News From the
Committee on Small Business
Nydia M. Velázquez, Chairwoman

For Immediate Release
September 19, 2007  

CONTACT: Kate Gilman/ Erin Donar,  (202) 225-4038

Velázquez Statement on SBA Contracting Programs, and Video Highlights From Today's Hearing

WASHINGTON – Today Chairwoman Nydia M. Velázquez gave the following opening statement at a House Small Business Committee hearing to examine the Small Business Administration’s (SBA) contracting programs:

“Today the committee continues its work toward opening the federal marketplace to small businesses. Important tools in this endeavor are an array of programs that, through their training and business development, help this nation’s entrepreneurs get a foot in the door.

“The need for these initiatives could not be greater. Recently the SBA announced that for the 6th year in a row, the federal government failed to meet its small business goal.  

“The committee took an important step in bringing equity to our procurement system when we passed Mr. Braley’s bill H.R 1873, The Small Business Fairness in Contracting Act.   However, to fully benefit from the changes that were made, a strong complement of contracting programs is also required.

“We rely on these initiatives to spur the next generation of supplies, providing diversity that allows the taxpayer to get the best value for its dollar.  Unfortunately, many were created in the 1960’s and have seen little change since then.  As a result they have fallen into complete disarray, largely due to mismanagement, under-funding and neglect.

“Modernizing and in some cases – such as with the veteran’s and women’s procurement program – simply implementing them would be a start.  The way the government purchases services and products is constantly changing, and the bottom line is that these initiatives need to keep pace.  No Fortune 500 company would enter into a long term relationship without a strong understanding of the types of resources that are necessary to keep the partnership growing – but that is exactly what agencies are doing today with the 8 (a) program. 

“If we are serious about business development then it is critical that barriers are removed, true incentives are provided and long term relationships are treated as such.  This will ensure efforts invested by both sides result in tangible benefits for the federal marketplace. 

“It is also vital that programs stay true to their original intent.  Earlier this year, this Committee took steps to address the practice of large business receiving small business contracts.  Just as we closed loopholes, which cost small business billions in lost opportunities, we also need to make sure that contracting initiatives don’t fall prey to similar unintended consequences. 

“Certain initiatives – like the HUBZone – have strayed from its initial purpose. On the surface, it has a goal of economic development in low income communities, but in many cases, this program fails to accomplish that.

“Today 80 percent of all firms are not even eligible after three years, and a preliminary Committee review found that many HUBZones contained multimillion dollar homes.  This is not exactly what one would expect for an initiative designed to spur development in low income areas.   Not only are more resources needed for oversight, but also greater protections to weed out the bad actors.

“While many who raise opposition over these initiatives point to the shortcomings, it is important that as the committee proceeds we focus on the original intent of supplier development. They are not intended to be handouts and this nation’s entrepreneurs aren’t looking for one.  What they do want is a fair opportunity to provide goods and services. With proper reform, these programs can do just that.

“Small business plays an important role in all of our communities.  They are the innovators – discovering one-third of all new patents. They are the market pioneers, representing 99% of all exporters. And they are the job creators, providing nearly 75% of Americans with their first jobs. Through thoughtful improvements, coupled with legislation passed earlier this year, small businesses can add another function to the list of critical roles they play in today’s economy – supplier to the nation’s taxpayers.”

View video highlights from today’s hearing. 

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