[Senate Hearing 110-662]
[From the U.S. Government Publishing Office]
S. Hrg. 110-662
OPPORTUNITIES AND CHALLENGES FOR WOMEN ENTREPRENEURS ON THE 20TH
ANNIVERSARY OF THE WOMEN'S BUSINESS OWNERSHIP ACT
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ROUNDTABLE
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
September 9, 2008
__________
Printed for the use of the Committee on Small Business and
Entrepreneurship
Available via the World Wide Web: http://www.access.gpo/gov/congress/
senate
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
JOHN F. KERRY, Massachusetts, Chairman
CARL LEVIN, Michigan OLYMPIA J. SNOWE, Maine
TOM HARKIN, Iowa CHRISTOPHER S. BOND, Missouri
JOSEPH I. LIEBERMAN, Connecticut NORMAN COLEMAN, Minnesota
MARY LANDRIEU, Louisiana DAVID VITTER, Louisiana
MARIA CANTWELL, Washington ELIZABETH DOLE, North Carolina
EVAN BAYH, Indiana JOHN THUNE, South Dakota
MARK PRYOR, Arkansas BOB CORKER, Tennessee
BENJAMIN L. CARDIN, Maryland MICHAEL B. ENZI, Wyoming
JON TESTER, Montana JOHNNY ISAKSON, Georgia
Naomi Baum, Democratic Staff Director
Wallace Hsueh, Republican Staff Director
C O N T E N T S
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Page
Opening Statements
Kerry, The Honorable John F., Chairman, Committee on Small
Business and Entrepreneurship, and a United States Senator from
Massachusetts.................................................. 1
Participants *
Barton, Margaret Mankin, Executive Director, National Women's
Business Council, Washington, DC
Coleman, Faye E., President and Chief Executive Officer, Westover
Consultants, Inc., Bethesda, MD
Costello, Patricia, Director, The Arthur M. Blank Center for
Entrepreneurship, Babson College, Babson Park, MA
Dolan, Lisa, President, Securit, Flushing, NY
Dorfman, Margot, Chief Executive Officer, U.S. Women's Chamber of
Commerce, Washington, DC
Elder, Tara, Director, Women's Business and Training Center,
Beckley, WV
Hadary, Sharon G., Executive Director, Center for Women's
Business Research, McLean, VA
Hollister, Kip, Founder and Chief Executive Officer, Hollister,
Inc., Boston, MA
Jacobus, Heidi, Chief Executive Officer, Cybernet Systems
Corporation, Ann Arbor, MI
Littlejohn, Virginia, Chief Executive Officer, Quantum Leaps,
Inc., Washington, DC
Merlino, Nell, Founder and Chief Executive Officer, Count Me In
for Women's Independence, New York, NY
Sullivan, Ann, Government Relations, Women Impacting Public
Policy, Washington, DC
* Comments, if any, between pages 6 and 16.
Participants' Prepared Statements
Littlejohn, Virginia
Prepared statement........................................... 7
Hadary, Dr. Sharon G.
Prepared statement........................................... 13
Statements for the Record
Ballard, Saberina A., Favor Network Services, LLC,
Fredericksburg, VA............................................. 49
Gozdz, Wanda E., W. Gozdz Enterprises, Inc., Fort Pierce, FL..... 50
Mahoney, Maria, The Mahoney Group, Inc., Lakeland, FL............ 51
Shondel, Valerie, SelectoFlash/WIPP, West Orange, NJ............. 53
Shrier, Cat, Ph.D., P.G., Watercat Consulting, LLC, Washington,
DC............................................................. 55
Turczyn, Charlene, CMW & Associates, Springfield, IL............. 58
Waldron, Gayle, The Management Edge, Largo, FL................... 60
Weeks, Julie R., Womenable, Empire, MI........................... 131
Supplemental Material
Global Entrepreneurship Monitor (GEM) 2007 Report on Women and
Entrepreneurship, Executive Summary 135
U.S. Women's Chamber of Commerce, Report to Congress, September
2008, ``Special Report: 2006 Federal Contracting Data Grossly
Overstates Spending with Women-Owned Firms'' 139
OPPORTUNITIES AND CHALLENGES FOR WOMEN ENTREPRENEURS ON THE 20TH
ANNIVERSARY OF THE WOMEN'S BUSINESS OWNERSHIP ACT
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TUESDAY, SEPTEMBER 9, 2008
United States Senate,
Committee on Small Business and
Entrepreneurship,
Washington, D.C.
The committee met, pursuant to notice, at 10:10 a.m., in
room 428-A, Russell Senate Office Building, the Honorable John
F. Kerry (chairman of the committee) presiding.
Present: Senator Kerry.
Majority staff present: Karen Radermacher (professional
staff member) and Greg Willis (counsel).
Minority staff present: Linda Le (professional staff
member) and Erik Necciai (counsel).
OPENING STATEMENT OF THE HONORABLE JOHN F. KERRY, CHAIRMAN,
SENATE COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP, AND A
UNITED STATES SENATOR FROM MASSACHUSETTS
Chairman Kerry. Well, we will officially open up this
roundtable. I appreciate everybody's patience. I am sorry I got
hung up on the telephone, and I am sorry to keep everybody
waiting. We are delighted to welcome so many people here, and I
gather we have even an overflow room where additional folks are
listening.
I will just bring you all up to speed. These roundtables
are a different way of doing business here, but we think a far
more effective way of doing business, frankly, because it
deformalizes the hearing process a little bit and increases the
ability to have a substantive dialog, it doesn't just become a
kind of formal few questions, one panel, next panel, but we get
to go on and have a longer discussion. While I can't stay for
the whole discussion, the staff to my right and left, Karen
Radermacher and Ms. Le, will manage the discussion as we go
forward.
There is a formal record kept of this so that our
colleagues are able to follow it and catch up to it, and we
have found through the years that this has really been one of
the most effective ways of laying the groundwork for good
legislation and really working through some of the issues with
the community at large.
A number of you in this particular roundtable have taken
part in previous ones and we are grateful to you for that and
we are very, very happy. I know that many of you sitting in the
audience would have preferred to have been here at the table,
and I understand that. I apologize that not everybody can be
accommodated all at the same time. But we will leave the record
open for a 2-week period of time, and if you hear anything that
is at odds with your experience or something that you would
like to add to the record, we really welcome it. It will be
particularly helpful to us in building the foundation for us to
be able to legislate here effectively as we proceed forward.
This is the second roundtable that we have had this year
focused specifically on women's business issues. In March, the
committee held a roundtable in Framingham, Massachusetts,
entitled, ``Women in Business: Leveling the Playing Field.''
That is exactly, really, what the discussion will continue on
here today.
This Committee has made, I think, significant efforts, and
I am pleased to have worked with Senator Snowe both when she
was Chairman and now in my role as Chairman. We have really
sort of interchanged the process here very easily and the
committee as a whole has worked very effectively on a
bipartisan basis.
But your comments today are going to be critical to helping
us as we think how to break down these last barriers that seem
to remain. They have been persistent and they are persistent,
and I think it is good to air that and to underscore the nature
of its persistence. I am glad to welcome each of the
participants here. I thank you for being here.
Particularly, I am grateful to say hello to Kip Hollister
from--pardon me a little chauvinism--from Boston,
Massachusetts, celebrating the 20th anniversary, I gather, of
your business, some 80 employees, and, I gather, $26 million of
revenues. So we really congratulate you on that. I know you
have had to overcome a lot of the hurdles that I have talked
about and just the upturns, downturns of the economy as it is.
So we congratulate you on that.
I also want to welcome Trish Costello, who took part in
our--she is from Babson College and she took part in our
earlier roundtable in Boston.
So all of you know that 20 years ago, Congress passed H.R.
5050, which was the Women's Business Ownership Act, and it was
the first comprehensive small business legislation aimed to
help women business entrepreneurs succeed. The bill was the
culmination of a movement that really began in the 1960s to
address economic inequalities between men and women and
continued with changes such as the passage of the Equal Credit
Opportunity Act of 1974. The women leaders throughout that
period of time pushed to move the Women's Business Ownership
Act forward, and it has been a very important tool in helping
provide the tremendous growth of women-owned businesses that we
have seen over the last two decades.
The Women's Business Ownership Act created Women's Business
Centers and they provide consulting and training to women who
seek to start or grow a business. I know firsthand of the
positive impact of that program through the work of the Center
for Women in Business Enterprise in Boston and in Worcester.
Since 1995, the three branches of this center have helped over
14,000 entrepreneurs. So it just goes to show there is a demand
out there and when we meet the demand, we have a very positive
impact.
H.R. 5050 also created the National Women's Business
Council, which presents policy advice on women small business
issues to Congress and to the President. It required the Census
Bureau to include women business owners in its census survey,
and it called for all agencies to report on any new contracts
with women-owned firms, one of the earliest efforts to try to
get our arms around the problem of whether or not women were
really getting their fair share of Federal contracting.
According to the data that the Center for Women's Business
Research will officially release tomorrow, and they have shared
it with us, between 1977 and 2002, the number of women-owned
businesses grew by a whopping 824 percent. The new 2008 numbers
also show that 7.2 million firms were owned by women. These
firms employed 7.3 million workers and created $1.1 trillion in
revenue.
But despite these, the success that is clearly articulated
in those numbers, women-owned businesses still lag behind their
male counterparts in important areas. Women-owned firms have
lower revenues and fewer employees than their male-owned
counterparts, and we are talking about apples and apples here,
not apples and oranges. Eighty percent of women-owned firms
have revenues under $50,000. And although 6 percent of men-
owned firms have revenue of $1 million or more, only 3 percent
of all women-owned firms do, so it is 2-to-1. Women-owned firms
often have fewer employees, as only 16 percent of all firms
with employees are owned by women. And in Federal procurement,
women-owned firms receive less than 3.5 percent of all Federal
contracts, and that is deeply troubling.
Understanding what causes these differences and taking
steps to address them is critical in terms of properly
addressing questions of the strength of the American economy
itself. It is particularly important during these tough
economic times. As reported in the Global Entrepreneurship
Monitor 2007 Report on Women and Entrepreneurship, and I quote
it, ``ignoring the proven potential of women entrepreneurial
activity means that countries put themselves at a disadvantage
and thwart their opportunity to increase economic growth.''
In reviewing the last 20 years, it is disturbing to see
that the issues that were hindering women entrepreneurs from
achieving their full potential 20 years ago are still barriers
today. Access to capital, access to markets, particularly
Federal procurement, as we have just pointed out, and other
issues continue to be the central issues of concern in this
relationship and they are the central issues of concern to this
committee as we meet here today.
This roundtable is going to focus on each of these issues,
accessing markets, especially Federal contracting and
procurement, accessing capital, and accessing networks and
decisionmakers. Twenty years later, the committee continues to
be engaged in addressing those issues.
Last year, Senator Snowe and I worked together to pass
legislation giving permanent funding to established Women's
Business Centers. That language was implemented this year. In
addition, we unanimously passed out of the Committee the
Entrepreneurial Development Act and the Small Business Venture
Capital Act. The Entrepreneurial Development Act reauthorizes
the Women's Business Center program and the National Women's
Business Council. In addition, the Small Business Venture
Capital Act creates incentives for financing of women-owned
firms under the SBA's program for Small Business Investment
Companies, the SBIC, as many of you, I hope, are familiar with.
Both of these bills are now part of S. 2920, which is the
Small Business Reauthorization and Opportunity Act, and we are
working to pass it in the Senate. I hope that each of you from
whichever State you come from will be in touch with your
Senators in order to urge them to pass that forthwith.
Senator Snowe, myself, and many others are also working to
prevent the Women's Procurement Rule--some of you may be
familiar with it--which has been offered by--some of you is an
understatement--well, you will be pleased to know we are
working hard to prevent that procurement rule from being
finalized. This has been one of my top priorities ever since
the Bush administration proposed the rule on December 27 of
last year. This rule would allow set-asides for women-owned
firms in only 4 of a possible 140 industries. If you want to
have an interesting background to that question, just pull up
the testimony we had with the Administrator of the SBA and the
Administration when we questioned them as to the rationale,
both Senator Snowe and myself, and their answers on rationale
is really very, very disappointing. That is when Steve Preston
was still there and we had that dialog last year.
Now, maybe there are those in this Administration who
believe that women business owners don't deserve a fair shot at
doing business with the Federal government, but I think the
statistics are clear. More needs to be done to provide access
to women in the Federal marketplace, and we have a Federal goal
that women should receive at least 5 percent of all Federal
contracts. Last year, they received only 3.4 percent. In
addition, that is without some of the Federal contracting areas
being available, like TSA, which we have now mandated are
available. So the pie, in fact, has grown significantly larger
than that and the percentage would be significantly smaller
when measured against the larger pie.
So I will just close quickly by saying that we have got to
do more and this proposed rule is really an affront to hard-
working women business owners who simply need an opportunity to
be able to prove what they are able to do and we ought to live
up to the law. It is pretty simple stuff.
I will continue to do everything I can to see that that
rule doesn't see the light of day in its current form and to
ensure that women have an opportunity to contract with the
Federal government by putting in place a meaningful procurement
program.
So I look forward to our discussion today. If you want to
make a comment, the general format is you take this thing and
just stand it up on its end like that and one of the staff
leaders will recognize you as we go forward. Or if I am here, I
will call on you. And we ask you just to keep your comments and
answers tight so that we can stay engaged and keep moving
around, and who knows, maybe we will even have the opportunity
toward the end to have a few interventions from folks in the
audience if we do this in a crisp fashion.
So either Linda or Karen, or Karen and Linda, in whichever
forum, will help to manage the discussion, and without further
ado, why don't we kick it off. Do you have a preordained--do
you want someone to go first, or do we just want to lead off on
the first topic?
Well, why don't we start off, I mean, we have those three
sectors, access to capital, access to--I think we ought to
divide it up, and then if we want to look at it generically.
Virginia, you were one of the people who helped make this thing
happen 20 years ago. Maybe you would be the ideal person to
lead off the discussion and give us a sense of where we are
compared to where we have traveled from.
Ms. Littlejohn. I am not going to give you the full
history. I am just going to give you a couple of anecdotes in
the interest of time, the first one relating to data and
statistics. The SBA's publication, State of Small Business,
reported on the state of women's entrepreneurship in the 1970s
and 1980s, but because the Federal Census measured only the
sole proprietorships, the figures were extremely distorted.
So at a very meeting in this room in 1982 or 1983, one of
the--the Staff Director said something about women-owned
businesses only had gross annual receipts of $10,000 a year and
most of them were basement or kitchen table-based businesses
with basically macrame firms or candle making. We had 40 women
business owners sitting in the room and I said, you know, I am
sure this isn't true. You are never supposed to do something
unless you know your numbers. But, I said, do you mind if we
ask in the room how many of you own C corporations, et cetera.
I asked everybody to raise their hand if they had more than $1
million in sales per year. You could hear the thunderous
slamming of jaws onto the table with slack-jawed stupefaction
as they realized all of the data were completely wrong. So that
was the background on getting that piece in 5050.
In terms of access to business credit, in the 1970s, there
was a congressional hearing where a divorced woman business
owner who didn't have a husband to cosign her loan provided
information about the request to have her son cosign her loan.
Now, here is the interesting part. The son was 17 years old.
And then in the Federal procurement area, in hearings that
were held in the late 1970s, there was discussion about
accessing Federal markets, which has been a huge issue for
years and years, and the woman business owner who was
testifying was telling about a conversation she had with the
Federal procurement officer and she asked him about how she
could break into the Federal market, what did she need to do,
and the serious response was, sleep with the contracting
officer. This was what we referred to within the community as
the Hollywood casting couch, the Federal version of things.
So all of those issues and others were addressed in H.R.
5050 and we have made huge, huge progress since then, but we
still have a long way to go.
Chairman Kerry. If you had to pick, Virginia--and thank you
for your efforts through the years on this--if you had to pick
one of those sectors or one thing that we could do that would
make the most difference, what would that be? I mean, if it
were access to capital or procurement or networking, where do
you think the biggest single leap could be made if X, Y, or Z
barrier were removed?
Ms. Littlejohn. Well, I would say the biggest barrier has
really been in the Federal market. That has been--in 1978, when
I still lived in San Francisco, we were working on trying to
get women-owned businesses into the Federal marketplace. It has
been so incremental. We have barely inched ahead. But huge,
huge strides are in the thinking process with the economic
blueprint and with some of the initiatives that are going on
right now. I think that is the biggest structural impediment.
There are many other issues that need to be dealt with that
are in the economic blueprint, but we basically decided in 1988
that we didn't think we would be able to get anything passed if
we went heavily after Federal procurement at that point. We
felt that it would jeopardize the entire bill. So of the five
burning issues we had then, we decided we would try to deal
with that later in another way and not jeopardize the whole
what became the Women's Business Ownership Act.
[The prepared statement of Ms. Littlejohn follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Kerry. Does anybody else want to pick up on that
question I just asked? Yes, Dr. Coleman? Tell everybody who you
are.
Ms. Coleman. Yes. My name is Faye Coleman. I own a
contracting, Federal contracting and management consulting
company named HIT, health consulting company in Bethesda,
Maryland. I have been in business since 1984, so I have been
around for 20, almost--well, next March it will be 25 years.
And I really just want to quickly echo what Virginia said about
the opportunity for significant improvement and advancement in
the figures and the impact being in the Federal procurement
area.
As someone--about 80 percent of our business is in the
Federal sector, and even before I started my business, I had
worked as a consultant in the Federal arena, and so I thought I
knew--because this was something I was familiar with, that is
the direct----
Chairman Kerry. What does it do? What does your business
do?
Ms. Coleman. My business provides technical assistance and
training and program assistance to agencies in the health
arena, health promotion, disease prevention, risk reduction,
and also the infusion of technology to provide solutions to--
our clients include the National Institutes of Health, the
Center for Substance Abuse Prevention, and many of the other
agencies in the health----
Chairman Kerry. How many employees?
Ms. Coleman. We have got 43 employees and we have revenues
of $16 million. One of the things that--I just went to a pre-
proposal conference yesterday for a large procurement out of
the Department of Defense and one of the things that just
really reinforced this whole issue around access to Federal
markets to me was that when people talk about the goals that
are set by contracting officers and procurement officials for
subcontracting, particularly for large bundled procurements,
multi-million-dollar procurements, women's business, the goals
for women-owned business involvement is probably one of the
least, the last ones. Small business, of course, is number one.
And the pie is so big on this that it is not a matter of
necessarily putting it in increments because there is enough
for everybody to go around, but it just is interesting to me
that it is almost an afterthought in many cases that
procurement officials and contracting officers, when they are
talking about percentages and goals for involvement in a
subcontracting basis, that women-owned businesses--service
disabled veteran-owned businesses, HUBZone businesses, 8(a),
women-owned, they are all involved, but the percentage goals
are smaller for women-owned businesses. So I do think----
Chairman Kerry. What stuff do you do outside the
government?
Ms. Coleman. I would say about 15 to 20 percent of our
business is outside of the Federal government. That includes--
--
Chairman Kerry. Are you growing outside----
Ms. Coleman. Yes. Yes, we are. We definitely are. But I
would say that the majority of our larger multi-year contracts
are on the Federal side.
Chairman Kerry. And in your efforts to secure the Federal
contracting, have there been perception issues you have had to
get over? Have there been just sort of fundamental----
Ms. Coleman. Well, it is--yes. There have been some
perception issues, particularly early on when I first started.
There was a perception that women were not quite as capable as
a male-owned company, particularly in some markets, in energy
and NASA. We do work with Transportation and NASA and some of
the more scientific agencies, Commerce. So I frequently got--
now, it is hard to pinpoint exactly, that that is exactly the
case, but you would go to procurement meetings and fora and
women were definitely underrepresented, and this sort of gets
into one of the other issues about access to networks and
decisionmakers.
Again, in the Federal procurement area, there is a whole
universe of people who are very instrumental in the
decisionmaking process and just the knowledge sharing process,
and if women are not as equally represented at those tables,
then you don't have the information that you need to be as
successful and as savvy in putting together winning proposals
and crafting teaming agreements and joint ventures and all the
things that lead to success.
Chairman Kerry. Did you find that there was a proactivity
on behalf of the agencies you were dealing with, or did you
have to kind of break down the doors and say, hey, we are here.
We are----
Ms. Coleman. Not as much for women. I will say it is
getting a little bit better. But the proactivity was not as--
definitely not as much for women-owned businesses as you saw in
some of the other areas.
Chairman Kerry. Sharon?
Ms. Hadary. I am Sharon Hadary, Executive Director of the
Center for Women's Business Research. Mr. Chairman, we thank
you for making our--or previewing our announcement of the Ninth
Biennial Update on the numbers of women-owned businesses that
we will be releasing tomorrow.
I just want to throw a little data in here. Obviously, we
are the Center for Women's Business Research and, in fact, we
evolved because of the Women's Business Ownership Act because
part of that said research is vital to understanding the issues
and having actionable knowledge, and we are the premier and
probably the only nonprofit research institute in the world
devoted exclusively to studying women business owners.
There are a couple of statistics I would like to add to
this. When we look at the businesses that are majority owned by
women, they represent about 30 percent of all businesses. We
also have to look at the changing profile of women-owned
businesses. Twenty-six percent of all women-owned businesses
today are women of color, and oh, by the way, that is up from
20 percent just a few years ago.
So a lot of the issues we are talking about are
exacerbated, we found in a 3-year study that we are doing on
accelerating the growth of businesses owned by women of color,
many of these issues are exacerbated--made worse, these big
words--researchers have trouble with big words.
[Laughter.]
Ms. Hadary. But seriously, many of these issues are, in
fact, made more difficult when the individual is both a woman
and a minority. I just very quickly want to give you a couple
of examples of this disparity, of the disparities we see,
because when we look, break this down by industry, you can't
just go with the overall--when you break this down by industry,
for example, when we look at industries like education, where
the majority of the businesses in that industry code are women-
owned, 56 percent are women-owned and yet they get only 7
percent of the dollars. When we look at health care, 58 percent
of the businesses in that industry code are owned by women and
they get only 7 percent.
And then when you drill down to some of the less
traditional areas for women-owned businesses, utilities, 14
percent are women-owned but they get only 10 percent--I am
sorry, only 1 percent of the contract dollars. Transportation,
12 percent of the firms and they get only 1 percent. This is
not----
Chairman Kerry. Let me stop you there for 1 second.
Ms. Hadary. Yes.
Chairman Kerry. Each and every one of those categories that
you have just listed, I might add, are left out of----
Ms. Hadary. Yes, sir.
Chairman Kerry. 140----
Ms. Hadary. Yes, sir, and I can go through every industry
category, but I figured in the interests of time, you would
prefer that I just pulled out a few of the most interesting
ones. But those--I am not--in every industry, we see the same
kind of gap and disparity, and I want to just add one more
thing.
This is not necessarily about equity. This is about
economic development, because in research, what we have seen is
that the businesses that have Federal contracts are the
businesses that show continual, regular growth over a period of
time. So it is important for economic development for our
country as well as for the opportunities for women business
owners.
[The prepared statement of Dr. Hadary follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Kerry. Well, that is a very good point, and what I
would like to do, Linda, is make sure that Senator Snowe and I
take your data and send a letter to the Acting Administrator of
the SBA and underscore to them these findings relative to their
proposed rulemaking. I think that is really important for us to
follow up on.
Margot Dorfman?
Ms. Dorfman. Thank you. I greatly appreciate the
opportunity to be here. My name is Margot Dorfman. I am CEO
with the U.S. Women's Chamber of Commerce, and, of course, our
number one issue is making sure that the Women's Procurement
Program is implemented as it was intended, so thank you for
your efforts on that.
I would like to add to some of the statistics that we have.
While total Federal spending grew from $200 billion in 1999 to
over $340 billion in 2006, and that is an increase of $140
billion, spending with women-owned firms increased by only $5
billion. So we see that where the spending is occurring is a
challenge.
Additionally, we believe that the numbers that are shown
right now with the 3.5 percent or whatever it is spent with
women-owned firms is probably overstated. We are releasing a
report, and one of the things that we have done is we have
identified the top 50 firms that are in the Federal Procurement
Data System and we find that over 50 percent of those that are
shown as women-owned actually have male CEOs. We are looking at
about $2 billion of contracting with women-owned firms that is
stated that may not be actually going to women-owned firms.
Another issue we see is that nine Federal agencies spent
more than 50 percent of their total spending with women-owned
firms with just ten firms each. So while there is money that is
being spent out there, it is a very small pool of women-owned
firms that are actually accessing the dollars.
Chairman Kerry. That is pretty stark. Two of you further
document what I think everybody in the audience understands is
happening, and the documentation is critical because you have
got to make your case and be persuasive. But let us assume for
the purposes of this discussion now that it is as bad as it can
be, and we all understand how bad it is. The question is, what
is the fastest remedy here? How do we turn this around?
Now, in my judgment, and obviously I put a lot of energy
into this 4 years ago, believing it, if you have got a
President who tells his cabinet officers this is going to
happen and you check every other week on whether it is
happening, it happens. It is called executive leadership and we
need to make sure that whatever the next administration is, we
are going to have strong executive leadership.
But what can we do in terms of the law or the access to
capital rules or anything that we can control here, in your
judgment, to most rapidly remedy this, beyond the executive
leadership that is necessary to demand that those goals be met?
Judgments on that? Yes, Ann Sullivan?
Ms. Sullivan. Virginia referred to the economic blueprint
that was released this week, and that is 30 organizations have
come together and a lot of individual business owners who are
in this audience to talk about what they want from the Congress
and the next administration in terms of action on these issues.
So with procurement, we have three main points. One is,
which we have talked about, put into place a meaningful Women's
Procurement Program. As you know, it has been a long time in
coming and we are very dissatisfied with what is proposed. But
that is the vehicle. If you can set aside contracts, if you can
limit the competition, that will definitely help the agencies
meet their goal.
Two, contracts are too large. We have to unbundle
contracts. Without that, and it is the trend today that
contracts are bigger, these small businesses just can't
compete.
And then, three, we have to strengthen small business
subcontracting by enforcing prime contractors' subcontracting
plans. If we helped you win the bid, you need to use us when
the work comes in, and that would, in our opinion, also help
the numbers that have been cited. It would really help women
businesses get contracts.
Chairman Kerry. Good suggestions. Trish, you had your
placard up, or you put it back down----
Ms. Costello. Well, I am looking at it, as well, Senator
Kerry, from the standpoint of with these stronger businesses,
with the contracts that can go in to enable these women's
businesses to be stronger, this has a tremendous impact on our
ability to have a robust economy because we know through the
Global Entrepreneurship Monitor that you mentioned earlier that
the number of women that are participating as entrepreneurs,
the stronger they are, the faster they grow, the more robust
our economy is.
And, in fact, looking across the world at actually
countries that represent 90 percent of the GDP, that is
consistent, that the more women that are involved in the
economy, from the lower-wealth countries to the higher-wealth
countries, the more women that are involved and the stronger
those companies grow, the more robust the economy will be.
So we are not looking just at the opportunity that these
individual women have and these individual companies have, but
it also has a major impact on our ability to be competitive and
to grow our economy. And as we are looking at how to revive and
push our economy forward, we need to be looking at how we
provide these kinds of services and opportunities both in
procurement and in other areas for women because it is a major
key piece.
In addition, what we have been doing, and I know you know,
Senator Kerry, because this is happening in Massachusetts, but
you can take--we are now taking the Global Entrepreneurship
Monitor data and not only are we all over the world, but we are
now moving down to the State, with Massachusetts being the
first one where we are actually looking now county by county to
see the growth of women in that State as our first pilot one to
see where do we have growth around the State, where are the
women growing fastest, in what industries are they, and how are
they benefiting, so we are being able to determine best
practice in a wide area across both sales and procurement and
different types of data points.
Chairman Kerry. Good. Great. That is helpful. Lisa?
Ms. Dolan. Thank you. Thank you for the opportunity to
speak today. My name is Lisa Dolan. I own Securit. We are a
private investigations and security firm in New York. We
provide 60 percent of our contracts to the Federal government.
To Dr. Hadary and Ms. Dorfman's point on their percentages,
the Women's Procurement Program, being in a male-dominated
field--my NAICS code is 561612--it wasn't even a consideration
for the SBA and we are certainly in a male-dominated field. I
was very disappointed. So obviously the Women's Procurement
Program didn't mean anything to me because they didn't include
me. They excluded me. So I do believe that you have to look at
those numbers because 4 categories out of 140 sectors is
certainly not a fair assessment of women-owned businesses where
we are underrepresented in many other industries. We do a lot
of business with the government, but we could do a lot more if
that carve-out allowed us to be included.
Chairman Kerry. Can you define further the impediment that
you run into in terms of the doing more now? What is the
restraint?
Ms. Dolan. Well, there are a number of restraints. One is
the contracts are very large, so in order to get those
contracts, you have to tap into capital. We have a line of
credit. We tried to increase it, but the bank actually said,
well, 60 percent of your contracts are with the government and
that doesn't make us comfortable.
[Laughter.]
Ms. Dolan. And I thought that was a very strange statement.
So here we are, having this opportunity to be awarded these
contracts, and yet I had to tap into my personal finances to
support the payroll because the bank wouldn't increase my line
of credit. So there are a number of impediments. Also, being in
a male-dominated field in security, I am usually the only woman
at the table and not taken seriously. In fact, I think I told
Karen this story, I went to a meeting. I sit on a governing
board on a grassroots effort for some legislation in the
security field and there were 14 men at the table and I was the
only woman and I came in with my legal pad, because I take
copious notes wherever I am, and the gentleman sitting next to
me said, ``Oh, are you John's secretary?'' We are in the year
2008.
Chairman Kerry. Well, he wasn't.
Ms. Dolan. He wasn't. You are right.
[Laughter.]
Ms. Dolan. That is right. So, yes, there are some
impediments.
Chairman Kerry. We are going to go over--yes, Kip?
Ms. Hollister. It is a pleasure to be here celebrating our
20th, as well. You all will be shocked that of the $26 million
that Hollister is doing this year, guess how much is dedicated
to government? Probably 15 percent. And I will tell you why. I
have--one, I think we have got to stop the loopholes for the
phoniness of it is not really females that are running these
companies. I have been courted by many who want me to come in
as the token woman, and guess what? It is a very hard thing to
resist because my revenues will shoot up. But I have integrity
as a female owner and I say no. But I know it happens in my
community.
Second, the relationship--I am in a relationship business.
We are a service business. We are a staffing company. No, I
don't own Hollister Clothing. I wish I did, and so do my four
children.
[Laughter.]
Ms. Hollister. But in the relationship business, I think we
need to bring some relationship to the procurement process, and
I don't know how to do that. First, the procurement process
needs to be easier point of entry for someone like me to manage
because it is easier right now for me to do business in the
private sector. And so I need ease of entry. Maybe I need
mentorship. I agree, I don't know what I don't know.
But second, once you get these contracts, you are a number
and that is not how I run my firm. All my clients know who I
am. I am the female CEO. I go see them. And it is really hard
to work into the system. So if that is a value, which I think
it should be, how do we better create a system that can partner
so that someone like me can take advantage of the government
and use it to grow my company, because I am not stopping. I
really have the vision of growing my company to $100 million.
The only reason it has taken me this long is because I also
value my work-family balance with my four children. But I am
competing with some male competitors and it is just a very
frustrating experience.
Chairman Kerry. It sounds like it.
Ms. Hollister. Yes.
Chairman Kerry. Well, I appreciate the integrity that you
bring to the effort and hopefully we can make it easier to
access more of that----
Ms. Hollister. I would love it.
Chairman Kerry. Do you have a sense, I mean, beyond what I
said about the executive piece of it, is it bundling that is a
problem?
Ms. Hollister. Yes, that is part of it, because what
happens in bundling is that they need us to help in the bundled
approach. So we get invited to the table----
Chairman Kerry. For the beginning, but then they cast you
aside afterwards.
Ms. Hollister. Absolutely, but then I look at how much
revenue has come or what was the price I had to pay, also
inclusive in my gross margin dollars, and I run a sales
organization, so my staff, I don't want to burn out. So yes, it
is partly the bundling issue, and I think the size of the
contracts, which has been communicated. You know, we do need
the capital to then fuel it, so there are a lot, I mean, there
are a lot behind Door Number 3, but----
Chairman Kerry. Have you had any interaction with the
Business Centers?
Ms. Hollister. No.
Chairman Kerry. You haven't?
Ms. Hollister. No. Should I?
Chairman Kerry. Have you used any kind of technical
assistance or input from the SBA or----
Ms. Hollister. You know what, that is something that I
really want to do. Yes.
Chairman Kerry. Do you have any SBIR or SBIC----
Ms. Hollister. No.
Chairman Kerry. None of that?
Ms. Hollister. No.
Chairman Kerry. I guess you wouldn't on the service side.
That makes sense. OK.
Tara Elder from West Virginia here, am I right?
Ms. Elder. I am Tara Elder. I am the Women's Business and
Training Center Director from Beckley, West Virginia. You asked
how to fix the problem and I think everything that has been
suggested is right. You have to start from the top down, but
you also have to start from the bottom up, and a lot of that
is, like Dr. Coleman said, more women have to be at the table.
More women have to be trained on how to approach the government
for contracting, how to do SBIR, how to do STTR. Women's
Business Centers are out there every day. That is what we do.
We assist women every day in their business, but we struggle.
We struggle in how to train women in government contracting. We
struggle in how to present SBIR and STTR training because it is
so expensive to bring and that is something that needs to be
addressed, is how to bring that training day in, day out, to
women so they can compete in government contracting and make a
difference to their local economy.
Chairman Kerry. Do the women that you train come to you or
do you go to them?
Ms. Elder. Both.
Chairman Kerry. Do you cast a net and try to pull people
in?
Ms. Elder. Both.
Chairman Kerry. You do?
Ms. Elder. Yes. We are a very rural State in West Virginia.
We cover--our center covers 11 counties, and from one end to
the other, it is about 5 hours. So some training we take on one
end, some to the other, and some events we bring them to the
center. And right now, we are the only Women's Business Centers
in the State of West Virginia, so we field calls from the whole
State.
Chairman Kerry. How do you target who you are approaching
or sort of the net you are casting?
Ms. Elder. A lot of the times, we use SIC codes. We look at
the industry they are in. But then we do a broad-based press
release, as well, so that we let people who we may have missed
with our targeting marketing who pick up the press release and
say, oh, that is government contracting. I may be interested in
that. And it may have been our shortsightedness who thought
they wouldn't fit into that SIC code or it may not be the right
industry for them. They may know more than we do sometimes.
Chairman Kerry. Do you coordinate with the Secretary of
State's office in terms of their recordation of all existing
businesses?
Ms. Elder. Sometimes. It depends. They are hard to get a
list from, so sometimes we can get a list very rapidly and
sometimes we can't.
Chairman Kerry. It seems to me maybe we ought to think
about making that sort of an automatic----
Ms. Elder. You would think.
Chairman Kerry [continuing]. That when a business is
incorporated or filed appropriately, there is some kind of
transfer to the SBA folks and they know, wow, there is a new
young business here and then you can actually reach them rather
than having them--it seems to me that we don't talk to each
other within these processes very well.
Ms. Elder. Unfortunately, State, Federal government doesn't
talk very well----
Chairman Kerry. Yes.
Ms. Elder [continuing]. And agencies inside the State
Government don't talk very well and neither do Federal agencies
a lot of times.
Chairman Kerry. We ought to think about ways to do that.
What about Chambers of Commerce? Do you have an automatic----
Ms. Elder. We work very well with our Chambers of Commerce.
Our local Chambers work very well with us. We partner on
everything, so we use their mailing lists and they use ours.
Chairman Kerry. Margot Dorfman, do you want to come back
here? I have got to run in about 4 minutes here, folks. I am
going to turn it over to the staff momentarily.
Ms. Dorfman. Thank you. One of the things that we find when
I talk to the small business officers and directors for the
agencies, what they have said to me, we would love to get more
women in the door, but without the program in place, we don't
have any directions on how to actually bring them in because
there are all sorts of legalities. There is no FAR. There is no
regulation and we have to have that regulation in place so that
we know how to live by the law according to procurement. So
that is why we are so adamant about getting this law on the
books in a way that reflects what we see as the 87 percent of
all businesses or all industries that are underrepresented with
women-owned firms, so that we can open that up.
And in addition, what we see is a need for the SBA to have
some transparency and do what they say they are going to do. It
is very clear that their mission is to support small business,
but just the fact that they are impeding the process of
implementing this program is one. They have cut their budgets.
So when you talk about the State level, a lot of the State-
level SBAs don't have the resources anymore to do any outreach
because their budgets have been cut and cut and cut and they
are--the people that have left, they have not been replaced.
And the same thing about when you get access to capital
funding. That also has been--levels of funding have been cut
for loans and the access to those loans. So there are, I think,
a number of areas that the SBA needs to be held accountable for
that we need to have them move forward.
Chairman Kerry. Fair enough. Heidi?
Ms. Jacobus. Thank you. I am Heidi Jacobus and I am the
founder and CEO of Cybernet Systems, which is a high-technology
business founded in Ann Arbor, Michigan. I have 50 employees
and----
Chairman Kerry. Fifty?
Ms. Jacobus. Fifty, yes, and they comprise a lot of Ph.D.s
and master's degrees and very well trained engineers.
I am interested to note that more than 50 percent of the
master's degrees since 1983 in science and technology have been
awarded to women and yet we still see so very few women taking
their education and bringing it to practice and whether--what
the impediments are for them to do that. But they certainly
don't lack for technical background to be able to do that.
I have the advantage of an excellent education. I started
college at a place that was forced to accept women in 1970
after the Supreme Court ruling, so I think a lot of us know
what it is like to have been denied access to certain very fine
colleges until that year. I did my undergraduate there, and
then I went on to graduate school in computer science, where I
earned my master's degree in computer science in 1977 and
continued toward my Ph.D. I never finished the Ph.D. I started
my company instead.
But it is lonely out there, and I don't think--I think we
see a lot more women graduating than we see occurring in
businesses. There is a trend for the number of women graduates
going up, and yet the data shows the number of women in these
technology businesses flat. So it doesn't make sense. The
numbers don't compute to me.
Chairman Kerry. That is interesting. Well, it is good to
see what the product of a good football program can do.
[Laughter.]
Ms. Jacobus. No comment.
Chairman Kerry. It doesn't compute, and it would be really
interesting to try to figure out--I can think of a lot of
possibilities about why it doesn't, but I don't want to even
hypothesize. It would be very interesting to understand where
those folks are going and what they are doing as a result of
that, because you are absolutely correct. There is about a 50
percent or even better----
Ms. Jacobus. Right.
Chairman Kerry [continuing]. Rate of graduation. We ought
to try to see if there is any data on that and see if we can
figure it out.
Folks, I, unfortunately, I have got an 11 o'clock. I have
got to run out of here. But I kept promising you Linda and
Karen and you finally get them. What I would like you to do
before you wrap this up--and again, I want you to invite, if
there are any interventions from the audience at large, I would
like to invite them, also--see if you can prioritize. I mean,
see if at the end of this you can say, OK, here is one, two,
three, four, whatever, that we ought to tackle so that we can
come out of this with maybe a consensus about what the order of
priority is as to what we might try to achieve. That would be
really helpful to us on the committee.
So hopefully without interrupting the flow, I really thank
you all very much. It has been very, very interesting, and I
know it will continue to be, so go ahead.
Ms. Radermacher. All right. Actually, Faye, did you want
to--I think your card is next up. Oh, no, I apologize.
Ms. Merlino. Thank you. Thank you, Faye. Nell Merlino from
Count Me In for Women's Economic Independence. We are a not-
for-profit provider of resources for women in business and we
won a program called Make Mine a Million Dollar Business. One
of the things that we have seen and continue to see is the
desire for women to grow their businesses to a million dollars
and beyond and a real lack of resources to the point that was
made in West Virginia, about the lack of resources, say, that
the SBA has to actually reach out to women. We are finding
across the States where we are doing our programs the SBA is
coming to us and asking us to do outreach to women and to get
them to come to our events so they can meet them at those
events.
So there seems to be a real disconnection or lack of
awareness on the part of an awful lot of businesswomen about
those agencies because they are not able at this point to do
the kind of outreach that I think was--it was a great
suggestion about perhaps notifying those agencies as women
start businesses, but more importantly, the women who are--and
Julie Weeks is in the audience who coined a phrase called ``The
Missing Middle,'' which is everybody who is beyond a startup
and is trying to figure out how to grow their business. How do
we put more resources to the missing middle who will create
more jobs than certainly any other group?
We have a goal at Make Mine a Million and in our program of
getting a million women to a million dollars in revenue and
that alone would create a minimum of four million jobs. So I
think the focus on growth, but growth for a large mass of
women, is important, because then they would be able to take
advantage of the procurement situations that are being
described.
Ms. Radermacher. Great. I think that is a really important
point that you bring up, Nell, about the missing middle and
also about how to help small businesses grow and perhaps it is
a good way to transition into some of our other topics. We have
spent the first hour talking about procurement, which is such
an important topic.
So I guess one of the questions I would have for you, what
are--you mentioned the missing middle and what you are doing to
help them. Are there any other either specific needs or things
that should be done, whether by SBA or anyone else, to help
these small businesses grow into multi-million businesses, or
million-dollar businesses?
Ms. Merlino. Certainly, a lot of the things that were
discussed already. The issue of the size of government
contracts is formidable to a lot of businesses. But it is a
combination--I think I can best answer it with a very short
story about a woman who went from $400,000 to over $20 million
in 18 months and the intervention that we supplied was
relatively small but significant.
One, she had never taken advantage of the fact that she was
a woman and minority-owned business and wasn't quite sure how
to do it. So we were able to direct her to the places. She runs
a business called Human Potential which trains people coming
back from Iraq and Afghanistan how to get back into the
workforce, and people coming out of prison and people who have
been downsized. So given the economic news, her business is
kind of valuable and important and she was stuck at $400,000
for 5 years, mainly because she didn't know how to delegate to
employees, and she has grown from now ten employees to 80
employees. So it was a minimum amount of technical assistance
and education and awareness about the opportunities that
existed in government contracts and programs.
So I think this issue of the networks and how aware we want
to make people about what those opportunities are--too many
women are coming to our program and going from way under a
million dollars to over a million in 12 to 18 months and it
suggests a focus in this area would move millions of women out
of that $50,000 revenue area into larger and larger businesses
where I do think there are then resources, or some resources--I
am sure some folks on the panel would argue with me about
that--but there seems to be greater opportunity. It is getting
to the point where you are big enough to start thinking about
taking advantage of these opportunities that I think needs to
be addressed more clearly by the SBA and the Business Centers
around the country.
Ms. Radermacher. Right. Well, I think that is actually an
incredible point, even, about the impact that just a little bit
of help can have, and it does make me think of the impact on
the whole economy if that were available to everybody.
Did you have a question, Linda?
Ms. Le. I first wanted to welcome all of the women here on
behalf of Senator Snowe. She was in the House of
Representatives in 1988 when the Women's Business Ownership Act
was passed and she voted for it then and has worked very hard
since then to support it, so welcome, everyone. I also wanted
to thank Karen Radermacher because she has worked so hard to
put this together.
My questions are about Make Mine a Million. What is it that
the women are learning when they come to your program that is
propelling them forward? What are the two or four or five
things that are making such a difference that they are going
from below a million dollars to above a million dollars in such
a short period of time and how can we take that and replicate
this model so that we can push that out through Women's
Business Centers and elsewhere?
Ms. Merlino. It is awareness of opportunity and meeting
other women who have done it. I think it is incredibly
important when you have so few women in your community or in
your--meeting other women who have grown, knowing what the
opportunities are, both in terms of government programs but
also in terms of corporate contracts and things, understanding
the opportunities, and understanding more about their own
finances and how that works.
Financial literacy in business is critically important and
it is something that I think once they get into a Business
Center, they often learn, but there are millions of women who
never get into those places and I think there needs to be a
greater outreach to women from those centers so that they are
aware of places.
We also provide community for these women, which I think is
another issue. If you are shut out of networks and you are
going to meetings where you are the only woman in the meeting,
it is helpful to be able to have someone to talk to or to call
on who has some experience in these areas or just has done the
same thing so that you know sort of what the rules of the road
are. We still are not aware enough of those, but I think there
are enough of us in it with organizations with WPO and all the
organizations represented in this room.
There is enough awareness now, and somehow through the SBA,
the Business Centers, there has got to be a way to share that
information so women aren't reinventing this every time they
start to do it, because we are moving women--it is surprising
to us how quickly they are getting past the million dollar mark
in revenue and it is a combination of these things, and the
additional things that are being talked about here, these
businesses would skyrocket.
Ms. Le. Thank you. I appreciate that. When you are working
with these women, are you finding that they are having--you
talked about resources earlier. Are you finding that they have
difficulty also accessing capital besides procurement, which we
have talked about a great deal? Ms. Dolan talked about how she
went and she had a contract and the bank said, no, you have too
much with the government, which it seems like they would say,
oh, great, you have so much with the government. Let us go.
Ms. Merlino. Right. They pay.
Ms. Le. Right. What have you seen along the lines of access
to capital, because that is another one of the topics that we
are very interested in--and please, other women, as well--are
the women finding that that is one of their major barriers,
that they can't grow because they are not being able to get the
next level of capital funding or they are not being able to get
the startup level of capital funding? Where is it that your
participants are having the most difficulty?
Ms. Le. They all have stories about challenges with access
to capital, every single one of them. A lot of them, if it is
taking out lines of equity on their houses to finance their
businesses, and sometimes in their husband's name to do that.
We have women who have not been able to start a business
without financing from Count Me In because we do have a small
loan fund available, who go on to--who get $5,000 from us and
go on to be million-plus businesses. So that challenge remains.
We have the wonderful situation of being able to offer the
women who win Make Mine a Million access to financing through
American Express Open, which has been a huge help to a lot of
these women. But I think it is helping other agencies and
organizations that provide financing to understand that these
are great businesses and with financing will grow and, you
know, produce great jobs and products and services and
everything.
Ms. Radermacher. Thank you. Ms. Dorfman, did you want to
comment on this, as well?
Ms. Dorfman. Yes. When you talk about access to capital, we
see a few things happening. An example is I had a member go to
Bank of America asking for a business loan only to be told that
we are not giving business loans anymore, but we will take a
look at your personal--what you have for personal wealth and
let us see if we can loan against that. That is one issue.
I have another member who went to get a loan and she was
told by that lender that she needed her husband to sign off on
it. She has a six-figure salary. He had a mid-five-figure
salary. They didn't believe her. They said, well, you couldn't
possibly be making more than your husband. You have to have him
sign or we are not going to give you the loan.
So this is not--back when you started this whole thing, it
was the same thing. We haven't really moved forward.
Additionally, when you are taking a look at the SBA loans, what
we see is that the banks are now using it as a tease. Oh, yes,
we have SBA loans, and now what happens is we get you in the
door and we give you a line of credit instead, so you are
putting your business on credit cards rather than using the
proper financing vehicle to have that happen.
Additionally, what we see now with the economy is
definitely impacting because women have had to go and use their
homes as equity, and now that the housing, the bottom has
dropped out, they don't have as much funding available to them
to grow their loans, and traditionally, women are given smaller
loans anyway. They don't have access to the larger loans to be
able to grow, so those are some of the challenges that we see.
Ms. Le. Let me just ask a follow-up question on the SBA
thing. So they are bringing women in saying, come get this SBA
loan, and then they are ending up pushing them into a credit
card. What is it that they are--I mean, obviously it is a bait-
and-switch, but what is it that they are telling these women
and that they are coming back and telling you to justify taking
them from a fixed loan, or a----
Ms. Dorfman. Well, we are just starting to investigate what
that all means. But we have seen that that has become an issue.
They also cherry pick. They will take the cream of the crop out
there, which doesn't leave--you probably have the same type
of--it is a good, solid business plan and in order to do the
business plan you need good funding, and in the old days, you
could go get a business loan and now women have to rely on the
SBA loans. But if we can't access them because we are being
pointed in a different direction--additionally, some of the SBA
loans out there have exorbitant fees attached to it, so a smart
businesswoman probably wouldn't accept a small business loan
with that on top of it. So those are some of the issues.
Ms. Le. Thank you.
Ms. Radermacher. Actually, I would like to turn it over to
hear some thoughts from other people. I think, Faye, you have
had your card up for a long time.
Ms. Coleman. Yes. I just wanted to--thank you, Karen. I
just wanted to sort of address the intersection of the
procurement and access to capital issue that has come up,
because when you said, Ms. Dolan said that her bank had refused
to provide additional financing to support her growth, I think
one of the things that is a problem that might possibly be a
way to address this is a lot of banks and financial
institutions don't understand Federal contracting and the
underpinnings of how receivables financing works, for example.
So many women business owners, women-owned businesses are
in the service arena as opposed to manufacturing or something
where there are hard fixed assets. So in the service industry,
in my business and Ms. Hollister's business, your assets are in
your head or with your people and not necessarily in a factory
somewhere. The whole notion of understanding how the process of
receivables financing in the Federal government sector works is
something that I think a lot of banks, particularly the
community banks who in many cases are the first point of entry
for women-owned businesses who are starting or who have reached
a plateau and they are trying to get from that $500,000 to the
million or to the ten million or whatever, they are the point
of entry as opposed to the large, the mega-national
conglomerate banks.
And so if there was a way that an entity--I don't know
whether it would be the Women's Business Centers or some
entity, SBA, some entity that could naturally bring together
the financial sector, banks and financial institutions that
have capital available, because we have the statistics to show
that this is a growing industry, that there is money to be
made, and particularly women, and the facts, the statistics
verify that.
I think it is a lack of knowledge and understanding of how
the process works, and I can speak from my own personal
situation. When I first started out, I tell people I was turned
down by every bank. I went to all the large banks and they said
no. I went to the small banks and they said no. And I finally
got a small funding, which I, of course, had to guarantee, from
a community bank, but that got me started to a point where
within about a 9-month period, I had actually outgrown that
bank's capacity to finance me. And they said, we just don't
have the infrastructure. We don't have the staff. We don't have
the understanding. So I went to larger and larger banks.
But I do think that there is a need for more intervention
with these financial institutions to train them in what type
of--what the mechanism, how the procurement financing works and
what the opportunity for making money for them and matching
them, what they need to expect, what the regulations are, all
of that. A lot of the banks just are not set up to do that, and
so that is why they would say to somebody who--this is a
wonderful opportunity for them to grow along with this growing
company. Instead of saying no, no, no, it is too risky, oh yes,
and compete for her business.
Ms. Radermacher. Right. That makes a lot of sense and it
does seem like more education is needed.
Trish, I saw you nodding and----
Ms. Costello. Well, I just want to jump right in here with
Faye. There are a couple of things that I think very
specifically the SBA could do, and to follow on with this and
then to expand to a few others. You know, the idea of having
banks compete for women's business is a very important one, and
actually the SBA does have data on which banks are making loans
to women. If we could access that data and have a little bit of
funding to actually do a project, we could do something that I
think everybody in Congress could be excited about, which is
really stimulate competition for women's business by showing
who is actually banking women right now and even doing a review
of the terms, because it is not just who is banking women but
there are some banks that are actually really taking advantage
of women by putting much higher rates and really onerous terms.
So who is banking women, and then let us put that out in
the public, and I know as a woman myself, I would make sure,
even though I am not into business right now, to make sure that
that is where I was putting my business, and let them go out
and start advertising and competing on terms for our business.
I know from talking with the SBA that that data could be
made available in 6 or 8 months if we had the kind of money to
put those reports out. We can even do a demonstration project,
take two or three States or a region and actually look at it.
It is a little complicated with the roll-ups, but it still
could be done, and I think in a very short period of time that
could actually cause some significant changes for us that we
could actually see and measure.
I think the other thing in that area--there are a couple of
other areas there, in addition, and a couple that I do want to
just back up a bit on the education programs. The SBA, the
Women's Business Development Centers have been very successful,
but they are always kind of just gripping to the edge, not
knowing if they are going to get more money again. And we have
seen some fabulous Women's Business Development Centers go
under or are at the risk of going under right now because the
money is not--you can't plan on the money. You can't leverage
it for other grants.
And so I think if the SBA would really look at making a
long-term commitment, understanding that this is still a seed
project, you know. There is not the kind of money that is out
there yet for them to be able to really take care of themselves
and really be self-sufficient. But if you let them die, you are
going to drastically impact the ability for women's businesses
to progress in this way.
In addition, there are other programs like Nell's and
others all around that are really hitting that middle ground,
and the SBA could put out some competitive grants, some very
lucrative competitive grants to take those programs like Nell's
and others and make sure that they are able to expand and
handle more women and document what they are doing that is
really working, because these people are on the forefront of
work that has not been done anywhere else in the world, and it
is an ability for us to again stay very competitive and take
advantage of this and make sure that we don't have a lot of
women that are demanding assistance or don't even know it is
available and can't get it.
And then, finally, I think there are some other programs
out there. When we are looking at the Federal government, I do
want to acknowledge the National Science Foundation in their
quest to get more women and minorities into the SBIC and STTR,
or SBIR and STTR programs. They have a special committee, and I
think SBA should look at this as a model, where they have put
together a special committee and they have made recent--they
know every organization that deals with women electrical
engineers and every woman and minority science association and
organization in the country and they are aggressively going
after them. So there are pockets that are doing really well out
there and I think those are the ones we need to actually hold
on to and make sure that we can take those and take advantage
of it.
There are a lot of other areas I have in the venture
capital and angel, but I will pass for those right now.
Ms. Radermacher. And we do want to talk about those, too,
so we will get back to that. Lots of great points, everything
from having banks compete for women-owned business owners, I
mean, that is a great idea, the need for data from SBA, also
figuring out what is working with that transition through the
middle ground.
I do want to give some other people a chance to respond,
too. Margaret, did you want to----
Ms. Barton. Yes, thank you. I am Margaret Barton and I am
Executive Director of the National Women's Business Council and
I am so very pleased today to see so many current Council
members among us as well as former Council members. This is an
important organization that was born 20 years ago along with
the SBA Office of Women's Business Ownership and we are pleased
to be the only independent policy voice for women
entrepreneurs.
And what I would like to go back to is the networks, the
importance of networks. We are not a membership organization.
We represent all women entrepreneurs nationally, so we have to
rely on networks, and we have just had a series of five town
hall meetings throughout the United States with another one
planned in the San Francisco area for November. We could not do
this without the networks, the networks of organizations that
are represented on the Council like WIPP and WBENC and NAWBO
and WPO.
But it was amazing to us in our findings, which you can
find on our Web site, as to how many women owners, business
owners, did not even know about their local Women's Business
Centers. I think SBA has been very delinquent in advertising
and outreach. Outreach doesn't--the centers don't work unless
there is outreach. The organizations understand the outreach to
the State and local levels.
And so we have really made an effort to reach out to
connect, make some of the connections in our small way without
very much budget and we will continue to do so because we
believe without the networking, it will not work. This whole
movement will fall apart. So we are committed to that.
Also, I would like to make a comment about--back to
procurement a bit. While the Council all agrees on the 5
percent goal, they don't all agree on how to meet that goal.
But one of the issues that we have that I think Tara Elder
referred to is the bottom-up, and maybe one of the
recommendations we can make is to link the contracting officers
with their goals via their annual performance reviews. So that
gives them some accountability, real accountability that they
can understand, to help fulfill those goals.
[Light applause.]
Mr. Necciai. Ms. Barton, following on that note just for a
moment--Eric Necciai from Senator Snowe's staff, her
Procurement Council--actually, for Ms. Coleman, I am curious. I
am reading from the Federal Register of the December 27, 2007
procurement rule. I am curious, in your consulting with the
Federal government, or anyone consulting with the Federal
government, do you work in any of the industries of coating,
engraving, heating, and treatment?
[Laughter.]
Mr. Necciai. Is anyone else on the--does anyone else in the
audience work in that? I didn't think so. Does household
furniture installation, kitchen cabinet making? Motor vehicle
dealership? National security and international affairs? Well,
nobody would be doing that because that is actually for the
public administration. No private entity can do that, either.
So the four industries actually go down to three industries.
Ms. Barton. Right.
Mr. Necciai. Nationwide, we are looking at 1,238 firms, at
least at my last count, that could potentially go into these
three industries. As of this morning, almost over 66,000 CCR
registrants, women-owned firms. At the time of the report, it
was 55. So we are looking at less than 2 percent that this rule
would apply to after, of course, having to go through the
discrimination issue, which is--there are two fundamentally
flawed issues with the procurement rule.
One of my questions is, what as far as relation to this
procurement rule would you recommend, and anyone else on the
panel recommend, to fix this rule? What Senator Snowe has done,
and with the support of the Chairman, through various comment
letters, and thank you for letters of support on various
issues, but is to try and fix those two fundamentally flawed
things. Is there anything else in addition to obviously
implementing, which I know is something that Margot Dorfman is
trying to get with her agencies, to try and get a workable--
along with WIPP--to try and get a workable program that can
help increase that 3.4 percent to 5 percent? What other
suggestions or tools do you think, specific to this program, do
you think that need to be done in order to fix the rule?
Ms. Coleman. Are you directing the question at me or----
Mr. Necciai. It is directed to kind of somewhere else.
Ms. Coleman. I think the first thing they can do is look at
the data and see what the data show in terms of where the
success stories are, where the growth is, where the potential
and the opportunities are, and pay attention to that. I mean,
that is obviously--that is a very easy thing that they clearly
did not pay attention to, because to come up with these four
areas that are so disconnected with what the data--and there is
a multitude of data that you can tap into. So that would be the
absolute first thing that I would recommend.
But I also think that, again, being much more proactive,
putting some action behind the rhetoric and being proactive
about in the way that they encourage women, either through the
funding and the sustaining of the Women's Business Centers and
other mechanisms for reaching out and providing technical
assistance to women-owned businesses to grow their businesses
and to sustain their businesses. There are, through SBA and
Department of Commerce, there are many other entities whose
existence is presumably to provide this type of technical
assistance and they are not being adequately advertised, as we
have heard, used. The resources are not there.
So when you have rhetoric that says we believe in growing
the percentage of contracting by women-owned businesses and we
are committed to meeting these goals, and I have not met a
procurement official or a contracting officer who has not said
that, but the actions are just not there.
Mr. Necciai. There are a few other--I know Karen is going
to ask a few questions. There are a few other questions I
wanted to ask, as well.
Ms. Radermacher. OK. Quickly, I know that you need to leave
early and so I just wanted to give you a chance to talk, and I
know you have been waiting, so----
Ms. Sullivan. I feel like a student with my hand up.
[Laughter.]
Ms. Sullivan. But on procurement, thank you for that
question, because Congress, we think, needs to strengthen the
underlying law, and Senator Snowe has a bill. I know that
Senator Kerry is working on one. So the first action we would
recommend is that you go back and you fix some of the original
language so that we would never end up with an unacceptable,
insulting rule like the SBA published on December 27.
Second, we need--going forward, we need to make sure that
the bill that is going to be passed will allow it to be--will
allow for the program to be legally sound. So we need more
findings. That is why I think everybody is asking the
participants in this audience to send their own stories and
their own letters for the record. That would be a huge help.
Third, you can't have past discrimination finding by an
agency. I mean, that makes the program immediately unworkable.
That has to be fixed.
And then the other thing that everybody here has alluded to
is that there are no cabinet makers in this audience. We have
to expand the category and the group of people that are going
to be covered by it and we need a much better interpretation by
the Small Business Administration about which industries are
under-represented.
So I thank you for your efforts to fix things by putting
together legislation which will greatly help us and hopefully
we are never going to be in this situation again where an
agency can put forth such an unacceptable bill.
Can I just go back to access to capital, since I need to
leave?
Ms. Radermacher. Sure. Absolutely.
Ms. Sullivan. OK. I just--the one point that everybody
seemed to talk about was that while there is technical
assistance by the SBA and some of their programs for those
women who are beginning, who need to know how to apply for
their initial bank loan, there is not the proper technical
assistance for small businesses who need large infusions of
capital to grow. I think a lot of people in this audience are
in that situation. So we would ask for an expansion--we meaning
WIPP and all the organizations that belong to it would ask for
an expansion of that program, those programs, to be able to now
help women who are in a growth mode and who are trying to
secure large government contracts.
We also--can I say one more? We also believe that Congress
should restore the loan guarantees and subsidized rates so that
the SBA loans are more acceptable. I mean, the reason there are
high fees is because it has to be a self-sustaining program. So
we would urge the Congress to go back to that.
Ms. Le. Let me ask you about that, Ann, because one of the
other issues I do is SBA lending, which is almost as fun as
women's but not as much.
[Laughter.]
Ms. Le. My question is, what size of loan are you talking
about? In, for example, 7(a), we can go up to two or three
million. What size are you looking for?
Ms. Sullivan. Well, I think there was a study done by a lot
of angel investors and it seems to be that the big gap is
between $500,000 and $7 million, and that is, by the way, why
we think angel investors, who are an important source of
capital in that in-between stage, should be given additional
tax incentives so that they want to invest in our business.
I mean, WIPP surveyed their--did a 2008 survey. Sixty-six
percent of the respondents used bank financing backed by home
equity loans. Forty-nine percent used credit card financing.
Thirty-six percent got their funding from family and friends,
and I know everybody is not wealthy. So this means that they
are relying on their own sources, begging and borrowing to be
able to grow their companies versus more traditional ways that
perhaps male-owned companies have access to.
Ms. Le. And you talked about technical assistance or
training. I think that that may be a little different than what
we normally think about when we do technical assistance with
loans. So what type of training do you specifically see for
those larger loans or that gap in the middle for the women
trying to grow that are already established?
Ms. Sullivan. Well, I think there is a whole set--at least
I hear from the women business owners--they are trying to
assess whether they ought to take, you know, what does it take
to get equity in that amount, at those levels. What should you
do in terms of taking on a partner? What should you do in terms
of equity positions? What do you need to look out for venture
funding? You know, we hear horror stories about people just
taking over the company. So there are all kinds of questions
that need to be addressed that nobody can answer that is just
an expert in how to fill out a startup bank loan.
Mr. Necciai. And thank you so much for your support in this
issue and your members' support and the Chamber's support on
particularly the women's procurement issue.
I wanted to just briefly touch on a few comments. Ms.
Hollister, you had mentioned mentoring, how that may be a
useful tool for women-owned businesses. There was a bill
November 7 of 2007 by Chairman Kerry, S. 2300, with the support
of the Ranking Member, actually creates a mentor-protege
program for women-owned firms. So we feel that that tool could
be very useful for women-owned firms.
Another thing we talk about is bundling. Bundling was an
issue that had been brought up on various different
participants. That bill also attacks bundling on various
different levels by increasing the eyes on the contracts. The
procurement community in the Federal government is decreasing
and it has been decreasing since 1980, and obviously with more
procurements happening, we are now at hundreds and hundreds of
billions of dollars being procured and it just keeps to grow.
Those fewer eyes and those more dollars just ultimately results
in more bundling. So one of the things that the bill does is
also create a PCR program, Procurement Center Representative
program, and there are more PCRs that are looking at this. So
there is legislation currently by the Chairman and by the
Ranking Member to address some of these vital issues.
Ms. Jacobus and Ms. Barton, you had mentioned also the
SBIR. SBIR is another piece of legislation that this Committee
recently passed, just recently last month or the month before,
to address more reporting after following the recommendations
of the National Academy of Sciences to report how many women-
owned firms are out there, to get that data. So you need the
data in order to address the problem, so that is another
crucial aspect that exists out there.
Ms. Sullivan had to leave, but I just wanted to again thank
her and thank all you members for addressing this vital issue.
Ms. Radermacher. Actually, I do see Sharon, Heidi, and Lisa
all have your placards up. I do want to bring the conversation
a little bit to something that Ann mentioned, which was venture
capital and how that is one of the areas where more funding
needs to go to women-owned companies. I wanted to open up that
a little bit, and I know that, Trish, you have done a
tremendous amount of work here. I don't know if you guys want
to comment on that or something else, but I did want to start
that conversation.
Ms. Costello. Well, it is, I think, a critical piece of it,
both angel investing and the venture capital investing in
women's businesses. Unfortunately, what we have seen over the
last 10 years is that those percentages are staying relatively
constant at below 10 percent, closer to 6 percent, sometimes
under 6 percent down to 3 or 4 percent, and actually even over
the last 20 years, you are not seeing much of a change,
although those were like 2 and 3 percent early on. So the
numbers just have not been, from the standpoint of investment
capital, really been moving into women-owned businesses.
Now, there are a couple of things that I think we could do
that--that we kind of touched on that could be very helpful,
and one that Ms. Sullivan just mentioned before she left is
that there are a number of States that have started to use tax
credits very effectively in getting more angel investing into
their local companies, and that could be a very effective tool,
looking at a number of different tax opportunities to invest in
women and even in women and minorities. There are ways that you
can also put some protection around that. You could have
programs that certify or put some guidelines around those kinds
of investments that would make them very effective.
I also know that the U.K. has a program where they will
match investments of certified angels into startup companies.
They will actually match them dollar-for-dollar. So there are
some very interesting programs that are going on outside of the
U.S. that is causing more money, equity investments to go into
startup companies.
And frankly, I mean, those are areas where you really get a
wealth machine going. If the E.U. and other countries get way
ahead of us in that area, that is something that we are going
to be playing catch-up on. So I think that both with angels,
there are a number of different ways that the SBA and the
Congress could drill down on to make it more effective.
Women have to know more about being able to access that
money, and again, that is another area where there should be
education going on. I know at Babson, we actually incubate our
women alums that we believe have the potential to get equity
investing and we put a whole team around them. And sometimes it
will take 12 to 18 months or longer, 2 years, before we really
have them ready to go out and target the equity market. And it
will sometimes take that. But the results of that can be so
amazing.
And once they figure this out, this isn't just a one-time.
These are women that can become serial entrepreneurs, that can
do it over and over and over, creating large businesses that
are going to create jobs and wealth for our country.
And then on the venture capital side, I would just toss out
to you that a number of years back when we had the SSBICs, we
were really ahead of what the market could actually provide,
and you know, that happens with startups all the time. The
technology is ahead of where the environment is. At that point,
we did not have, I believe, enough women in venture capital
that had a lot of expertise and experience. So we were putting
money out and our market wasn't really at the place where it
could take advantage of it.
That is not the case today. The timing is perfect to
actually get some significant SBICs targeted to women out there
and we could see some very successful investments made and some
great success stories.
There is another thing that I would like to toss out, what
I call a women's kicker. There are--in all the mainline venture
capital firms now, and there aren't that many, but in all the
mainline venture capital firms, you now have at least, in the
average, at least one or sometimes two senior partners in those
firms. There is an opportunity for some kind of, I think, very
innovative idea where you say, everyone that has two women
partners in mature firms, we will give you $20 million to focus
on women over the next 5 years. It is like an SBIC-type of
thing, but different. These are mature firms that would not
ever go for SBIC money.
And you could potentially have the impact of having
investments made by these top venture capital firms with all
the resources they bring to bear toward women. It has never
been done before and I think this is an area where you have the
most experience putting the money in women's business that can
draw so much more and leverage so much more.
So I might actually think it is something like that, some
kind of very experimental programs using some of the best
talent out there now. And as I say, we have some tremendous
women VCs that are doing fabulous work now. We didn't have them
10 years ago. We probably didn't even have them 5 years ago,
but they are there now.
Mr. Willis. Hello. My name is Greg Willis. I am Counsel on
the Senate Small Business Committee and I wanted to follow up
on the VC question. One of the things that we are trying to do
in S. 2920 is increase leverage to women- and minority-owned
firms so that they can invest in--well, the leverage would go
to the VC and then the VC would access that if they did a
percentage of their business with women or minority businesses.
One of the questions that we have is what has been just on
the ground level experience for women business owners in
attempting to access venture capital? I mean, what is the
experience when they have gone into the room? Who have they
been meeting with? What have they been saying? And anybody at
the table, if you have had experience of trying to access
venture capital, whether you have been successful or
unsuccessful, could you kind of give us some insight into what
you are dealing with on the ground level in trying to access
venture capital. If nobody at the table, is there anyone in the
crowd who could speak to that? Yes? Could you come forward?
Ms. Johnson. I am Jeanne Johnson. I am from Kansas City. I
own an information technology consulting firm that is located
in St. Louis, Missouri. We are a high technical firm, as well,
so it is nice to have technical people in the room. We are in
the missing middle, and the banking missing middle looks at us,
too. Venture capitalists are hesitant to invest in women
businesses because the climate is not conducive for growth.
So my recommendation from the individual out here in the
middle with a multi-million-dollar company, many, many
employees, is that the Federal government needs to lead the way
and show the example. Bundles exist. Audit the bundle at the
end and make sure that, if it is verifiable, that the subs who
were quoted at the beginning are then used and paid. They can't
escape it.
Also, if there are women-owned businesses that are
receiving prime contracts that are not women-run or women-
owned, they are defrauding the Federal government. If I defraud
the Federal government, I go to jail. I recommend punitive
measure.
And that is all I have. Venture capitalists are hesitant
because it is tough for us and we have to fight. We love to
fight. We are very effective. But we just need to make sure
that it is a level playing field. Thanks.
Ms. Costello. We have to understand, too, that 90 percent
of men that apply for venture capital get turned down, too. I
mean, I just want to put that out there. We have to be
realistic about----
Mr. Willis. I think I see a hand in the back. Ms. Payne,
Joann?
Ms. Payne. Joann Payne, and I am not going to speak to
venture capitalists even though this person right here beside
me is an expert at it, Heidi. But I do want to go to the prime
contracting procurement and subcontracting since this wonderful
lady right here suggested it.
My suggestion, let us just throw away the rules and
regulations and start over again. We have an opportunity to put
together a program for women that could be a hallmark and
actually a program for all of SBA now and all of procurement
programs. I think our system is broke. There are not a lot of
prime contracts for women in general in government and
subcontracting, there is a lot of opportunity.
I represent women highway contractors. We do about, what,
$2.2 billion a year in subcontracts. Our subcontracting program
on the other levels is broken. There is so much available.
Break up the bundling. Give the women an opportunity. You set
goals. You make sure that the prime contractors give those
contracts to those individuals that they are contracting out
to.
Women do beautiful work, do great work. They can do the job
and they can earn the money. It is as simple as that. I mean,
this is not rocket scientists, I am telling you. If you look at
the DBE program and how it works, it is the best program,
procurement program, we have, and it is very successful.
Ms. Radermacher. Great. Thanks so much, Joann.
Actually, I think we had someone over here who also wanted
to make a quick comment, if you can squeeze in.
Ms. Wang. I am Rose Wang, Binary Group. My company, we have
over 100 employees in Federal government contracting. But my
previous life, I am a serial entrepreneur. My previous
business, I tried to raise venture capital and I was a
spectacular failure in that venture. Mainly, I think, my
experience is I did not have the wherewithal to get to the
network, to know the right people, to get to the right--present
to the right people.
There is a national--one of my best friends actually just
had to dissolve one of her businesses that was backed by
venture capital. Only 1 percent of entrepreneurs in this
country are backed by venture capitalists that are women, only
1 percent. We don't have a big network.
My current business, we are in the missing middle now, so I
put small business--I joined a venture fund as a result. I want
to see more women entrepreneurs have a chance, because nobody
is--not enough people, I should say--it is tough enough to have
an idea that is presentable, but it is even tougher to relate
to people in the room when you don't have access to that
network, to the knowledge, to the body of knowledge. That is
one of the key things. And no mentors. So that is my
experience.
Ms. Radermacher. Yes. Thank you so much for adding to that.
I actually do have one more person and I actually do want
to talk a little bit more about the networks, which we said we
would talk about today, and we are starting to run short on
time. But if people could keep their comments brief so we can
get in as many comments as possible, that would be great. Go
ahead.
Ms. Porges. Hi. My name is Shelly Porges. I am a serial
entrepreneur, as well, as well as being the Vice Chair of the
Board, Nell's board, Count Me In for Women's Economic
Independence. I wanted to talk to you about two of the five
business experiences that I have had, two of them with VCs and
I will call it alternative investors.
The first was a venture that actually I didn't found. It
was founded by another woman, however, and I came on board as
the Chief Marketing Officer. We found that there were a lot of
closed doors to getting the financing for what was a great
business idea, what became at the time, considered to be one of
the ten fastest-growing online ventures, a company called Third
Age Media.
What was our successful strategy in the end was that we
brought on board private investors who were friends of the
founder and of mine who were themselves connected to the
investment community and it was sort of the functional
equivalent of having to get your husband to sign for your loan.
It was essentially getting these men on board who had
credibility.
Having said that, I was Chief Marketing Officer for Bank of
America during a big turnaround where we went from number 23 to
number 1 in consumer lending in the country. So we had people
on board ourselves who had tremendous business experience and
credibility, but it wasn't until we got those guys on board
that we could access the VCs. So that is part one.
My second experience, however, was partnering up with a
very well known investment banker for the next venture and we
had no problem there, and he was a man.
Ms. Radermacher. Great. Thank you very much for adding
that. Actually, that is one of the comments I have heard
actually from a number of women, is hiring men in order to get
access to networks or to get jobs. So I do want to quickly ask
about networks, and before we close, I will give Sharon, Heidi,
and Lisa a chance to respond.
One of the things that we hear over and over again, and
Rose mentioned it here, having access to the decisionmakers and
to the appropriate networks, and if someone would like to
respond to that, or we can start with Heidi or Sharon if you
would like to.
Ms. Jacobus. I would like to speak about the access to
equity, which is an older topic now, but every business needs
access to equity. You do the work first and then your customer
pays you, and so you have to have money to do the work.
I went 20 years ago, like Dr. Coleman did, to a bank with a
signed Federal contract and asked my banker for a line of
credit and the banker said, no, it doesn't count for anything,
and I was mystified but I drilled down to figure out why. It
turns out that Federal contracts don't fall under the Uniform
Commercial Code, and so therefore the bankers comply with a
formula that says, here is my mix of banking assets and here is
my risks and here are the loans I have out. But Federal
contracts count for zero in the bank examiners' metrics.
So it is really not a mystery. It is confusing why it would
be, but the reason is the Federal government does not allow
their contracts to be assigned. So if I am owed money by a
department store and something happens, my debtor can go to--my
loaner can go to the department store and get money. But if
something happens to me and my contract is with the Federal
government, they can't touch it. So they have no back-up plan.
Ms. Radermacher. Right. That makes a lot of sense.
Actually, Sharon and Heidi, and we will allow you guys to
speak, as well. Again, if people can keep it brief, just
because we do want to end on time or close to it.
Ms. Dolan. I just have one quick point. I want to say that
on the mentor-protege program under the 8(a) in Title 13, as
codified in the CFR, the mentor can invest up to 49 percent in
the protege's firm, and that would be a great vehicle. The only
problem is it is such an arduous task to get your mentor-
protege approved by the SBA that by the time you get it
approved, that mentor is down the road looking for somebody
else. This happened to me personally. This was a very large
company. But the task that it took to get them to the table to
look at things--they couldn't even interpret the CFR properly.
They don't know how to interpret that program if it is just a
little bit off.
So I think that is a great vehicle that could be used for a
lot of these small businesses. I am an 8(a) firm. I am going to
be graduating next year. But we tried to get into that to get
an infusion and we just had so many impediments and were met
with so many barriers that I just threw my hands up and said,
forget it. It is never going to work.
Mr. Necciai. I would like to get your card after this. We
could discuss your story and see how we can address that issue.
Ms. Dolan. Absolutely.
Mr. Necciai. Thank you.
Ms. Radermacher. Actually, Sharon, do you want to comment,
and then we will let both of you guys comment, as well.
Ms. Hadary. Yes, and I love data, so I am going to throw
out--instead of telling a story, I am going to throw out a
couple of disparate pieces of information. I want to focus on
the other side of the equation. We are talking about how are we
making venture capital, how are we making higher-level loans
available to women. But what we also see in the data is that
women in many cases do not understand. About 60 percent of
women business owners, when we ask about venture capital, don't
understand why they want equity, what equity investment would
do for them, how they would go after it, and we hear again and
again, I don't want to lose control of my business.
So I think, looking at the Women's Business Centers and
other groups, there is a whole--there are two sides to this
story. One side is we have got to make it available, but the
other side is we need to increase that financial
sophistication, and I think this is Trish's term, of women
business owners.
We also see, and I find this very interesting, we have hard
data that shows that the only consistent statistically
significant factor that will predict whether a women business
owner will get capital and grow her business is not the size of
the business, length of time in business, or the industry. It
is her goal for growth. And I think what Nell has done that is
so spectacular is she has made women declare and therefore
internalize a goal for growth, and as a result, they are moving
ahead.
So I think those are very important things. We are still
seeing that there are so many women who say--I think it is 60-
some percent of the women who say they would prefer not to
carry debt. So this whole issue of financial sophistication and
training, I think is very important on the women's side.
In terms of networks, I think that is also an important
issue because if you are not visible in these networks, you
don't get access to capital, you don't get access to markets,
and what we see looking at women overall, and particularly we
saw it in our study of women of color, is that women tend to
stay within their community and their networking. They tend to
belong to fewer and smaller networks, and that much of their
network is really for personal support as opposed to for
business issues and getting business. So I think that is a
whole area--this whole area of not only access to networks, but
when the women come into these networks, to make sure that they
have the introductions and the credibility.
Again, we heard, particularly in our study on women of
color, they said, yes, I go to the meetings and nobody notices
that I am there. So I think there is another area, that we need
to get them to expand their networking, but we need to find
ways when they get into the networks that they have the
introductions and they have the credibility.
Ms. Radermacher. Great. Thanks so much, Sharon. A lot of
very important points.
If you guys would like to comment----
Ms. Maples. I can be very brief.
Ms. Radermacher. Actually, can you give us your name?
Ms. Maples. Oh, I am sorry. I am Karen Maples. My company
is MYUTIQ LLC. We are based in Arlington, Virginia. There is
actually one very good success model for helping women
understand how to take more advantage of VC funding.
Springboard has done programs throughout the year, and I have
attended events and seen firsthand the incredible amount of
confidence they are able to build in women and how they present
their business and their business idea to a VC group so that
they can actually start to participate more in VC funding. So
as a model for something specific that we could do more of, I
think that is a very important thing for us to look toward.
Thank you.
Ms. Radermacher. Great point. Thank you.
Ms. Shrier. A tremendous amount of Federal contracts are
going to deal with important issues in energy and the
environment. Ms. Jacobus pointed out earlier how many women
have the degrees in those fields, have worked through firms in
those fields, and often are not getting to the top levels in
those fields. Next Friday, the Committee on Women and Science
and Engineering and Medicine at the National Academy of
Sciences is having a whole workshop on women in transition in
their careers and looking at getting into tenure. For a lot of
women who are in practice in using these professions, that
transition becomes starting their own business so that they can
fully practice and fully engage in their professions.
It is absolutely critical that we make sure that we are
supporting those women who are starting businesses in those
areas. Often, we are coming in as subcontractors to these
larger bundled projects because these big engineering firms are
getting the contracts. I used to do business development for a
large firm, a large engineering firm, and we would look for the
women-owned business. Oh, yes, that is going to be good for the
team. That is going to help the proposal. But it is absolutely
critical to make sure that they are fully engaged in the actual
use on the projects.
Ms. Radermacher. Great. Can you tell us your name and which
organization you are with? Thanks.
Ms. Shrier. I am sorry. My name is Cat Shrier. I recently
started a firm here on Capitol Hill called Watercat Consulting,
doing water resources planning and policy work throughout the
country.
Ms. Radermacher. Great. Thanks so much.
Ms. Gaydos. My name is Valerie Gaydos. I am an angel
investor. I manage the Private Investors Forum in Philadelphia
and also I am involved in the Pennsylvania Angel Network, which
seeks to fund these early stage companies.
You know, I was downstairs in the other room when I missed
some of the questions that were asked before, but the number
one thing is that we do see a lot of women businesses. The
problem is they are not scalable. The problem with that is that
scalable technologies typically tend to be in technology. I
think to solve the problem is encourage more women to get into
technology fields to create products and devices that are
scalable. So, I mean, there is an education component to that
early on.
Second, I see that women get into mostly service businesses
because that is what they do, and it is because there is a lack
of bank loans and the early stage financing which allows them
to keep their equity. So I think looking at banking regulations
and loosening up banking regulations for women-owned businesses
would be very, very helpful.
I think also when you mentioned about giving tax credits,
someone mentioned giving tax credits to establish venture
capital firms, as an angel investor and an early stage
investor, I don't think that is the issue. I think what the tax
credits should go to are the women businesses that are
developing the business, because the problem isn't on the end
that these guys don't necessarily look at these businesses, and
I know maybe some of you said that you had problems getting
access.
The thing is that when a business plan comes across my desk
and I see that it is not scalable, honestly--I mean, I do a
pretty good effort, make a pretty good effort to call some of
these women back and explain to them and say, hey, look, this
is a good business but--it may be a lifestyle business, but I
am not going to invest in it. And so I try to do my best to try
to educate them, what does scalable mean? What are the elements
that a venture person is going to invest in that business?
That is where I believe that we need more education and
more help, but I think it starts with banking and it starts
with getting more women into technical positions.
Ms. Radermacher. Great. Thank you for that.
Ms. Baker. Hi. I am Tina Baker. I am the CEO of Cadence
Group. I am also the Georgia Chair for WIPP. I just want to say
that--I want to reiterate what someone said earlier about
leveling the playing field and enforcing the opportunities at
the government level, because in working with successful
businesswomen in Atlanta, there are women that are in the
private sector and doing well and are not moving into the
government sector because there is an obvious lack of
opportunity. So there is a large cost for bidding a Federal
procurement. You can easily spend $50,000 just to bid. And if
there is not a recognizable opportunity for women, then why not
take that money and use it in the private sector instead.
And the other thing I want to point out, in doing work with
the Federal government ourselves since 1992 and doing that
through small business set-asides, that there is a need to
protect those set-asides, I believe, as you move forward. So,
for instance, for us in particular, we had a contract from 1992
through 2005. The last contract with the same agency was a $12
million contract. That contract was bundled in an A-76 study
which was then awarded to the government instead of outsourced,
and then a large percentage of what was a successful small
business set-aside for 13 years was given without a requirement
for a bid process as a subcomponent of the A-76 award to the
government to big business. So there are problems with bundling
that go beyond just initial offerings. Thank you.
Ms. Radermacher. Great. Thank you very much.
Yes, one more. Go ahead.
Ms. Bierman. I am Christine Bierman with Colt Safety out of
St. Louis, Missouri, and Las Vegas, Nevada. I just want to go
on record saying I testified--I came to Washington and
testified for H.R. 5050 20 years ago and I am very disappointed
that we need to continue to have this conversation today. We, I
feel, haven't gone very far, specifically in women business
owners contracting with the Federal government. That is my
core.
Ms. Radermacher. OK. Thank you very much.
I do have two more things that--one more question and I
promised Senator Kerry we would also prioritize right at the
end. Oh, and Linda has one question. We have talked a lot about
the missing middle and some of the other issues. The one thing
we haven't talked as much about, and I at least want to get a
little bit of feedback, is the microenterprises and if there
anything specific to that that anyone wants to bring to our
attention or that we should look at more. I did want to hit on
that at least briefly.
Actually--oh, did you want to comment? Go ahead. You did?
OK.
Ms. Elder. Probably 90 percent of the businesses we see are
microenterprises and it goes back to access to capital and I
want to touch back on that. I have to. SBA's top lenders last
year as far as number of loans were Innovative Bank and
Superior Financing. Those were Community Express Loans. Those
are great. It is a great program. It does put money out into
the economy. It does fund small businesses. However, those are
awarded at prime-plus-3.25 or 4.75 percent. That is huge, huge
percentage-wise as far as small businesses go.
Now, that needs to change. Something needs to be done with
that so it is not that high of an interest rate for small
businesses just starting out.
We know that many, many women's businesses start with a
small influx of cash. Fifteen-thousand to fifty-thousand get
hundreds of businesses started every day. In addition, there is
no collateral requirement with those loans, so it makes it very
attractive. For women to go in and get a loan for collateral is
almost as hard as to go in and get a loan for a small business.
I had two women who were very successful. They went to get
a business. It took them 2 years because they couldn't get a
bank to give them a business loan. They had collateral. They
had credit. They had everything they needed. They were asked
for their husbands' signatures. It still happens today.
Ms. Radermacher. Wow.
Ms. Elder. Yes, every day. However, the networks are
essential. If they know us, if they know the Women's Business
Center, if they know a bank, if they know a Chamber, if they
know who they can come and talk to, they can find the other
resources.
Going back to the networks, it is imperative that those
networks exist. We had a conversation in here earlier. Women
are great at networking. However, we have our own little
network, our own little circle that we cultivate and we create
and we strengthen and we almost guard because we worked so hard
to create it. That is our thought, too, because we don't share
that circle very well. We don't take the time out of our busy
schedule to say, wait a minute. Let us share this circle.
And I think we have to get better at that, and I don't know
how you can help us with that, but I think somehow we have to
get better at the Chamber sharing the circle with the Women's
Business Centers and the Women's Business Centers sharing that
circle with the research and the businesses sharing that circle
with us so that all of the startup businesses, all those in the
middle businesses, and all those million-dollar businesses have
a place to come together so that those networking
decisionmakers are available.
Ms. Radermacher. Great. That makes a lot of sense and I
feel it touches on what Sharon and Rose and others have said.
I will give Faye and Trish and Margot a chance to respond
and then I do want to just quickly at the end talk about what
kind of the priorities are and what they should be in order if
you guys want to think about it. Go ahead.
Ms. Coleman. Real, real quick. I just wanted to comment on
a comment that Heidi had made about her experience with getting
bank financing for your contracts. My experience, and I do
understand about the UCC, but I do think that sometimes banks
use that as an excuse, because I can actually say my experience
has been that, particularly earlier on, when I needed to get
larger and larger financing for larger contracts, the bank
actually said the only way we will finance your contracts is if
you assign them, and I did assign them. Now, later on, it was
not a requirement.
So I know from personal experience that if they are so
inclined, they will find a way to allow those contracts to be
assigned and they did that because that was--that bolstered
their comfort level because we were--again, the whole issue of
not having collateral and all of that. But I have heard that
situation before. But I know that there are ways to get around
it. Despite the UCC requirement, there are ways to get around
that if they are so inclined.
Ms. Radermacher. That makes sense. Thank you.
Trish, and then Margot, very quickly.
Ms. Costello. Just a quick thing. I do have copies of the
new Women's GEM report and it is true, it doesn't matter where
you live. If you live in Latin America or Africa or here, the
number one issue is robust professional networks. If you are
going to grow your company, it is just absolutely completely
clear in the information that is coming out.
And then the other thing is, I wonder if--I am starting to
think that all of us that have been in business for many years
should really take a step back and look at if the business that
we are in today really is what is the vehicle that we should be
using as entrepreneurs going forward, because the world has
changed dramatically and that issue of, you know, can I grow
it, a lot of it has to do with the type of business you are in
and it was a chicken and the egg. Even a few years back, we had
to get into businesses that didn't take money because we
couldn't get money.
Ms. Radermacher. Right.
Ms. Costello. Now we are in businesses where we can't get
more money. And I would make a provocative comment and say
probably 30 percent of us should shut down the original
businesses we were in and look to our future in another
vehicle, or a portfolio, and that would be very hard for women,
for we as women to do. We have personal connections. But I
think that this is something--what we should start thinking
about, that whole idea of the business as a vehicle and what we
should be driving today, not our father's Oldsmobile.
Ms. Radermacher. Right. Thanks, Trish.
Margot?
Ms. Dorfman. Back on access to capital, the microlending
should be put back into the SBA lending platform. That is key.
The other thing is that we see is when we talk to banks about--
and this is Wells Fargo did this--oh, isn't it wonderful we are
lending X-percentage to women. I think it was they lent $10
million to women-owned firms and isn't this wonderful, and we
said to them, well, what is the greater--how much did you lend
to the full amount? Give us some specifics on these numbers.
And they came back and said, well, we can't really do that
because legally, we can't give out the race or the gender of
the lendees.
The issue we see is now that is covering their tracks so
that they can be a little loosey-goosey and not tell us the
truth and I think we need to open that up so that there is
transparency and put that into play where they should be
responsible. If they are going to say they provide lending to
this number of women-owned firms or a generic thing, we want to
know across the board all the details on that.
Ms. Radermacher. OK. Thanks so much.
Linda had one quick question. We will keep it brief. We do
need to prioritize and then we will be done.
Ms. Le. Actually, I think that this question ties into all
of what we are talking about. The Women's Business Ownership
Act was passed 20 years ago. The whole purpose of the Act was
to try to drive women entrepreneurship and development. We know
that Women's Business Centers can't be the solution to all
things, but I am concerned about the level of outreach that
they have made, that they haven't ever helped Ms. Hollister and
that they may not have reached other of the many women
businesses that are out there. And so the question is, how do
we bring these women into either organizations like Count Me In
or into Women's Business Centers?
I think that, yes, there is a resource constraint, but also
what can the SBA do to do better outreach, to bring in these
women to make sure that they understand that these resources
are available so that we can help these women starting off not
just grow their businesses, but even choose the type of
business that they should be in so maybe it is more scalable,
that type of thing. How do we, you know, propel the success of
Women's Business Centers so that they are not just reaching
this group of women, but this group of women?
Ms. Costello. Why don't you start.
Ms. Dorfman. I would be glad to. When we take a look at
overall the SBA, the funding that has been cut from the budget,
we see two tiers. We see here at the national level where the
policy is driven and the budget is driven and the goals are
set, and then when you get into the regions, you see that
because the budget has been cut, there just aren't the
resources that they should have to do the programs, whether it
be lending, the SBIR, SBIC, the outreach to the community. I
know in the communities the SBA folks are just as frustrated
because they want to do a good job. So I would say that the key
thing is to make sure that the budget is grown and the
resources are truly made available so that they can do the work
that they need to do.
Ms. Le. Thank you, and Karen and I have worked on that
multiple years, hoping we are going to have better success.
Ms. Radermacher. And actually, I do just want to make that
into a bigger--it ties right into what I wanted the last
question to be and what Senator Kerry mentioned earlier. We
have heard so many great ideas about what we can do and I do
just want to hear from people what you all think are the top
three or the top five, or even just the top issue that you
think either needs to be addressed, or if you have a specific
idea about how to do that, we would definitely like to hear
that. I don't know if, Trish, you want to start, but then Kip
and Virginia.
Ms. Costello. I was on the last one.
[Laughter.]
Ms. Radermacher. OK.
Ms. Costello. Yes. I was on the last question.
Ms. Radermacher. Kip, do you want to start?
Ms. Hollister. Well, I think it is clear that this
procurement process has to be at the top of the list. I think
all of us have talked about it. I think the audience is
compelled to speak about it. And unfortunately, I don't have
the--I have the what, but I don't have the how, and I think
that is feeling frustrating to me sitting here. But if we could
make it easier and point of entry easier and tie it with what
we are talking about as the networking and the education behind
it so that there is a collaborative effort to engage and then
measure those results, I think that would be phenomenal.
Ms. Radermacher. OK. Good point.
Ms. Le. Thank you.
Ms. Radermacher. Virginia, do you want to----
Ms. Littlejohn. Rather than mentioning a specific policy
issue, I think it is sort of the point of view of what we focus
on. When we were doing H.R. 5050, we were much more at a
startup or much earlier stage. I think if we look at the
missing middle piece and growth and how we move beyond that
with different components that relate to the capital piece, the
VC and the angel piece, the procurement piece, which honestly I
have spent 25 years of my life often on addressing that issue,
I think if we look at it rather than the incremental components
but as what we do to spur growth, by looking at missing middle,
where all of the gaps are that will really be able to advance
the ball.
And I wanted to mention to everyone that Quantum Leaps, my
organization, and the National Women's Business Council are
collaborating on developing a road map to 2020. The women's
business owner groups will all be plugging in on pieces of
that. But I think if we look at it in a strategic way rather
than just this piece, this piece, this piece, but in terms of
what has been lacking for a long time, I do think the Federal
procurement is one of the biggest lacks.
Ms. Radermacher. OK. That makes a lot of sense. Thank you.
Actually, do you quickly want to add in?
Ms. Anderson. Yes. Thank you for letting my voice be heard.
I serve as the National Public Policy Chair for the Association
of Women's Business Centers. My name is Petrea Anderson. I am
also the Executive Director of the Canisius College Women's
Business Center. And I have to say, I think collaboration
without duplication is critical moving forward. We do a lot of
collaboration in the local market in Buffalo, New York, with
the Small Business Development Centers and SCORE. We focus on
existing versus startup businesses, and I have to say, we are
an economic development program, not a social service program,
and there is confusion in the marketplace. If we work together,
we can really make a big difference in women's business. Thank
you.
Ms. Radermacher. Thanks so much.
Sharon and Margot?
Ms. Hadary. I want to echo what Virginia said, that we need
a strategic approach to this. Partly, it is realizing how women
business owners and their businesses have changed. I think we
need to be very sensitive to the fact that increasingly, it is
a diverse population made up of women who are African American,
Asian, Latina, and many other races.
And unfortunately, I don't think we can say, let us focus
only on the Federal procurement or only on access to capital or
only on networks because my experience over 20 years is that
these are so inextricably integrated. You can't do the Federal
procurement and the performance if you don't have the access to
capital. You can't get the access to markets or the access to
capital if you are not part of the networks.
So while we may want to say, especially because of the
legislative component, that Federal procurement may be the
leading edge, we have to make sure that the fundamentals are
underneath that to ensure that once you get the contract, you
can afford to perform on it and you can be part of the networks
that get you not only that access, but also the relationships
to allow you to perform.
Ms. Radermacher. That makes a lot of sense. Thank you.
Margot?
Ms. Dorfman. Great. Thank you. First of all, just as an
aside, the networks also should include the Procurement
Technical Assistance Centers, because they specifically work on
the Federal contracting systems and provide that type of
service.
As you already know, our first priority is getting the law
implemented as it was originally intended by Congress 8 years
ago, and with that taking a look at the SBA and holding them
accountable for not just the implementation of the program, but
making sure that the companies that are in there are truly
women-owned, that the contracts are being put aside for women
to be able to move forward.
And then our next big thing is the access to capital piece.
Our members say that without--once I get the contract, then I
need the capital so I can turn over the contract and deliver.
And the third piece that they say, which has not been
mentioned but is very key to our members, is then we need
access to affordable health care and other benefits that the
big boys provide to their employees so that they can be
competitive, getting the class of employees to deliver on the
contracts. So those are our three priorities. Thank you.
Ms. Radermacher. OK. Great. Thank you.
Actually, is yours up or no?
Ms. Costello. Yes, it is up----
Ms. Radermacher. But actually, just quickly, I will allow
you, Trish, and then also you to speak, as well, and then
everything else, we will ask you to submit for the record. We
definitely do want to hear it. We just don't have the time.
Ms. Costello. I would say that one area that we have not
talked about but that we see, because in education, we are
seeing the people 30 and below that are moving up. SBA and the
Women's Business Centers, because there is never going to be
enough money. Two-hundred-and-fifty thousand, you are supposed
to deal with all of this in a regional area. It can't happen,
will never happen, unless we start seeing huge amounts of
resources.
I think we should really--the SBA needs to start looking at
what they can do within the virtual world and have specialty
areas, because, you know, I look at the Kansas Women's Business
Center, that I have been on their board for many years. They
can't be an expert in five different--you know, from new
venture creation to micro to procurement. So maybe we could
have specialty centers that are set up and you can draw on them
in virtual world, over the Internet, because that is where
everyone else is going educationally. Everyone is moving that
way and the Federal government isn't keeping up with that. But
it will be much more cost effective.
So I think if we put energy into look at that and into some
specialization, understanding there are still face-to-face
networks that our SBDCs should do, but in finding resources,
and then go to the other end of this and really look at access
to capital so that we can keep pulling women into the highest
level and they are going to keep reaching back and pulling the
next group of women in. Women are good at that.
Ms. Radermacher. OK. Great.
Ms. Costello. Those would be my two areas.
Ms. Radermacher. Thank you, Trish.
Ms. Herwick. Hi. My name is Rebecca Herwick and I am
President and CEO of Global Products in St. Louis, Missouri, a
manufacturing company, and my biggest issue is finding the
procurement opportunities. I am able to afford a full-time
staff person who does nothing but update my three different
codes, classifications, that each of the different divisions of
the government has. I don't think that a lot of women know what
their SIC code is, what their NAICS code is, what their FSC
code is, the matrix of trying to resolve those together and
then update each of the different divisions of the government
who has a different maze that you go through to try to find
your product category. That in itself is a huge problem, just
finding the opportunities to bid.
Ms. Radermacher. Great. Thank you.
Ms. Herwick. Thank you.
Ms. Radermacher. All right. One last person and then we are
really done.
Ms. Adams. OK. They say you always leave the best for the
last, so I will take that.
[Laughter.]
Ms. Adams. OK. I am Juliette Adams and I am a real estate
investor. I have heard a lot being said about access to capital
and my question or challenge is how can women be helped to form
banks or credit unions, form financial institutions so to
assist with the issue of credit and financing, because I see
that we are working from like a male structure and women have a
different way how they do things. Maybe that is why we have
been talking for 20 years and we will continue to talk for
another 20 years. There is a touch and a twist as women that we
have to come to grips with to interject in the systems.
So especially from the financial institution, I am
confident there are women who have the expertise, who have the
desire. How can Congress or how can you assist in really
getting that going, and then the banks will start to get
jealous, you know, the competition.
Ms. Radermacher. Right.
Ms. Adams. And that can snowball something. Thank you.
Ms. Radermacher. OK, great. Thank you so much.
Thank you all for participating. The record is open for 2
weeks and we would love to have more submitted. Thanks so much.
Ms. Hadary. I also would just like to take one last comment
and say thank you on behalf of all of us, all women business
owners, all 10.1 million women-owned businesses in this
country, to Karen Radermacher for her passion and her
leadership in making this happen. Thank you, Karen.
[Applause.]
Ms. Radermacher. Well, I just have to say, it is Senator
Kerry. It is his vision that we seek to carry out, so thank
you.
[Whereupon, at 12:25 p.m., the committee was adjourned.]
STATEMENTS FOR THE RECORD
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SUPPLEMENTAL MATERIAL
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