio’s opening remarks as prepared can be found below.
Chairman Rubio: “I want to thank you all for being here today as we continue our work to reauthorize the Small Business Act by examining the contracting programs that are intended to help small businesses diversify and grow.
“For small businesses and entrepreneurs around the country, securing a contract with the federal government can mean instant growth in the marketplace.
“In 2018, the government obligated $560 billion in contracts for goods, services, research, and development.
“The SBA estimates that more than $100 billion of that total went to small business contractors.
“The contracting office at the SBA administers several targeted programs, authorized by Congress, that seeks to help entrepreneurs access these procurement opportunities with the federal government, which is required to spend 23 percent of all federal contracting dollars with small businesses.
“The four prime contracting programs provide participants with access to compete within a smaller pool of contracts that are set aside just for small businesses.
“The Small Business and Capital Ownership Development Program, more commonly known as ‘8(a)’ because of its location within the Small Business Act, also provides small businesses with procurement training, technical assistance, and the ability to be paired with a mentor business.
“In addition to the classic small businesses that participate in this program for up to nine years before graduating out, 8(a) also gives businesses that are communally-owned by Alaskan Native Corporations, Native Hawaiian Organizations, Indian tribes, or Community Development Corporations the ability to participate in the program indefinitely.
“The Historically Underutilized Business Zone Program, or ‘HUBZone,’ works to stimulate economic development and create jobs in the areas of the country that need it the most.
“Created in 1997, the HUBZone Program has used set-aside contracts, and a price preference, to bring opportunity to distressed inner cities and rural communities where joblessness is often rampant.
“The Women-Owned Small Business program and Service-Disabled Veteran-Owned Small Business program give two very important small business groups the chance to compete for set-aside contracts.
“In addition to the government-wide goal of awarding 23 percent of contracts to small businesses, Congress has set goals of 5 percent each for 8(a) and women-owned small businesses, and 3 percent for service-disabled veteran-owned small businesses and HUBZone-certified businesses.
“The federal government could easily exceed these goals if small businesses were given more guidance on the difficult and complex world of federal procurement, and if agency contracting specialists were better informed on how to make compliant set-aside and sole source awards to small businesses.
“Unfortunately, as a result of fraud across the board in the SBA programs, as reported from multiple Government Accountability Office investigations, businesses that do not qualify for these specific category programs are often taking the contracts that are intended for these special groups.
“For example, a 2018 audit by the Office of Inspector General that looked at 56 sole-source awards made to firms in the Women-Owned Small Business program found that:
“18 contracts, valued at $11.7 million, were awarded to firms that had no documentation;
“32 contracts, valued at $40.5 million, were awarded to firms with incomplete documentation; and
“50 contracts, valued at $52.2 million, were not awarded in compliance with federal regulations.
“A 2019 GAO study of this program showed that the SBA still had not developed a process to identify when ineligible awards were made under this program.
“Too many agency contracting officers also do not know how to work with the contracting programs.
“A 2018 GAO study found that the SBA’s ‘Procurement Scorecard’ to assess agency compliance with small business contracting was not effectively measuring agency performance or promoting opportunities for small businesses.
“The facts are simple: the small business contracting goals are aspirational and unenforceable, so if we do not make contracting with small businesses easy for federal agencies, it will not happen.
“The SBA should be an ally for small business contractors and not an additional and frustrating hurdle.
“The disparities amongst the prime contracting programs have made it difficult for a small business to know where to start.
“Each program has an entirely different system, even for the initial certification process – not to mention the different forms of training, types of awards, award amounts, and price preferences made available to each group.
“In 2015, Congress passed a law requiring that the SBA set up a certification process for the then self-certified Women-Owned Small Business Program.
“Unfortunately, four years later, the SBA has yet to comply with that law.
“Small businesses face enough ambiguity when trying to compete for government contracts; they do not need the SBA to make this process more difficult by failing to implement the laws that small business participants are counting on.
“In 2018, Congress passed a law to measure a business’ revenue for five years instead of three when determining if that business is ‘small’ and if it can compete for set-aside contracts, but the SBA has refused to comply with that law.
“Small businesses need the SBA to help them grow so that they can compete for bigger contracts both in and outside of government.
“They do not need the SBA to force them to use their already limited resources to figure out how to keep their revenue down so that they remain ‘small.’
“While the prime contracting programs are the most well-known parts of the SBA’s contracting office, the subcontracting program is increasingly important as the government moves towards consolidated purchasing and larger multi-award contracts, or ‘MACs.’
“It is important that we find ways for small businesses to continue to work with the government, even as the government is changing its purchasing habits to rightfully use taxpayer money more efficiently.
“Innovations and unique solutions from small businesses in the private sector help to support our soldiers, protect national security, enhance government operations and make the federal bureaucracy more efficient.
“To keep this contracting cycle going, we must reduce fraud, streamline the contracting office at the SBA, and provide more opportunities for small businesses to grow.
“I look forward to discussing ways to accomplish these goals today.”