[House Report 115-1079]
[From the U.S. Government Publishing Office]
Union Calendar No. 838
115th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 115-1079
_______________________________________________________________________
REPORT ON THE ACTIVITIES
of the
COMMITTEE ON SMALL BUSINESS
115TH CONGRESS
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
December 17, 2018.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
______
U.S. GOVERNMENT PUBLISHING OFFICE
33-792 WASHINGTON : 2018
LETTER OF TRANSMITTAL
----------
House of Representatives,
Committee on Small Business,
Washington, DC, December 17, 2018.
Hon. Karen L. Haas,
Clerk, House of Representatives,
Washington, DC.
Dear Ms. Haas: Pursuant to clause 1(d)(3) of rule XI of the
Rules of the House of Representatives, I present herewith the
report of the activities of the Committee for the 115th
Congress, including the Committee's review of legislation
within its jurisdiction and the oversight activities taken in
accordance with the oversight plan adopted on February 1, 2017.
Sincerely,
Steve Chabot,
Chairman.
Enclosure.
C O N T E N T S
----------
Page
Committee Jurisdiction........................................... 1
Rules of the Committee........................................... 2
Authorization and Oversight Plan................................. 13
Membership and Organization...................................... 21
Legislative Activities........................................... 23
Oversight Summary................................................ 43
Part A--Full Committee Hearings.................................. 43
Part B--Subcommittee Hearings.................................... 82
Part C--Waste, Fraud, Abuse, and Mismanagement................... 115
Part D--Oversight Plan and Implementation........................ 125
Subpart A--Committee Authorization and Oversight Plan............ 125
Subpart B--Implementation of Oversight Plan...................... 132
Regulatory Review................................................ 151
Union Calendar No. 838
115th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 115-1079
======================================================================
REPORT ON THE ACTIVITIES OF THE COMMITTEE ON SMALL BUSINESS FOR THE
115TH CONGRESS
_______
December 17, 2018.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Chabot, from the Committee on Small Business,
submitted the following
R E P O R T
Clause 1(d)(3) of rule XI of the Rules of the House of
Representatives for the 115th Congress requires that each
standing committee, no earlier than December 15 or adjournment
of the Congress sine die (whichever occurs first), submit to
the House a report on the activities of that Committee,
including separate sections summarizing the legislative and
oversight activities of that Committee.
JURISDICTION AND SPECIAL OVERSIGHT FUNCTION
Clause 1 (q) of rule X of the Rules of the House of
Representatives of the 115th Congress sets forth the
jurisdiction of the Committee on Small Business as follows--
(1) Assistance to and protection of small business,
including financial aid, regulatory flexibility, and paperwork
reduction.
(2) Participation of small-business enterprises in Federal
procurement and Government contracts.
Clause 3(1) of rule X of the Rules of the House of
Representatives for the 113th Congress sets forth the Special
Oversight Function of the Committee on Small Business as
follows--
The Committee on Small Business shall study and investigate
on a continuing basis the problems of all types of small
business.
RULES OF THE COMMITTEE ON SMALL BUSINESS FOR THE 115TH CONGRESS
1. GENERAL PROVISIONS
(A) Rules of the Committee. The Rules of the House of
Representatives, in total (but especially with respect to the
operations of committee., Rule X, cl. 1(q), cl. 2, cl. 3(1) and
Rule XI), are the rules of the Committee on Small Business
(``Committee'') to the extent applicable and are incorporated
by reference.
(B) Appointments by the Chair. Pursuant to the Rules of the
House, the Chair shall designate a Member of the Committee
Majority to serve as Vice Chair of the Committee. The Vice
Chair shall preside at any meeting or hearing during the
temporary absence of the Chair. The Chair also reserves the
right to designate a Member of the Committee Majority to serve
as the Chair at a hearing or meeting.
2. REFERRAL OF BILLS BY THE CHAIR
The Chair will retain consideration of all legislation
referred to the Committee by the Speaker. No action will be
required of a Subcommittee before legislation is considered for
report by the Committee. Subcommittee chairs, pursuant to the
rules set out herein, may hold hearings on any bill referred to
the Committee.
3. SUBCOMMITTEES
(A) Generally. Each Subcommittee of the Committee is part
of the Committee and is subject to the authority and direction
of the Committee, and to the Rules of the House and the rules
adopted herein, to the extent applicable. The Chairman and
Ranking Member of the Committee are ex officio Members of all
Subcommittees for the purpose of any meeting conducted by a
Subcommittee.
(B) The Committee shall be organized into the following
five subcommittees:
(1) Subcommittee on Agriculture, Energy, and Trade
This Subcommittee (which will consist of six (6)
Republican Members and four (4) Democratic Members)
will address policies that enhance rural economic
growth, increasing America's energy independence and
ensuring that America's small businesses can compete
effectively in a global marketplace.
Oversight of agricultural policies.
Oversight of environmental issues and
regulations (including agencies such as the
Environmental Protection Agency and the Army Corps of
Engineers).
Oversight of energy issues, including
expansion of domestic resources, whether they are
renewable or non-renewable.
Oversight of international trade policy with
particular emphasis on agencies that provide direct
assistance to small businesses, such as: the Small
Business Administration's (SBA) Office of international
Trade, the Department of Commerce's United States
Export Assistance Centers, the Department of
Agriculture's Foreign Agricultural Service, and the
Export-Import Bank.
Oversight of infringement of intellectual
property rights by foreign competition.
(2) Subcommittee on Health and Technology
This Subcommittee (which will consist of six (6)
Republican Members and four (4) Democratic Members)
will address how health care policies may inhibit or
promote economic growth and job creation by small
businesses. In addition, the Subcommittee will examine
small business job growth through the creation and
adoption of advanced technologies.
Oversight of the implementation of the
Patient Protection and Affordable Care Act.
Oversight of availability and affordability
of health care coverage for small businesses.
Oversight of general technology issues,
including intellectual property policy in the United
States.
Oversight of United States
telecommunications policies including, but not limited
to, the National Broadband Plan and allocation of
electromagnetic spectrum.
Oversight of the Small Business Innovation
Research Program.
Oversight of the Small Business Technology
Transfer Program.
(3) Subcommittee on Economic Growth, Tax, and Capital
Access
This Subcommittee (which will consist of six (6)
Republican Members and four (4) Democratic Members)
will evaluate the operation of the financial markets in
the United States and their ability to provide needed
capital to small businesses. In addition, the
Subcommittee will review federal programs, especially
those overseen by the SBA, aimed at assisting
entrepreneurs in obtaining needed capital. Since the
tax policy plays an integral role in access to capital,
this Committee also will examine the impact of federal
tax policies on small businesses.
Oversight of capital access and financial
markets.
Implementation of the Dodd-Frank Wall Street
Reform and Consumer Protection Act.
SBA financial assistance programs, including
guaranteed loans, microloans, certified development
company loans, and small business investment companies.
Oversight of the Department of Agriculture
business and industry guaranteed loan program.
Oversight of general tax policy affecting
small businesses.
The management of the SBA disaster loan
program.
(4) Subcommittee on Investigations, Oversight, and
Regulations
This Subcommittee (which will consist of six (6)
Republican Members and four (4) Democratic Members)
will probe the efficient operation of government
programs that affect small businesses, including the
SBA, and develop proposals to make them operate in a
more cost-effective manner. This Subcommittee also will
review the regulatory burdens imposed on small
businesses and how those burdens may be alleviated.
Oversight of general issues affecting small
businesses and federal agencies.
Oversight of the management of the SBA.
Oversight of the SBA Inspector General.
Implementation of the Regulatory Flexibility
Act.
Oversight of the Office of Information and
Regulatory Affairs at the Office of Management and
Budget.
Use of the Congressional Review Act.
Transparency of the federal rulemaking
process as required by the Administrative Procedure and
Data Quality Acts.
Implementation of the Paperwork Reduction
Act.
(5) Subcommittee on Contracting and Workforce
This Subcommittee (which will consist of six (6)
Republican Members and four (4) Democratic Members)
will assess the federal procurement system, including
those programs designed specifically to enhance
participation by small businesses in providing goods
and services to the federal government. The
Subcommittee will examine various programs designed to
provide technical assistance to small businesses,
whether specifically aimed at federal contractors or
small businesses in general. Finally, the Subcommittee
will review the broad scope of workforce issues that
affect the ability of small businesses to obtain and
maintain qualified employees.
Oversight of government-wide procurement
practices and programs affecting small businesses.
Oversight of federal procurement policies
that inhibit or expand participation by small
businesses in the federal contracting marketplace.
All contracting programs established by the
Small Business Act, including HUBZone, 8(a), Women-,
and Service Disabled Veteran-Owned Small Business
Programs.
Technical assistance provided to federal
contractors and perspective contractors through SBA
personnel, Offices of Small and Disadvantaged Business
Utilization, and Procurement Technical Assistance
Centers.
The SBA Surety Bond guarantee program.
Oversight of all federal policies that
affect the workforce including, but not limited to, the
roles of the Department of Labor and the National Labor
Relations Board.
SBA entrepreneurial development and
technical assistance programs unrelated to
participation in the federal government contracting.
(C) Powers and Duties of Subcommittees. Each Subcommittee
is authorized to meet, hold hearings, receive evidence, and
report to the Committee on any matters referred to it. Prior to
the scheduling of any meeting or hearing of a Subcommittee, the
Chair of the Subcommittee shall obtain the approval of the
Chair of the Committee.
(D) Hearing Time and Date. No healing or meeting of a
Subcommittee shall take place at the same time as the meeting
or hearing of the full Committee or another Subcommittee,
provided however, that the Subcommittee Chairs may hold field
hearings that conflict with those held by other Subcommittees
of the Committee.
4. COMMITTEE STAFF
(A) Majority Staff. The employees of the Committee, except
those assigned to the Minority as provided below, shall be
appointed and assigned, and may be removed by the Chair of the
Committee. The Chair shall fix their remuneration and they
shall be under the general supervision and direction of the
Chair.
(B) Minority Staff. The employees of the Committee assigned
to the Minority shall be appointed and assigned, and their
remuneration determined, as the Ranking Minority Member of the
Committee shall decide.
(C) Subcommittee Staff. There shall be no separate staff
assigned to Subcommittees. The Chair and Ranking Minority
Member shall endeavor to ensure that sufficient Committee staff
is made available in order that each Subcommittee may carry out
the responsibilities set forth in Rule 3, supra.
5. MEETINGS
(A) Regular Meeting Day. The regular meeting day of the
Committee shall be the second Wednesday of every month when the
House is in session. The Chair may dispense with the meeting of
the Committee, if in the sole discretion of the Chair, there is
no need for such meeting.
(B) Additional Meetings. Additional meetings may be called
as deemed necessary by the Chair or at the request of the
majority Members of the Committee pursuant to Rule XI, cl. 2(c)
of the rules of the House. At least 3 days' notice of such an
additional meeting shall be given unless the Chair, with the
concurrence of the Ranking Minority Member, determines that
there is good cause to call the meeting on less notice or upon
a vote by a majority of the Committee (a quorum being present).
To the extent possible, the three days shall be counted from
the 72 hours before the time of the meeting. Announcements. of
the meeting shall be published promptly in the Daily Digest and
made publicly available in electronic form.
(C) Business to be Considered. The determination of the
business to be considered at each meeting shall be made by the
Chair subject to limitations set forth in House Rule XI, cl.
2(c).
(D) Meeting Materials. The Chair shall provide to each
Member of the Committee, to the extent practicable, at least 48
hours in advance of a meeting, a copy of the bill, resolution,
report or other item to be considered at the meeting, but no
later than 24 hours before the meeting. Such material also
shall be made available to the public at least 24 hours in
advance in electronic form.
(E) Special and Emergency Meetings. The rules for notice
and meetings as set forth in Rule 5 of these Rules shall not
apply to special and emergency meetings. Clause 2(c)(2) of Rule
XI and clause 2(g)(3)(A) of Rule XI of the Rules of the House,
as applicable, shall apply to such meetings.
6. NOTICE AND ANNOUNCEMENT OF HEARINGS
(A) Announcement of Hearings. Public announcement of the
date, place and subject matter of any hearing to be conducted
by the Committee shall be made no later than 7 calendar days
before the commencement of the hearing. To the extent possible,
the seven days shall be counted from 168 hours before the time
of the Committee's hearing.
(B) Exception. The Chair, with the concurrence of the
Ranking Minority Member, or upon a vote by the majority of the
Committee (a quorum being present), may authorize a hearing to
commence on less than 7 days' notice.
(C) Witness Lists. Unless the Chair determines it is
impracticable to do so, the Committee shall make a tentative
witness list available at the time it makes the public
announcement of the hearing. If a tentative witness list is not
made available at the time of the announcement of the hearing,
such witness list shall be made available as soon as
practicable after such announcement is made. A final witness
list shall be issued by the Committee no later than 48 hours
prior to the commencement of the hearing.
(D) Hearing Material. The Chair shall provide to all
Members of the Committee, as soon as practicable after the
announcement of the hearing, a memorandum explaining the
subject matter of the hearing and any official reports from
departments and agencies on the subject matter of the hearing.
Such material shall be made available to all Members of the
Committee no later than 48 hours before the commencement of the
hearing, unless the Chair, after consultation with the Ranking
Minority Member, determines that certain reports from
departments or agencies should not be made available prior to
the commencement of the hearing. Material provided by the Chair
to all Members, whether provided prior to or at the hearing,
shall be placed on the Committee website no later than 48 hours
after the commencement of the hearing, unless such material
contains sensitive or classified information, in which case
such material shall be handled pursuant to Rule 16 of the
Committee's Rules.
7. MEETINGS AND HEARINGS OPEN TO THE PUBLIC
(A) Meetings. Each meeting of the Committee or its
Subcommittees for the transaction of business, including the
markup of legislation, shall be open to the public, including
to radio, television, and still photography coverage, except as
provided by House Rule XI, cl. 4. If the majority of Members of
the Committee or Subcommittee present at the meeting determine
by a recorded vote in open session that all or part of the
remainder of the meeting on that day shall be closed to the
public because the disclosure of matters to be considered would
endanger national security, would compromise sensitive law
enforcement information, or would tend to defame, degrade, or
incriminate any person or otherwise would violate any law or
rule of the House; provided however, that no person other than
Members of the Committee, and such congressional staff and such
executive branch representatives they may authorize, shall be
present in any meeting which has been closed to the public.
(B) Hearings. Each hearing conducted by the Committee or
its Subcommittees shall be open to the public, including radio,
television and still photography coverage. If the majority of
Members of the Committee or Subcommittee present at the hearing
determine by a recorded vote in open session that all or part
of the remainder of the hearing on that day shall be closed to
the public because the disclosure of matters to be considered
would endanger national security, would compromise sensitive
law enforcement information, or would tend to defame, degrade,
or incriminate any person or otherwise would violate any law or
rule of the House; provided however, that the Committee or
Subcommittee may by the same procedure also vote to close one
subsequent day of hearings. Notwithstanding the requirements of
the preceding sentence, a majority of those present (if the
requisite number of Members are present under Committee rules
for the purpose of taking testimony) may vote: (i) to close the
hearing for the sole purpose of discussing whether the
testimony or evidence to be received would endanger the
national security, would compromise sensitive law enforcement
information, or violate Rule XI, cl. 2(k)(5) of the House or
(ii) to close the hearing, as provided clause 2(k)(5) of Rule
XI of the House.
(C) Participation in Subcommittee Hearings. The Chair and
Ranking Minority Member are ex officio Members of all
Subcommittees for any hearing conducted by a Subcommittee.
Members of the Committee who wish to participate in a hearing
of the Subcommittee to which they are not Members shall make
such request to the Chair and the Ranking Minority Member of
the Subcommittee at the commencement of the hearing. The Chair,
after consultation with the Ranking Minority Member of the
Subcommittee, shall grant such request.
(D) Non-Participatory Attendance by Other Members of the
House. No Member of the House may be excluded from non-
participatory attendance at any hearing of the Committee or any
Subcommittee, unless the House of Representatives shall by
majority vote authorize the Committee or Subcommittees, for
purposes of a particular subject of investigation, to close its
hearing to Members by the same procedures designated to close
hearings to the public.
(E) Procedure to Participate. Members of Congress who are
not Members of the Committee but would like to participate in a
hearing shall notify the Chair and the Ranking Minority Member
and submit a formal request no later than 24 hours before the
commencement of the meeting or hearing.
(F) Audio and Video Coverage. To the maximum extent
practicable, the Committee shall provide audio and video
coverage of each hearing or meeting for the transaction of
business in a manner that allows the public to easily listen
and view the proceedings and shall maintain the recordings of
such coverage in a manner easily accessible to the public.
8. WITNESSES
(A) Number of Witnesses. For any hearing conducted by the
Committee or Subcommittee there shall be no more than four non-
governmental witnesses of which the Ranking Minority Member of
the Committee or Subcommittee (as appropriate) is entitled to
select one witness for the hearing.
(B) Witnesses Selected by the Minority. Witnesses selected
by the Ranking Minority Member of the Committee or Subcommittee
shall be invited to testify by the Chair of the Committee or
Subcommittee (as appropriate). Rule 8(D) shall apply with equal
force to witnesses selected by the Ranking Minority Member of
the Committee or Subcommittee.
(C) Small Business Week Exception. The limitations set
forth in the preceding paragraph shall not apply if the
Committee holds a hearing to honor the work of the small
business community in conjunction with the annual celebration
of Small Business Week. Witness limitations for such a hearing
shall be determined by the Chair in consultation with the
Ranking Minority Member.
(D) Statement of Witnesses.
(1) Each witness who is to appear before the
Committee or Subcommittee shall file an electronic copy
of the testimony with the Committee and the Ranking
Minority Member no later than 48 hours before the
commencement of the hearing. In addition, the witness
shall provide 25 copies of the testimony by the
commencement of the hearing. The Chair may waive the
requirement by the witness providing 25 copies in which
case the Committee or Subcommittee shall provide the 25
copies.
(2) Each non-governmental witness shall provide to
the Committee and the Ranking Minority Member, no later
than 48 hours before the commencement of the hearing, a
curriculum vitae or other statement describing their
education, employment, professional affiliation or
other background information pertinent to their
testimony.
(E) Witness Disclosure. As required by Rule XI, cl. 2(g) of
the Rules of the House, each non-governmental witness before
the commencement of the hearing shall file with the Chair a
disclosure form detailing any contracts or grants that the
witness has with the federal government, as well as the amount
and country of origin of any payment or contract related to the
subject of the hearing originating with a foreign government.
In addition, each non-governmental witness shall file with the
Committee Chair a disclosure form detailing any payments or
contracts received from a foreign government if such payments
or contracts are related in any manner to the subject matter of
a hearing. Such information shall be posted on the Committee
website within 24 hours after the witness appeared at the
hearing.
(F) Failure to Comply. The failure to provide the materials
set forth by the deadlines set forth in these rules may be
grounds for excluding both the oral and written testimony of
the witness unless waived by the Chair of the Committee or
Subcommittee.
(G) Public Access to Witness Materials. The Committee will
provide public access to printed materials, including the
testimony of witnesses in electronic form on the Committee's
website no later than 24 hours after the hearing is adjourned.
Supplemental material provided after the hearing adjourns shall
be placed on the Committee website no later than 24 hours after
receipt of such material.
(H) Questioning of Witnesses. Except when the Committee
adopts a motion pursuant to subdivisions (B) and (C) of clause
2(i)(2) of Rule XI of the Rules of the House, Committee Members
may question witnesses only when they have been recognized by
the Chair for that purpose. Members shall have the opportunity,
as set forth in Rule XI, cl. 2 (j) of the Rules of the House,
to question each witness on the panel for a period not to
exceed five minutes. For any hearing, the Chair of the
Committee or Subcommittee may offer a motion to extend the
questioning of a witness or witnesses by the Member identified
in the motion for more than five minutes as set forth in Rule
XI, cl. 2(j)(B).
(I) Order of Questioning. The Chair ofthe Committee or
Subcommittee shall commence questioning followed by the Ranking
Minority Member. Thereafter, questioning shall alternate
between the majority and minority Members. Before the gavel has
been struck, or in the case of Members arriving simultaneously,
the order of questioning shall be based on seniority among
Members of his or her own party. After the gavel has been
struck, Members first to arrive shall have priority over
Members of his or her own party.
(J) Consideration of Ratio. In recognizing Members to
question witnesses, the Chair may take into consideration the
ratio of majority and minority Members present in such a manner
as to not disadvantage the Members of either party.
9. QUORUM
(A) Determining a Quorum. A quorum, for purposes of
reporting a measure or recommendation, shall be a majority of
the Committee Members.
(B) Quorum for a Hearing. For purposes of taking testimony
or receiving evidence, a quorum shall be one Member from the
Majority and one Member from the Minority. The Chair of the
Committee or Subcommittee shall exercise reasonable comity by
waiting for the Ranking Minority Member even if a quorum is
present before striking the gavel to commence the hearing. For
hearings held by the Committee or a Subcommittee in a location
other than the Committee's hearing room in Washington, DC, a
quorum shall be deemed to be present if the Chair of the
Committee or Subcommittee is present.
10. RECORD VOTES
(A) When Provided. A record vote of the Committee shall be
provided on any question before the Committee upon the request
of any Member of the Committee. A record of the vote of each
Member of the Committee on a matter before the Committee shall
be available in electronic form within 48 hours of such record
vote, and, with respect to any roll call vote on any motion to
amend or report, shall be included in the report of the
Committee showing the total number of votes cast for and
against and the names of those Members voting for and against.
(B) Public Access to Record Votes. The Chair of the
Committee shall, not later than 24 hours after consideration of
a bill, resolution, report or other item, cause the text of the
reported item and any amendment adopted thereto to be made
publicly available in electronic form.
11. SUBPOENAS
(A) Authorization and Issuance. A subpoena may be
authorized and issued by the Committee in the conduct of any
investigation or series of investigations or activities to
require the attendance and testimony of such witness and the
production of such books, records, correspondence, memoranda,
papers and documents, as deemed necessary. Such subpoena shall
he authorized by a majority of the full Committee. The
requirement that the authorization of a subpoena requires a
majority vote may be waived by the Ranking Minority Member of
the Committee.
(B) Issuance During Congressional Recess. The Chair may
issue a subpoena, in consultation with the Ranking Minority
Member, when the House is out for session for more than three
legislative days.
12. AMENDMENTS DURING MARKUP
(A) Availability of Amendments. Any amendment offered to
any pending legislation before the Committee must be made
available in written form by any Member of the Committee. If
such amendment is not available in written form when requested,
the Chair shall allow an appropriate period for the provision
thereof and may adjourn the markup to provide sufficient time
for the provision of such written amendment. Such period or
adjournment shall not prejudice the offering of such amendment.
(B) Drafting and Filing of Amendments. For amendments to be
accepted during markup, there is no requirement that the
amendments be filed prior to commencement of the markup or
prepared with the assistance of the Office of Legislative
Counsel. Even though it is not necessary, Members seeking to
amend legislation during markup should draft amendments with
the assistance of the Office of Legislative Counsel and consult
with the Chair or Ranking Minority Member's staff (as
appropriate) in the preparation of such amendments.
13. POSTPONEMENT OF PROCEEDINGS
(A) When Postponement is Permissible. The Chair, in
consultation with the Ranking Minority Member, may postpone
further proceedings when a record vote is ordered on the
question of approving any measure or matter or adopting an
amendment. The Chair may resume postponed proceedings, but no
later than 24 hours after such postponement, unless the House
is not in session or there are conflicts with Member schedules
that make it unlikely a quorum will be present to conduct
business on the postponed proceeding. In such cases, the Chair
will consult with Members to set a time as early as possible to
resume proceedings but in no event later than the next meeting
date as set forth in Rule 5 of these Rules.
(B) Resumption of Proceedings. When proceedings resume on a
postponed question, notwithstanding any intervening order for
the previous question, an underlying proposition shall remain
subject to further debate or amendment to the same extent as
when the question was postponed.
14. COMMITTEE RECORDS
(A) The Committee shall keep a complete record of all
actions, which shall include a record of the votes on any
question on which a recorded vote is demanded. The result of
any vote by the Committee, or if applicable by a Subcommittee,
including a voice vote shall be posted on the Committee's
website within 24 hours after the vote has been taken. Such
record shall include a description of the amendment, motion,
order, or other proposition, the name of the Member voting for
and against such amendment, motion, order, or other
proposition, and the names of Members present but not voting.
For any amendment, motion, order, or other proposition decided
by voice vote, the record shall include a description and
whether the voice vote was in favor or against.
(B) Transcripts. The Committee shall keep a complete record
of all Committee and Subcommittee activity which, in the case
of a meeting or hearing transcript, shall include a
substantially verbatim account of the remarks actually made
during the proceedings subject only to technical, grammatical,
and typographical corrections authorized by the person making
the remarks.
(C) Availability of Records. The records of the Committee
at the National Archives and Records Administration shall be
made available in accordance with Rule VII of the Rules of the
House. The Chair of the Committee shall notify the Ranking
Member of the Committee of any decision, pursuant to Rule VII,
cl. 3(b)(3) or cl. 4 (b), to withhold a record otherwise
available, and the matter shall be presented to the Committee
for a determination of the written request of any Member of the
Committee.
(D) Publishing and Posting of Records. The Committee Rules
shall be made publicly available in electronic form and
published in the Congressional Record not later than 30 days
after the Chair of the Committee is elected in each odd-
numbered year.
15. COMMITTEE WEBSITE
The Chair shall maintain an official Committee website for
the purpose of furthe1ing the Committee's legislative and
oversight responsibilities, including communicating
inflammation about Committee's activities to Committee Members
and other Members of the House. The Ranking Minority Member may
maintain a similar website for the same purpose, including
communicating information about the activities of the Minority
to Committee Members and other Members of the House.
16. ACCESS TO CLASSIFIED OR SENSITIVE INFORMATION
(A) Access to classified or sensitive information supplied
to the Committee or Subcommittees and attendance at closed
sessions of the Committee or a Subcommittee shall be limited to
Members and necessary Committee staff and stenographic
reporters who have appropriate security clearance when the
Chair determines that such access or attendance is essential to
the functioning of the Committee or one of its Subcommittees.
(B) Procedures Governing Availability. The procedures to be
followed in granting access to those hearings, records, data,
charts, and files of the Committee which involve classified
information or information deemed to be sensitive shall be as
follows:
(I) Only Members of the House of Representatives and
specifically designated Committee staff of the
Committee on Small Business may have access to such
information.
(II) Members who desire to read materials that are in
possession of the Committee shall notify the Clerk of
the Committee in writing.
(III) The Clerk of the Committee will maintain an
accurate access log, which identifies the circumstances
surrounding access to the information, without
revealing the material examined.
(IV) If the material desired to be reviewed is
material which the Committee or Subcommittee deems to
be sensitive enough to require special handling, before
receiving access to such information, individuals will
be required to sign an access information sheet
acknowledging such access and that the individual has
read and understands the procedures under which access
is being granted.
(V) Material provided for review under this rule
shall not be removed from a specified room within the
Committee offices.
(VI) Individuals reviewing materials under this rule
shall make certain that the materials are returned to
the proper custodian.
(VII) No reproductions or recordings may be made of
any portion of such materials.
(VIII) The contents of such information shall not be
divulged to any person in any way, form, shape, or
manner and shall not be discussed with any person who
has not received the information in the manner
authorized by the rules of the Committee.
(IX) When not being examined in the manner described
herein, such information will be kept in secure safes
or locked file cabinets within the Committee offices.
(X) These procedures only address access to
information the Committee or Subcommittee deems to be
sensitive enough to require special treatment.
(XI) If a Member of the House of Representatives
believes that certain sensitive information should not
be restricted as to dissemination or use, the Member
may petition the Committee or Subcommittee to so rule.
With respect to information and materials provided to
the Committee by the Executive Branch or an independent
agency as that term is defined in 44 U.S.C. Sec. 3502,
the classification of information and materials as
determined by the Executive Branch or independent
agency shall prevail unless affirmatively changed by
the Committee or Subcommittee involved, after
consultation with the Executive Branch or independent
agency.
(XII) Other materials in the possession of the
Committee are to be handled in accordance with normal
practices and traditions of the Committee.
17. OTHER PROCEDURES
The Chair of the Committee may establish such other
procedures and take such actions as may be necessary to carry
out the foregoing rules or to facilitate the effective
operation of the Committee.
18. AMENDMENTS TO COMMITTEE RULES
The rules of the Committee may be modified, amended or
repealed by a majority vote of the Members, at a meeting
specifically called for such purpose, but only if written
notice of the proposed change or changes has been provided to
each Member of the Committee at least 72 hours prior to the
time of the meeting of the Committee to consider such change or
changes.
19. BUDGET AND TRAVEL
(A) Allocation of Budget. From the amount provided to the
Committee in the primary expense resolution adopted by the
House of Representatives in the 115th Congress, the Chair,
after consultation with the Ranking Minority Member, shall
designate one-third of the budget under the direction of the
Ranking Minority Member for the purposes of minority staff,
travel expenses of minority staff and Members, and minority
office expenses.
(B) Authorization of Travel. The Chair may authorize travel
in connection with activities or subject matters under the
legislative or oversight jurisdiction of the Committee as set
forth in Rule X of the Rules of the House. The Ranking Minority
Member may authorize travel for any Minority Member or staff of
the minority in connection with activities or subject matters
under the Committee's jurisdiction as set forth in Rule X of
the Rules of the House. Before such travel, there shall be
submitted to the Chair of the Committee in writing the
following at least seven (7) calendar days prior specifying: a)
the purpose of the travel; b) the dates during which the travel
is to occur; c) the names of the states or countries to be
visited and the length of time spent in each; and d) the names
of Members and staff of the Committee participating in such
travel.
AUTHORIZATION AND OVERSIGHT PLAN OF THE COMMITTEE ON SMALL BUSINESS FOR
THE ONE HUNDRED FIFTEENTH CONGRESS
Mr. Chabot, from the Committee on Small Business, submitted
to the Committee on Oversight and Government Reform, the
Committee on House Administration and the Committee on
Appropriations the following.
REPORT
Rule X, cl. 2(d)(l) of the Rules of the House requires each
standing Committee to adopt an authorization and oversight plan
for the two-year period of the Congress and to submit the plan
to the Committees on Government Reform and House Administration
not later than February 15 of the first session of the
Congress. Under Rule X, the Committee has oversight authority
to investigate and examine any matter affecting small business.
This Report reflects that broad oversight jurisdiction.
Pursuant to Rule X, cl. 2(d)(l)(F), this Plan also includes
proposals to cut or eliminate programs that are inefficient,
duplicative, outdated, or more appropriately administered by
State or local governments.
House Rule X, cl. 2(d)(2) requires that committee oversight
plans include a list of programs or agencies within each
committee's jurisdiction with lapsed authorizations that
received funding in the prior fiscal year, or a program or
agency with a permanent authorization which has not been
subject to review by the Committee in the prior three
Congresses. The Committee has found no Small Business
Administration (SBA) programs that fit these parameters. Rule
X, cl. 2(d)(2) also requires a description of the programs or
agencies to be authorized in the current Congress or the next
Congress, and any oversight to support the authorization of
those programs or agencies, and recommendations for moving such
programs or agencies from mandatory funding to discretionary
appropriations where appropriate. The Committee may consider
reforms and improvements to various SBA programs as noted
throughout this Authorization and Oversight Plan, including the
need for SBA to create appropriate metrics to measure efficacy.
OVERSIGHT OF FEDERAL CAPITAL ACCESS PROGRAMS
The Committee will conduct hearings and investigations of
SBA and other federal agencies that provide capital to
America's entrepreneurs that may include any or all of the
following, as well as matters brought to the attention of the
Committee subsequent to the filing of this Report:
Effectiveness of the capital access programs
to generate jobs in the fastest growing small
businesses.
Whether lenders are meeting their goals to
lend to small businesses and create jobs.
Risk to the taxpayers of the capital access
programs.
Adequacy of SBA oversight of its lending
partners to ensure that federal taxpayers are properly
protected.
Capabilities of the SBA information
technology to manage the loan portfolio.
Whether SBA rules, regulations and guidance
result in transparent and reasoned decision making with
respect to capital access programs.
Assessment of credit-scoring algorithms as a
replacement for individual credit assessment by SBA and
its lending partners.
The exercise of discretion by SBA to create
pilot programs and the risk they pose to the taxpayer
and whether such authority should be curtailed or
eliminated.
Whether SBA disaster loan program and its
oversight ensures that small businesses are able to
revive and rebuild communities without unduly placing
the federal taxpayer at risk.
Efficacy and duplication of federal capital
access programs offered by the Department of
Agriculture to small businesses in rural areas.
Utilization by small businesses of export
capital programs at the Export-Import Bank and the
Overseas Private Investment Corporation.
Continued examination of the Small Business
Lending Fund and State Small Business Credit Initiative
established by Pub. L. No. 111-240, the Small Business
Jobs Act of 2010, in creating jobs and providing
capital to small businesses.
Impact of the Dodd-Frank Wall Street Reform
and Consumer Protection Act, Pub. L. No. 111-203, on
small business access to capital.
Implementation of crowdfunding and other
provisions of the Jumpstart Our Business Startups Act,
Pub. L. No. 112-106.
In performing oversight, the Committee will focus on risky
aspects of financial assistance programs including, but not
limited to, commercial real estate refinancing, premier
certified lenders, participating security small business
investment companies, small business lending companies, express
lenders, and loan programs utilizing simplified lending
applications.
OVERSIGHT OF SBA AND OTHER FEDERAL ENTREPRENEURIAL DEVELOPMENT PROGRAMS
The Committee will conduct hearings and investigations into
the SBA programs that provide training and advice to small
businesses that may include any or all of the following, as
well as matters brought to the attention of the Committee
subsequent to the filing of this Report:
Examining effectiveness of SBA
entrepreneurial development programs, including
programs for veterans, in creating jobs at startups and
traditional firms.
Determining whether certain programs should
be eliminated as a result of their ineffectiveness or
duplication of programs provided by other agencies or
by the private sector.
Suggesting methods for enhancing
coordination among federal agencies in providing
assistance to entrepreneurs, including, but not limited
to, businesses located in rural areas and those seeking
to provide goods and services in the federal
procurement marketplace.
Enhancing the efficacy and utilization of
the Manufacturing Extension Partnership at the
Department of Commerce, including developments in
renewable energy.
Recommending improvements in assistance to
small businesses in rural areas, including those
involved in agriculture, forestry, and energy
production.
OVERSIGHT OF FEDERAL GOVERNMENT CONTRACTING MATTERS
The Committee will conduct hearings and investigations into
the federal procurement system that may include any or all of
the following, as well as matters brought to the attention of
the Committee subsequent to the filing of this Report:
Whether fraud or other problems exist in the
federal government contracting programs overseen by the
SBA including the 8(a), HUBZone, service-disabled
veteran, women-owned contracting, and Small Business
Innovation Research programs.
Effectiveness of SBA contracting programs to
increase participation by small businesses in federal
procurement.
Effectiveness of federal agency protections
against contract bundling and consolidation.
The accuracy and utility of SBA size
standards and federal procurement databases.
Operation and effectiveness of federal
agency assistance provided to small businesses
interested in federal procurement, including that
provided by the SBA, Offices of Small and Disadvantaged
Business Utilization and Procurement Technical
Assistance Centers.
Development of federal acquisition policies
and whether small businesses have sufficiently
effective voice in development of such policies.
Cost-effectiveness of outsourcing government
work to private enterprise rather than expanding the
government to provide the good or service internally
(i.e., government insourcing).
Implementation and efficacy of changes made
in small business federal procurement programs arising
from the enactment of the National Defense
Authorization Acts for FYs 2012-2016.
Examination of the Small Business Innovation
Research Program as modified by the National Defense
Authorization Act for FY 2012, Pub. L. No. 112-81,
including, but not limited to, increased efforts at
commercializing federally-funded technology.
In performing oversight, the Committee will focus its
efforts on uncovering abuse and misuse of the small business
designation to obtain federal government contracts.
OVERSIGHT OF SBA MANAGEMENT
The Committee will conduct the hearings and investigations
into the management of the SBA that may include any or all of
the following, as well as matters brought to the attention of
the Committee subsequent to the filing of this Report:
The appropriate mission of the SBA.
Whether agency employees in the field are
empowered to assist small businesses.
Duplication of offices and missions at SBA
headquarters.
Effectiveness of personnel management to
ensure that employees are rewarded for assisting small
businesses.
Capabilities of SBA employees to provide
proper assistance to small business owners.
Agency personnel capabilities to properly
manage loan defaults to maximize recovery of
collateral.
Whether SBA improperly utilizes statutory
authority to create untested initiatives and the
procedures by which the agency develops such programs.
In carrying out this oversight, the Committee will focus
particularly on streamlining and reorganizing of the agency's
operations to provide maximum assistance to small business
owners. Offices that primarily provide assistance or advice to
headquarters staff that do not promote the interests of small
businesses or protect the federal government as a guarantor of
loans will be recommended for cuts or elimination. For some
potential offices that the Committee will examine, refer to the
section titled ``Reductions in Programs and Spending.''
OVERSIGHT OF FEDERAL REGULATORY AND PAPERWORK BURDENS
The Committee will conduct hearings and investigations into
unnecessary, burdensome, and duplicative federal rules,
reporting and recordkeeping requirements affecting small
businesses that may include any or all of the following, as
well as matters brought to the attention of the Committee
subsequent to the filing of this Report:
Consumer Financial Protection Bureau.
Consumer Safety Products Commission.
Department of Agriculture.
Department of Commerce.
Department of Energy, particularly the
Office of Energy Efficiency and Renewable Energy.
Department of Health and Human Services,
particularly the Centers for Medicare and Medicaid
Services and Food and Drug Administration.
Department of Interior, particularly the
Bureau of Land Management and Fish and Wildlife
Service.
Department of Homeland Security,
particularly the Transportation Security
Administration.
Department of Labor, particularly the
Occupational Safety and Health Administration and the
Wage and Hour Division.
Department of Transportation, particularly
the Federal Aviation Administration and Federal Motor
Carrier Safety Administration.
Department of the Treasury, particularly the
Internal Revenue Service.
Environmental Protection Agency.
Federal Communications Commission.
Federal Financial Institutions Examination
Council and its constituent agencies.
Office of Management and Budget,
particularly the Office of Federal Procurement Policy.
Securities and Exchange Commission.
The Committee will identify specific rules and regulations
already issued or at the proposed rule stage to assess the
impact on small businesses. In addition, the Committee will
examine agency compliance with the Regulatory Flexibility Act
and Paperwork Reduction Act. The Committee will pay close
attention to the effect that regulations have on startups.
Oversight of the regulatory process also will, to the extent
relevant, examine the work of the Office of Information and
Regulatory Affairs at the Office of Management and Budget.
Special attention will be paid to the work performed by the
Chief Counsel for Advocacy at the Small Business Administration
to ensure that Office is fulfilling its mission to advocate
vigorously on behalf of America's small business owners in
regulatory matters at federal agencies. Finally, this oversight
will entail an examination of compliance by federal agencies
with amendments to Executive Order 12,866 and memoranda on
regulatory flexibility and regulatory compliance issued by the
President on January 18, 2011 and still in effect as of the
approval of this Oversight Plan.
OVERSIGHT OF FEDERAL TAX POLICY
The Committee will conduct hearings and investigations into
the federal tax code, its impact on small business, and
Internal Revenue Service's (IRS) collection of taxes that may
include any or all of the following, as well as matters brought
to the attention of the Committee subsequent to the filing of
this Report:
Identification of tax code provisions and
proposed rules that hinder the ability of small
businesses to create jobs and recommendations for
modifying those provisions to boost small business job
growth.
Examination of the structure of the tax code
in order to simplify compliance for small businesses.
Assessment of the recordkeeping and
reporting requirements associated with tax compliance
and suggestions for reducing such burdens on small
businesses.
Evaluation of the estate tax provisions to
determine whether they inhibit the ability of
successive generations to maintain successful job
creating enterprises.
Efficiencies at the IRS that improve the
interaction between the government and small business
owners.
Inefficiencies at the IRS that force small
businesses to divert capital from job growth to tax
compliance.
OVERSIGHT OF HEALTH CARE POLICY
The Committee will conduct hearings and investigations into
federal health care policy (such as Medicare and Medicaid) and
the continued implementation of the Patient Protection and
Affordable Care Act that may include any or all of the
following, as well as matters brought to the attention of the
Committee subsequent to the filing of this Report:
The cost of the Patient Protection and
Affordable Care Act to small businesses, including the
self-employed.
The availability of health insurance in the
federal marketplaces established by the Patient
Protection and Affordable Care Act.
The impact of the Patient Protection and
Affordable Care Act, Medicare and Medicaid on the
ability of physicians, pharmacists, and allied health
care providers to offer the best care possible to
patients.
The impact of state tort and insurance laws
on the cost of medical care.
Examination of increases in efficiencies
that will improve the provision of health care while
reducing costs to small businesses that offer their
workers' health insurance.
OVERSIGHT OF ENERGY POLICY
The Committee will conduct hearings and investigations into
energy policy to reduce the cost of energy and increase energy
independence that may include any or all of the following, as
well as matters brought to the attention of the Committee
subsequent to the filing of this Report:
Innovations developed by small businesses
that create greater energy independence.
Federal regulatory policies that increase
dependence on foreign sources of energy.
Policies needed to incentivize production of
energy in the United States.
Examination of commercialization of research
in renewable energy.
Federal regulations or policies that
increase energy costs for small businesses.
The primary thrust of the Committee's efforts will focus on
efforts to use the innovation of America's entrepreneurs to
fuel the drive for greater energy independence, including the
development of renewable energy products.
OVERSIGHT OF TRADE AND INTELLECTUAL PROPERTY POLICY
The Committee will conduct hearings and investigations into
international trade and intellectual property policies of
America and its trading partners that may include any or all of
the following, as well as matters brought to the attention of
the Committee subsequent to the filing of this Report:
Impact of free trade agreements to increase
exports by American small businesses.
Oversight of SBA's Office of International
Trade and the agency's efforts to promote small
business exports.
Examination of the impact of illicit actions
by foreign entities on small businesses and whether the
federal government is doing enough to protect their
interests.
Whether the federal government is doing
enough to protect the intellectual property rights of
small businesses by foreign competitors.
The impact of federal intellectual property
policies, particularly patents and copyrights, to
protect the innovations of American entrepreneurs.
Efforts to increase exports by small
businesses.
Whether the United States Trade
Representative and Department of Commerce sufficiently
protect the interests of small businesses in the
negotiation of free trade agreements.
Whether the United States Trade
Representative takes positions at the World Trade
Organization that sufficiently promote the interests of
American small businesses.
The focus of oversight will emphasize the best mechanisms
to promote and protect advanced technology innovations of small
businesses.
REDUCTIONS IN PROGRAMS AND SPENDING
In addition to the programs and policies already cited, the
Committee will examine any and all offices and programs that
fall within the Committee's legislative jurisdiction to find
areas that could lead to reduction in the federal deficit. Some
programs and offices may include:
State Small Business Credit Initiative
operated by Department of Treasury.
Express Loan Program overseen by SBA.
Emerging Leaders Initiative started by SBA.
Clusters Program initiated by the SBA.
Innovation and Impact Fund Pilot Programs
operated by the SBA.
SBA Office of Policy.
SBA Regional Administrators.
Office of Advocacy Regional Advocates.
SBA Deputy District Directors.
SBA Office of International Trade.
SBA Office of Native American Affairs.
In particular, the Committee will assess whether
reorganization and reassignment of employees to more critical
functions at the SBA, such as positions in the Office of
Government Contracting and Business Development will provide a
more effective agency at helping small businesses to generate
growth.
PROGRAMMATIC DUPLICATION
The Committee notes that Sec. 18 of the Small Business Act
prohibits duplication of any effort by the Small Business
Administration if a program is already offered by another
federal agency unless the Small Business Administration
expressly authorizes the duplication. The Committee will
continue to monitor the Small Business Administration for
programs that duplicate the efforts of other federal agencies.
MEMBERSHIP AND ORGANIZATION
OF THE
COMMITTEE ON SMALL BUSINESS
ONE HUNDRED AND FIFTEENTH CONGRESS
FULL COMMITTEE
Minority Majority
Nydia Velazquez, (NY-07), Steve Chabot (OH-01),
Ranking Member Chairman
Dwight Evans (PA-02) Steve King (IA-04)
Stephanie Murphy (FL-07) Blaine Luetkemeyer (M0-03)
Al Lawson, Jr. (FL-05) Dave Brat (VA-07)
Yvette Clarke (NY-09) Aumua Amata Coleman Radewagen (AS)
Judy Chu (CA-27) Steve Knight (CA-25)
Alma Adams (NC-12) Trent Kelly (MS-01)
Adriano Espaillat (NY-13) Rod Blum (IA-01)
Brad Schneider (IL-10) Jenniffer Gonzalez-Colon (PR)
VACANT Brian Fitzpatrick (PA-08)
Roger Marshall (KS-01)
Ralph Norman (SC-05)\1\
John Curtis (UT-03)\2\
Troy Balderson (OH-12)\3\
----------
\1\Rep. Ron Estes was elected on April 11, 2017 in a special election
to replace former Rep. Mike Pompeo and was appointed to the House
Committee on Small Business on May 5, 2017. Rep. Estes resigned from
the Committee on Small Business on June 27, 2017 to accept an
appointment to the House Committee on Homeland Security. Rep. Norman
was elected on June 20, 2017 in a special election to replace former
Rep. Mick Mulvaney and was appointed to the House Committee on Small
Business on June 27, 2017.
\2\ Rep. Curtis was elected on November 7, 2017 in a special election
to replace former Rep. Jason Chaffetz and was appointed to the House
Committee on Small Business on November 29, 2017. Rep. Don Bacon
resigned from the Committee on Small Business on November 29, 2017 to
accept an appointment to the Committee on Homeland Security.
\3\Rep. Balderson was elected on August 7, 2018 in a special election
to replace former Rep. Pat Tiberi and was appointed to the House
Committee on Small Business on September 5, 2018. Rep. James Comer
resigned from the House Committee on Small Business on September 5,
2018.
SUBCOMMITTEE ON AGRICULTURE, ENERGY, AND TRADE
Brad Schneider (IL-10), Rod Blum (IA-01),
Ranking Member Chairman
Al Lawson, Jr. (FL-05) Steve King (IA-04)
VACANT Blaine Luetkemeyer (M0-03)
VACANT Aumua Amata Coleman Radewagen (AS)
John Curtis (UT-03)
VACANT
SUBCOMMITTEE ON HEALTH AND TECHNOLOGY
Al Lawson, Jr. (FL-05), Aumua Amata Coleman Radewagen
Ranking Member (AS),
Adriano Espaillat (NY-13) Chairman
VACANT Blaine Luetkemeyer (MO-03)
VACANT Dave Brat (VA-07)
Jenniffer Gonzalez-Colon (PR)
Brian Fitzpatrick (PA-08)
Roger Marshall (KS-01)
SUBCOMMITTEE ON ECONOMIC GROWTH, TAX,
AND CAPITAL ACCESS
Dwight Evans (PA-02), Dave Brat (VA-07),
Ranking Member Chairman
Judy Chu (CA-27) Steve Knight (CA-25)
Stephanie Murphy (FL-07) Trent Kelly (MS-01)
Yvette Clarke (NY-09) Jenniffer Gonzalez-Colon (PR)
Brian Fitzpatrick (PA-08)
VACANT
SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT,
AND REGULATIONS
Alma Adams (NC-12), Trent Kelly (MS-01),
Ranking Member Chairman
VACANT Rod Blum (IA-01)
VACANT Roger Marshall (KS-01)
VACANT Ralph Norman (SC-05)
John Curtis (UT-03)
VACANT
SUBCOMMITTEE ON CONTRACTING AND WORKFORCE
Stephanie Mmphy (FL-07), Steve Knight (CA-25),
Ranking Member Chairman
Yvette Clarke (NY-09) Steve King (IA-04)
Dwight Evans (PA-02) Ralph Norman (SC-05)
Al Lawson, Jr. (FL-05) VACANT
VACANT
VACANT
LEGISLATIVE ACTIVITIES
Clause 1(d) of Rule XI of the Rules of the House of
Representatives for the 115th Congress requires that each
standing committee, no later than January 2 of each odd-
numbered year, submit to the House a report on the activities
of that committee, including a separate section summarizing the
legislative activities of that committee.
SMALL BUSINESS REGULATORY FLEXIBILITY IMPROVEMENTS ACT
(H.R. 33)
Summary
H.R. 33 would amend Chapter 6 of Title 5 of the United
States Code (commonly known as the Regulatory Flexibility Act)
to ensure complete analysis of potential impacts of rules on
small entities.
Legislative History
H.R. 33 was introduced by Representative Steve Chabot on
January 3, 2017. H.R. 33 was included as Title III to H.R. 5,
the Regulatory Accountability Act of 2017. On January 6, 2017,
the Committee on Small Business discharged H.R. 5 in a letter
to the House Committee on the Judiciary, and on January 9,
2017, notified the Speaker of the House, Paul Ryan, of the
discharge. On January 11, 2017, the House passed H.R. 5 by a
vote of 238-183 (Roll Call No. 45).
HELPING ANGELS LEAD OUR STARTUPS (HALOS) ACT
(H.R. 79)
Summary
H.R. 79 clarifies Securities law to ensure startup
companies are able to participate in ``demo days'' without
violating SEC general solicitation rules and regulations.
Legislative History
H.R. 79 was introduced by Representative Steve Chabot on
January 3, 2017. On January 10, 2017, H.R. 79 passed the House
by a vote of 344-73 (Roll Call No. 31). H.R. 79 was later
included in H.R. 10, the Financial CHOICE Act of 2017, H.R.
3280 the Financial Services and General Government
Appropriations Act of 2018, H.R. 3354, the Make America Secure
and Prosperous Appropriations Act of 2018, H.R. 6147, the
Interior, Environment, Financial Services and General
Government Appropriations Act of 2019, and S. 488, the JOBS and
Investor Confidence Act of 2018, all of which failed to
advance.
SUPPORTING AMERICA'S YOUNG ENTREPRENEURS ACT OF 2017
(H.R. 201)
Summary
H.R. 201 would amend title IV (Student Assistance) of the
Higher Education Act of 1965 to make eligible for deferment and
cancellation under the Federal Direct Loan program a borrower
who is an employee or founder of a small business start-up in a
distressed area. It also amends the Internal Revenue Code to
exclude from an individual's gross income the amount of such
canceled student loan debt. The bill establishes a Federal
Direct Refinanced Private Loan program to refinance private
education loans. Finally, it establishes a young entrepreneurs
business center within the Small Business Administration to
certify small business start-ups, identify distressed areas,
and approve loan cancelation for founders of small business
start-ups.
Legislative History
H.R. 201 was introduced by Representative Nydia Velazquez
on January 3, 2017.
COMMERCIAL MARKET REPRESENTATIVES CLARIFICATION ACT OF 2017
(H.R. 1597)
Summary
H.R. 1597 would codify and modernize the Small Business
Administration's (SBA) Commercial Market Representatives (CMR)
program. The bill would ensure that small business concerns
have the opportunity to compete for subcontracts on large
federal prime contracts, and that the SBA employees tasked with
enforcement of the subcontracting program have clear direction.
Legislative History
H.R. 1597 was introduced by Representative Dave Brat on
March 17, 2017. On May 25, 2017, the Subcommittee on
Investigations, Oversight and Regulations and the Subcommittee
on Contracting and Workforce held a joint hearing on federal
contracting change orders. During the hearing, Members
discussed the negative effects of change orders on small
federal contractors. H.R. 1597 was included in H.R. 1773, the
Clarity for America's Contractors Act of 2017. H.R. 1597 and
H.R. 1773 were subsequently included in H.R. 2810, the National
Defense Authorization Act for Fiscal Year 2018, which was
reported, as amended, by the House Committee on Armed Services
on July 6, 2017, passed the House, as amended, on July 14, 2017
by a vote of 344-81 (Roll Call No. 378), and passed the Senate,
as amended, on September 18, 2017 by a vote of 89-8 (Roll Call
No. 199). H.R. 1597 and H.R. 1773 were later included in the
Conference Report for H.R. 2810, which passed the House on
November 14, 2017 by a vote of 356-70 (Roll Call No. 631), the
Senate on November 16, 2017 by voice vote, was signed into law
by the President on December 12, 2017, and became Public Law
Number 115-91.
UNIFYING SMALL BUSINESS TERMINOLOGY ACT
(H.R. 1640)
Summary
H.R. 1640 would amend the Small Business Act to revise the
terminology describing the range of the anticipated value of
federal procurement contracts that must be reserved exclusively
for small businesses.
Legislative History
H.R. 1640 was introduced on March 20, 2017 by
Representative Nydia Velazquez. H.R. 1640 was included in H.R.
1773, the Clarity for America's Small Contractors Act of 2017.
H.R. 1640 and H.R. 1773 were included in the National Defense
Authorization Act for Fiscal Year 2018, which was reported, as
amended, by the House Committee on Armed Services on July 6,
2017, passed the House, as amended, on July 14, 2017 by a vote
of 344-81 (Roll Call No. 378), and passed the Senate, as
amended, on September 18, 2017 by a vote of 89-8 (Roll Call No.
199). H.R. 1640 and H.R. 1773 were later included in the
Conference Report for H.R. 2810, which passed the House on
November 14, 2017 by a vote of 356-70 (Roll Call No. 631), the
Senate on November 16, 2017 by voice vote, was signed into law
by the President on December 12, 2017, and became Public Law
Number 115-91.
WOMEN'S BUSINESS CENTERS IMPROVEMENT ACT OF 2017
(H.R. 1680)
Summary
H.R. 1680 amends the Small Business Act to set forth the
responsibilities of the Small Business Administration's (SBA)
Office of Women's Business Ownership. The bill also establishes
the criteria for eligible entities, establishes an
accreditation program for eligible entities receiving grants
from the Office of Women's Business Ownership, and requires a
site visit by the Office prior to an entity receiving a grant
to ensure the entity has sufficient resources to provide the
services under the grant.
Legislative History
H.R. 1680 was introduced on March 22, 2017 by
Representative Steve Knight. H.R. 1640 was included in H.R.
1774, the Developing the Next Generation of Small Businesses
Act, and later became part of H.R. 2810, the National Defense
Authorization Act for Fiscal Year 2018. H.R. 2810 was reported,
as amended, by the House Committee on Armed Services on July 6,
2017, and passed the House on July 14, 2017 by a vote of 344-81
(Roll Call No. 378). On September 18, 2017, the Senate passed
H.R. 2810, as amended, by a vote of 89-8 (Roll Call No. 199).
H.R. 1680 was not included in the final version of H.R. 2810.
The House passed H.R. 1680, as amended, on May 8, 2018 under
Suspension of the Rules by voice vote.
IMPROVING CONTRACT PROCUREMENT FOR SMALL BUSINESSES THROUGH MORE
ACCURATE REPORTING ACT
(H.R. 1693)
Summary
H.R. 1693 amends the Small Business Act to require that SBA
include in its annual reports to the House Committee on Small
Business and the Senate Committee on Small Business and
Entrepreneurship analyzing the number and dollar amount of
prime contracts awarded by federal agencies each fiscal year to
small business concerns, including those owned and controlled
by service-disabled veterans, qualified HUBZone small business
concerns, socially and economically disadvantaged individuals,
and women, information regarding the small business concerns in
these socioeconomic categories that would no longer be deemed a
small business concern for the purposes of the initial
contract, and those that were awarded using a procurement
method that restricted competition to small business in these
socioeconomic categories.
Legislative History
H.R. 1693 was introduced on March 23, 2017 by
Representative Yvette Clarke. H.R. 1693 was included in H.R.
1773, the Clarity for America's Small Contractors Act. H.R.
1693 and H.R. 1773 were included in H.R. 2810, the National
Defense Authorization Act for Fiscal Year 2018. H.R. 2810 was
reported, as amended, by the House Committee on Aimed Services
on July 6, 2017, passed the House, as amended, on July 14, 2017
by a vote of 344-81 (Roll Call No. 378) and the Senate, as
amended, on September 18, 2017 by a vote of 89-8 (Roll Call No.
199). H.R. 1693 and H.R. 1773 were included in the Conference
Report for H.R. 2810, which passed the House on November 14,
2017 by a vote of 356-70 (Roll No. 631), the Senate on November
16, 2017 by voice vote, was signed into law by the President on
December 12, 2017 and became Public Law Number 115-91.
SCORE FOR SMALL BUSINESS ACT OF 2017
(H.R. 1700)
Summary
H.R. 1700 amends the Small Business Act to reauthorize the
SCORE program for Fiscal Years 2017 and 2018. It also
officially changes the name of the program from Service Corps
of Retired Executives to SCORE.
Legislative History
H.R. 1700 was introduced on March 23, 2017 by
Representative Alma Adams. H.R. 1700 was included in H.R. 1774,
Developing the Next Generation of Small Businesses Act, which
later became part of H.R. 2810, the National Defense
Authorization Act for Fiscal Year 2018. H.R. 2810 was reported,
as amended, by the House Committee on Armed Services on July 6,
2017, and passed the House on July 14, 2017 by a vote of 344-81
(Roll Call No. 378). On September 18, 2017, the Senate passed
H.R. 2810, as amended, by a vote of 89-8 (Roll Call No. 199).
H.R. 1700 was not included in the final version of H.R. 2810.
On July 10, 2018, H.R. 1700 passed the House under Suspension
of the Rules by voice vote.
SMALL BUSINESS DEVELOPMENT CENTERS IMPROVEMENT ACT OF 2017
(H.R. 1702)
Summary
H.R. 1702 amends the Small Business Act to improve data
collection methods for Small Business Development Centers
(SBDC), allow SBDCs increased flexibility to effectively market
their services, and implement confidentiality requirements to
protect small business clients. Additionally, it requires the
SBA to submit an annual report to Congress delineating all
entrepreneurial development activity during the current fiscal
year.
Legislative History
H.R. 1702 was introduced on March 23, 2017 by
Representative Dwight Evans. H.R. 1702 was included in H.R.
1774, Developing the Next Generation of Small Businesses Act,
and later became part of H.R. 2810, the National Defense
Authorization Act for Fiscal Year 2018. H.R. 2810 was reported,
as amended, by the House Committee on Armed Services on July 6,
2017, and passed the House on July 14, 2017 by a vote of 344-81
(Roll Call No. 378). On September 18, 2017, the Senate passed
H.R. 2810, as amended, by a vote of 89-8 (Roll Call No. 199).
H.R. 1702 was not included in the final version of H.R. 2810.
On May 8, 2018, the House passed H.R. 1702, as amended, under
Suspension of the Rules by voice vote.
CLARITY FOR AMERICA'S SMALL CONTRACTORS ACT OF 2017
(H.R. 1773)
Summary
H.R. 1773 amends the Small Business Act to expand and
improve opportunities for America's small businesses to compete
for federal contracts. The measure would: modernize the Small
Business Act and the SBA's reporting requirements to ensure
that the language used is clear across all federal procurement
programs; strengthen small business advocates within the SBA
and other agencies so they can promote competition and
compliance; and improve opportunities for small businesses to
compete for contracts.
Legislative History
H.R. 1773 was introduced on March 29, 2017 by Chairman
Steve Chabot. H.R. 1773 was included in H.R. 2810, the National
Defense Authorization Act for Fiscal Year 2018. H.R. 2810 was
reported, as amended, by the House Committee on Armed Services
on July 6, 2017, passed the House, as amended, on July 14, 2017
by a vote of 344-81 (Roll Call No. 378), and the Senate, as
amended, on September 18, 2017, by a vote of 89-8 (Roll Call
No. 199). H.R. 1773 was later included in the Conference Report
for H.R. 2810, which passed the House on November 14, 2017 by a
vote of 356-70 (Roll Call No. 631), the Senate on November 16,
2017 by voice vote, was signed by the President on December 12,
2017, and became Public Law Number 115-91.
DEVELOPING THE NEXT GENERATION OF SMALL BUSINESSES ACT OF 2017
(H.R. 1774)
Summary
H.R. 1774 amends the Small Business Act to reauthorize and
improve the Small Business Administration's Small Business
Development Centers (SBDC) program, the Women's Business
Centers (WBC) program, and the SCORE program. The bill
modernizes the SBDCs while increasing SBA's data collection
compliance; enhances training and creates an accreditation
process for WBCs; and requires the SCORE program to expand its
use of online components and develop a strategic plan.
Legislative History
H.R. 1774 was introduced on March 29, 2017 by
Representative Nydia Velazquez. H.R. 1774 was included in H.R.
2810, the National Defense Authorization Act for Fiscal Year
2018. H.R. 2810 was reported, as amended, by the House
Committee on Armed Services on July 6, 2017, and passed the
House on July 14, 2017 by a vote of 344-81 (Roll Call No. 378).
On September 18, 2017, the Senate passed H.R. 2810, as amended,
by a vote of 89-8 (Roll Call No. 199). The House agreed to the
Conference Report on November 14, 2017 by a vote of 356-20
(Roll Call No. 631), the Senate on November 16, 2017 by voice
vote. H.R. 1774 was not included in the final version of H.R.
2810.
TO AMEND THE SMALL BUSINESS ACT TO PROVIDE THE ADMINISTRATOR OF THE
SMALL BUSINESS ADMINISTRATION AUTHORITY TO INCREASE THE AMOUNT FOR
GENERAL BUSINESS LOANS, AND FOR OTHER PURPOSES
(H.R. 1915)
Summary
H.R. 1915 amends the Small Business Act to provide that if
the amount of Small Business Administration (SBA) commitments
for authorized general business loans for a fiscal year exceeds
the limit on the total amount of commitments the SBA may make
for such loans under such Act, the SBA may make such
commitments for such loans for such fiscal year in a total
amount equal to up to 120% of that limit.
Legislative History
H.R. 1915 was introduced on April 5, 2017 by Representative
Nydia Velazquez. H.R. 1915 was included H.R. 4743, the Small
Business 7(a) Lending Oversight Reform Act of 2018. On April 5,
2017, the Committee on Small Business held a hearing to receive
testimony from SBA Administrator Linda McMahon to discuss
Administrative priorities. During the hearing, Members
discussed with the Administrator the need to provide
flexibility in the 7(a) authorization cap to ensure stability
within the program. The Committee met in open session on March
14, 2018 and ordered H.R. 4743 reported favorably, as amended,
to the House by voice vote. On May 8, 2018, the House passed
H.R. 4743, as amended, under Suspension of the Rules by voice
vote. On June 5, 2018, the Senate passed the bill by unanimous
consent. It was signed into law by the President on June 21,
2018 and became Public Law Number 115-189.
MICROLOAN MODERNIZATION ACT
(H.R. 2056)
Summary
H.R. 2056 would amend the Small Business Act to provide for
expanded participation in the Microloan Program.
Legislative History
H.R. 2056 was introduced on April 6, 2017 by Representative
Stephanie Murphy. In the 114th Congress, the Subcommittee on
Economic Growth, Tax and Capital Access held a hearing titled
``Improving Capital Access Programs within the SBA'' on May 19,
2015. At the hearing, the Subcommittee heard testimony from
industry representatives about SBA capital access programs,
including the Microloan program. On June 15, 2017, the
Committee met in open session and ordered H.R. 2056 reported
favorably to the House, as amended, by a 19-0 vote. On July 24,
2017, H.R. 2056 passed the House under Suspension of the Rules
by voice vote.
H.R. 2056 was included in H.R. 5515, the National Defense
Authorization Act for Fiscal Year 2019. H.R. 5515 passed the
House on May 24, 2018 by a vote of 351-66 (Roll Call No. 230)
and the Senate, as amended, on June 18, 2018 by a vote of 85-10
(Roll Call Number 128). The conference report for H.R. 5515
passed the House on July 26, 2018 by a vote of 359-54 (Roll
Call No. 379), the Senate on August 1, 2018 by a vote of 87-10
(Roll No. 181), was signed by the President on August 13, 2018
and became Public Law Number 115-232.
SMALL BUSINESS INVESTMENT OPPORTUNITY ACT
(H.R. 2333)
Summary
H.R. 2333 would amend the Small Business Investment Act of
1958 to increase the amount of leverage available to small
business investment companies.
Legislative History
H.R. 2333 was introduced on May 3, 2017 by Representative
Steve Knight. In the 114th Congress, the Subcommittee on
Economic Growth, Tax and Capital Access held a hearing titled
``Improving Capital Access Programs within the SBA.'' The
Subcommittee heard testimony from witnesses on capital access
programs, including the Small Business Investment Company
Program, and urged the Subcommittee to support legislation to
increase the amount of private funds available to small firms.
On June 15, 2017, the Committee met in open session and ordered
H.R. 2333 reported favorably to the House, as amended, by a 21-
0 vote. On July 24, 2017, the House passed H.R. 2333 under
Suspension of the Rules by voice vote. On June 5, 2018, the
Senate passed the bill by unanimous consent. It was signed into
law by the President on June 21, 2018 and became Public Law
Number 115-187.
SMALL BUSINESS KNOW-BEFORE-YOU-BID-CONSTRUCTION TRANSPARENCY ACT
(H.R. 2350)
Summary
H.R. 2350 would amend the Small Business Act to foster
greater transparency in, and establish standards related to the
administration of modifications to small business construction
contracts.
Legislative History
H.R. 2350 was introduced by on May 4, 2017 by
Representative Don Bacon.
INVESTING IN MAIN STREET ACT OF 2017
(H.R. 2364)
Summary
H.R. 2364 would amend the Small Business Investment Act of
1958 to increase the percentage that certain banks and savings
associations may invest in small business investment companies.
Legislative History
H.R. 2364 was introduced on May 4, 2017 by Representative
Judy Chu. On July 25, 2013, the Subcommittee on Investigations,
Oversight and Regulations held a hearing titled ``Examining the
Small Business Investment Company Program.'' The Subcommittee
reviewed whether the Small Business Investment Company (SBIC)
Program is meeting the needs of small business owners and
reducing risk to taxpayers. The Committee heard from witnesses
who strongly supplied allowing experienced managers of SBIC
funds to increase their leverage, making more private capital
available to investors.
On May 19, 2015, the Subcommittee on Economic Growth, Tax
and Capital Access held a hearing titled ``Improving Capital
Access Programs within the SBA.'' The Subcommittee heard
testimony from witnesses on capital access programs, including
the Small Business Investment Company Program, and urged the
Subcommittee to support legislation to increase the amount of
private funds available to small firms. On June 15, 2017, the
Committee met in open session and ordered H.R. 2364 reported
favorably to the House by a 21-0 vote. On July 24, 2017, the
House passed H.R. 2364 under Suspension of the Rules by voice
vote. Portions of H.R. 2364 were included in H.R. 5515, the
National Defense Authorization Act for Fiscal Year 2019, which
passed the House on May 24, 2018 by a vote of 351-66 (Roll Call
No. 230), the Senate, as amended, on June 18, 2018 by a vote of
85-10 (Roll No. 128). Those portions were later removed from
the conference report on H.R. 5515. H.R. 2364 was also included
in H.R. 6147, the Interior, Environment, Financial Services and
General Government Appropriations Act of 2019 and S. 488, the
JOBS and Investor Confidence Act of 2018, both of which failed
to advance.
PUERTO RICO SMALL BUSINESS ASSISTANCE ACT OF 2017
(H.R. 2488)
Summary
H.R. 2489 would amend the Small Business Act regarding
small businesses that have their principal office in Puerto
Rico, including to temporarily: (1) increase the total amount
of loans outstanding and committed to any microloan
intermediary if at least 20% of the intermediary's loans are
made to such businesses; (2) waive the Small Business
Administration (SBA) Microloan Program's limit on an
intermediary's spending on technical assistance for prospective
borrowers if 25% of the intermediary's loans are made to these
businesses; (3) reduce or eliminate SBA fees on certain loans
to such businesses; and (4) give federal contract preference to
such businesses, transfer specified technology or surplus
property to them, and provide subcontracting incentives for
their protege films. It would also require the SBA to
establish: (1) a Veteran Business Outreach Center in Puerto
Rico, and (2) a temporary Federal and State Technology (FAST)
grant program to provide assistance to Puerto Rico businesses.
Legislative History
H.R. 2488 was introduced by Representative Nydia Velazquez
on May 17, 2017.
TO AMEND THE SMALL BUSINESS INVESTMENT ACT OF 1958 AND THE SMALL
BUSINESS ACT TO INCLUDE SMALL BUSINESS INVESTMENT COMPANIES IN THE
SMALL BUSINESS INNOVATION RESEARCH AND SMALL BUSINESS TECHNOLOGY
TRANSFER PROGRAMS
(H.R. 2489)
Summary
H.R. 2489 would amend the Small Business Investment Act of
1958 and the Small Business Act to include Small Business
Investment Companies in the Small Business Innovation Research
and Small Business Technology Transfer Programs.
Legislative History
H.R. 2489 was introduced by Representative Nydia Velazquez
on May 17, 2017.
SMALL BUSINESS PAYMENT FOR PERFORMANCE ACT
(H.R. 2594)
Summary
H.R. 2594 would amend the Small Business Act to ensure that
small business federal contractors are paid in a timely manner
for change orders.
Legislative History
H.R. 2594 was introduced on May 23, 2017 by Representative
Brian Fitzpatrick. On May 25, 2017, a joint hearing was held by
the Small Business Subcommittee on Contracting and Workforce
and the Subcommittee on Investigations, Oversight and
Regulations on federal contracting change orders. On June 15,
2017, the Committee met in open session and ordered H.R. 2594
reported favorably to the House, as amended, by a 21-0 vote.
SMALL BUSINESS INNOVATION PROTECTION ACT
(H.R. 2655)
Summary
H.R. 2655 would amend the Small Business Act to expand
intellectual property education and training for small
businesses by establishing a partnership between the United
States Small Business Administration and the United States
Patent and Trademark Office.
Legislative History
H.R. 2655 was introduced on May 25, 2018 by Representative
Dwight Evans. On March 14, 2017, the Committee met in open
session and ordered H.R. 2655 reported favorably by voice vote.
On May 21, 2018, the Committee on the Judiciary discharged H.R.
2655 in a letter to the House Committee on Small Business. On
July 10, 2018, H.R. 2655 passed the House under Suspension of
the Rules by voice vote. The Senate version of the bill, S.
791, was passed by voice vote in the Senate on July 18, 2018.
The Committee on Small Business and the House Committee on the
Judiciary discharged S. 791 in an exchange of letters on
September 20, 2018. On September 25, 2018, S. 791 passed the
House under Suspension of the Rules by voice vote. On October
9, 2018, S. 791 was signed by the President and became Public
Law Number 115.
SBIR COMMERCIALIZATION ASSISTANCE ACT OF 2017
(H.R. 2702)
Summary
H.R. 2702 would amend the Small Business Act to require a
federal agency required to have a Small Business Innovation
Research (SBIR) program (covered agency) to implement a
commercialization assistance pilot program (CAPP), under which
an eligible entity may receive a subsequent Phase II SBIR award
through FY2022, unless the Small Business Administration
determines that the agency already has a program sufficiently
similar to a CAPP.
Legislative History
H.R. 2702 was introduced by Representative Al Lawson on May
25, 2017. H.R. 2702 was included as an amendment to H.R. 2763,
the Small Business Innovation Research and Small Business
Transfer Improvements Act of 2017. The bill was included in the
Conference Report for H.R. 5515, the John S. McCain National
Defense Authorization Act for Fiscal Year 2019, which passed
the House on July 26, 2018 by a vote of 359-54 (Roll No. 379),
the Senate on August 1, 2018 by a vote of 87-10 (Roll No. 181),
was signed by the President on August 13, 2018 and became
Public Law Number 115-232.
SMALL BUSINESS INNOVATION RESEARCH PROGRAM AND SMALL BUSINESS
TECHNOLOGY TRANSFER IMPROVEMENTS ACT
(H.R. 2763)
Summary
H.R. 2763 improves agency accountability, including several
hard reporting deadlines for participating agencies and for the
Small Business Administration (SBA) to provide future
Congresses with better information and a greater understanding
of the programs' strengths and weaknesses. It also statutorily
requires the Secretary of Defense to set a goal to increase the
number of Phase II contracts that lead to technology insertion
into programs of record or fielded systems and to use
incentives to encourage agency program managers and prime
contractors to meet that goal. The bill also allows
participating agencies to establish a new, separate
Commercialization Assistance Pilot Program, if the agency is
not currently operating such a similar program, within one year
of passage of the bill. Finally, the legislation extends three
popular pilot programs also established by Public Law 112-81
through FY 2022, when the full program will need a full
reauthorization. One pilot provides authority for participating
agencies to utilize 3 percent of the SBIR program for costs
relating to administrative, oversight, and contract processing
activities. Another pilot allows participating agencies to
offer a straight to Phase II option for small firms that have
established they have completed the work traditionally done in
Phase I of the program. The last pilot carves out a small
portion of the STIR funding to establish Phase ``Proof of
Concept'' grants to universities engaged in entrepreneurship
building to create new small firms spun out of university
research.
Legislative History
H.R. 2763 was introduced by Representative Steve Knight on
May 30, 2017. It was referred to the Committee on Small
Business and the Committee on Science, Space and Technology. On
October 11, 2017, the bill passed the House under Suspension of
the Rules by voice vote. Provisions of the bill were included
in the Conference Report for H.R. 2810, the National Defense
Authorization Act for Fiscal Year 2018, which passed the House
on November 14, 2017 by a vote of 366-70 (Roll Call No. 631),
the Senate on November 16, 2017 by voice vote, was signed by
the President on December 12, 2017 and became Public Law Number
115-91. Additional provisions were included in the Conference
Report for H.R. 5515, which passed the House on July 26, 2018
by a vote of 359-54 (Roll No. 379), the Senate on August 1,
2018 by a vote of 87-10 (Roll No. 181), was signed by the
President on August 13, 2018 and became Public Law Number 115-
232.
SMALL BUSINESS DEVELOPMENT CENTER CYBER TRAINING ACT
(H.R. 3170)
Summary
H.R. 3170 would improve cybersecurity resources for small
businesses. Specifically, H.R. 3170 would amend the Small
Business Act to require cyber certification for small business
development center counselors.
Legislative History
H.R. 3170 was introduced by Chairman Steve Chabot on July
10, 2017. It was referred to the Committee on Small Business.
During the 115th Congress, the Committee held a number of
hearings, detailed elsewhere in this report, on cybersecurity
issues. The Committee met in open session on March 14, 2018 and
ordered H.R. 3170 reported favorably to the House by voice
vote. On May 8, 2018, the House passed H.R. 3170 under
Suspension of the Rules by voice vote.
HUBZONE UNIFICATION AND BUSINESS STABILITY (HUBS) ACT
(H.R. 3294)
Summary
H.R. 3294 would improve and reform the Historically
Underutilized Business Zone (HUBZone) Program, a procurement
program that provides federal assistance to firms in
economically distressed areas. H.R. 3294 includes new program
performance metrics, an accelerated application process, and a
five year cycle to determine the program's geographic
boundaries, to increase certainty for participating companies.
Legislative History
H.R. 3294 was introduced by Ranking Member Nydia Velazquez
on July 19, 2017. It was referred to the Committee on Small
Business. During the 114th and 115th Congresses, the Committee
held several hearings on the HUBZone program. On September 13,
2017, the Committee held a legislative hearing on H.R. 3294 in
which the Committee heard from small contractors about the
challenges of the HUBZone program. H.R. 3294 was included in
H.R. 2810, the National Defense Authorization Act for Fiscal
Year 2018. H.R. 2810 was reported, as amended, by the House
Committee on Armed Services on July 6, 2017, and passed the
House on July 14, 2017 by a vote of 344-81 (Roll Call No. 378).
On September 18, 2017, the Senate passed H.R. 2810, as amended,
by a vote of 89-8 (Roll Call No. 199). H.R. 3294 was included
in the Conference Report for H.R. 2810, which passed the House
on November 14, 2017 by a vote of 356-70 (Roll Call No. 631),
the Senate on November 16, 2017 by voice vote, was signed into
law by the President on November 16, 2017, and became Public
Law No. 115-91.
SMALL BUSINESS OWNERS' TAX SIMPLIFICATION ACT OF 2017
(H.R. 3717)
Summary
H.R. 3717 would update the United States Code to simplify
tax compliance for small businesses. In particular, the bill
would help to reduce complexity and simplify filing for
entrepreneurs.
Legislative History
H.R. 3717 was introduced by Chairman Steve Chabot on
September 8, 2017. It was referred to the House Committee on
Ways and Means. The Committee has held several hearings and
roundtables on reforming the tax code and the need to expand
``cafeteria'' benefit plans. On September 27, 2017, the
Committee held a legislative hearing on the challenges small
business owners face in grappling with a voluminous and
complicated tax code.
SPURRING SMALL BUSINESSES IN COMMUNITIES ACT OF 2017
(H.R. 4111)
Summary
H.R. 4111 would amend the Small Business Act of 1958 to
improve the number of small business investment companies in
under-licensed states.
Legislative History
H.R. 4111 was introduced by Representative Cathy McMorris
Rodgers on October 24, 2017. It was referred to the House
Committee on Small Business. On May 8, 2018, the House passed
H.R. 4111 under Suspension of the Rules by voice vote. On
December 6, 2018, the Senate passed H.R. 4111.
SMALL BUSINESS ADVANCED CYBERSECURITY ENHANACEMENTS ACT OF 2017
(H.R. 4668)
Summary
H.R. 4668 would amend the Small Business Act to provide to
establish Small Business Development Centers (SBDCs) as the
primary interface for federal information sharing for small
businesses; to ensure small businesses that share cyber
indicators through SBDCs receive the same protections and
exemptions provided in the Cybersecurity Information Sharing
Act of 2015; to ensure that any policies or rulemaking adopted
by any federal agency as a result of small business cyber
information sharing do not unfairly burden small businesses;
and, to expand liability protections for small businesses that
engage with the federal government in good faith.
Legislative History
H.R. 4668 was introduced by Chairman Steve Chabot on
December 18, 2017. It was referred to the Committee on Small
Business. The Committee has held a number of hearings on cyber
security for small business and the need to help small firms
protect their data, including those held on July 26, 2017 and
January 30, 2018. The Committee met in open session on March
14, 2018 and ordered H.R. 4668 reported favorably, as amended,
to the House by voice vote.
SMALL BUSINESS BROADBAND AND EMERGING INFORMATION TECHNOLOGY
ENHANCEMENT ACT OF 2017
(H.R. 4677)
Summary
H.R. 4677 would improve certain programs of the SBA to
better assist small business customers in accessing broadband
technology.
Legislative History
H.R. 4677 was introduced by Representative Seth Moulton on
December 18, 2017. It was referred to the House Committee on
Small Business. H.R. 4677 was included in H.R. 5515, the John
S. McCain National Defense Authorization Act for Fiscal Year
2019, which passed the House on May 24, 2018 by a vote of 351-
66 (Roll Call No. 230), the Senate, as amended, on June 18,
2018 by a vote of 85-10 (Roll No. 128). Several provisions were
later removed from the Conference Report on H.R. 5515, which
passed the House on July 26, 2018 by a vote of 359-54 (Roll No.
379), the Senate on August 1, 2018 by a vote of 87-10 (Roll No.
181), was signed by the President on August 13, 2018 and became
Public Law Number 115-232.
SMALL BUSINESS 7(A) LENDING OVERSIGHT REFORM ACT OF 2017
(H.R. 4743)
Summary
H.R. 4743 would improve oversight of SBA's 7(a) Loan
Program. It would do this by: 1) codifying the Office of Credit
Risk Management and its duties; 2) requiring SBA to detail its
oversight budget in a transparent manner; and 3) requiring SBA
to perform a full risk analysis of the 7(a) program annually.
The bill would also strengthen SBA's Credit Elsewhere Test by
clarifying the factors that SBA must consider in determining
whether the test has been met.
Legislative History
H.R. 4743 was introduced by Chairman Steve Chabot on
January 9, 2018. It was referred to the Committee on Small
Business. During the 114th and 115th Congresses, the Committee
held several beatings on the 7(a) Program, including hearings
on March 9, 2017 and May 17, 2017. The Committee held a
legislative hearing on H.R. 4743 on January 17, 2018. The
Committee met in open session on March 14, 2018 and ordered
H.R. 4743 reported favorably, as amended, to the House by voice
vote. On May 8, 2018, the House passed H.R. 4743, as amended,
under Suspension of the Rules by voice vote. On June 5, 2018,
the Senate passed the bill by unanimous consent. It was signed
into law by the President on June 21, 2018 and became Public
Law Number 115-189.
CHANGE ORDER TRANSPARENCY FOR FEDERAL CONTRACTORS ACT
(H.R. 4754)
Summary
H.R. 4754 would amend the Small Business Act to provide
prospective construction contractors with information about an
agency's policies on the administration of contract change
orders. This would allow small contractors to make informed
business decisions regarding the pricing of contract bids or
proposals.
Legislative History
H.R. 4754 was introduced by Representative Don Bacon, a
former Member of the Small Business Committee, on January 30,
2018. The bill was referred to the Committee on Small Business.
The Subcommittees on Contracting and Workforce and
Investigations, Oversight, and Regulations held a joint hearing
on contract change order issues on May 25, 2017. On May 8,
2018, the House passed H.R. 4754, under Suspension of the
Rules, by voice vote.
H.R. 4754 was included in H.R. 5515, the National Defense
Authorization Act for Fiscal Year 2019. H.R. 5515 passed the
House on May 24, 2018 by a vote of 351-66 (Roll Call No. 230),
and the Senate, as amended, on June 18, 2018 by a vote of 85-10
(Roll Call Number 128). The conference report for H.R. 5515
passed the House on July 26, 2018 (Roll Call No. 379), the
Senate on August 1, 2018 by a vote of 871-10 (Roll No. 181),
was signed by the President on August 13, 2018, and became
Public Law Number 115-232).
SERVICE-DISABLED VETERANS SMALL BUSINESS CONTINUATION ACT
(H.R. 5044)
Summary
H.R. 5044 would amend the Small Business Act to clarify the
treatment of certain surviving spouses of service-disabled
veterans under the contracting goals and small business
preferences of the Department of Veterans Affairs.
Legislative History
H.R. 5044 was introduced by Chairman Steve Chabot on
February 15, 2018. The House Committee on Veterans Affairs met
in open session on May 18, 2018 and ordered H.R. 5044 reported
favorably to the House by voice vote. On May 21, 2018, the
House passed H.R. 5044 under Suspension of the Rules by voice
vote.
CONTRACTING COMPLIANCE ACT
(H.R. 5144)
Summary
H.R. 5144 would require the Comptroller General of the
United States to report on compliance of contracting agencies
with subcontracting plans and subcontracting goals under the
Small Business Act.
Legislative History
H.R. 5144 was introduced by Representative Rod Blum on
March 1, 2018. The bill was referred to the Committee on Small
Business.
PUERTO RICO SMALL BUSINESS CONTRACTING ASSISTANCE ACT
(H.R. 5178)
Summary
H.R. 5178 would amend the Small Business Act to provide
double agency credit for contract awards to Puerto Rico small
businesses as well as a number of additional incentives
promoting the selection of Puerto Rico small businesses as
proteges for purposes of increasing and promoting Puerto Rico
small business participation in the federal marketplace.
Legislative History
H.R. 5178 was introduced by Representative Nydia Velazquez
on March 6, 2018 and was referred to the Committee on Small
Business. The Committee met in open session on March 14, 2018
and ordered H.R. 5178 reported favorably to the House by voice
vote. H.R. 5178 was included in H.R. 5515, the National Defense
Authorization Act for Fiscal Year 2019, which passed the House
on May 24, 2018 (Roll Call No. 230) and the Senate, as amended,
on June 18, 2018 by a vote of 85-10 (Roll No. 128). The
Conference Report for H.R. 5515 passed the House on July 26,
2018 by a vote of 359-54 (Roll Call No. 379), the Senate on
August 1, 2018 by a vote of 87-10 (Roll No. 181), was signed by
the President on August 13, 2018 and became Public Law Number
115-232.
MAIN STREET EMPLOYEE OWNERSHIP ACT
(H.R. 5236)
Summary
H.R. 5236 would amend the Small Business Act to expand
lending options available to employee-owned small businesses
through Small Business Administration loan programs.
Legislative History
H.R. 5236 was introduced by Ranking Member Nydia Velazquez
on March 8, 2018 and was referred to the Committee on Small
Business. The Committee met in open session on March 14, 2018
and ordered H.R. 5236 reported favorably, as amended, to the
House by voice vote. On May 8, 2018, the House passed H.R.
5236, as amended, under Suspension of the Rules by voice vote.
H.R. 5236 was included in H.R. 5515, the National Defense
Authorization Act for Fiscal Year 2019, which passed the House
on May 24, 2018 (Roll Call No. 230) and the Senate, as amended,
on June 18, 2018 by a vote of 85-10 (Roll No. 128). The
Conference Report for H.R. 5515 passed the House on July 26,
2018 by a vote of 359-54 (Roll Call No. 379), the Senate on
August 1, 2018 by a vote of 87-10 (Roll No. 181), was signed by
the President on August 13, 2018 and became Public Law Number
115-232.
ACCELERATED PAYMENTS OF SMALL BUSINESS CONTRACTORS ACT
(H.R. 5337)
Summary
H.R. 5337 would amend Section 3903 of title 31 of the
United States Code to establish accelerated payments applicable
to contracts with certain small businesses.
Legislative History
H.R. 5337 was introduced by Representative Steve Knight on
March 20, 2018. It was referred to the Committee on Oversight
and Government Reform. H.R. 5337 was included in H.R. 5515, the
National Defense Authorization Act for Fiscal Year 2019, which
passed the House on May 24, 2018 by a vote of 351-66 (Roll No.
230) and the Senate, as amended, on June 18, 2018 (Roll No.
128). It was included in the conference report on H.R. 5515,
which passed the House on July 26, 2018 by a vote of 359-54
(Roll Call No. 379), the Senate on August 1, 2018 (Roll No.
181), was signed by the President on August 13, 2018 and became
Public Law Number 115-232.
SMALL BUSINESS ADVOCACY IMPROVEMENTS ACT
(H.R. 6316)
Summary
H.R. 6316 would clarify the functions and duties of the
Office of Advocacy of the Small Business Administration to
explicitly permit the Office of Advocacy to examine the rule of
small business in international economies and to represent
small business views and interests before foreign governments
and international entities. The bill also corrects two spelling
errors in Section 202 of Public Law 94-305.
Legislative History
H.R. 6316 was introduced by Representative James Comer on
July 6, 2018. It was referred to the Committee on Small
Business. The Committee met in open session on July 18, 2018
and ordered H.R. 6316 reported favorably, as amended, to the
House by voice vote. On September 25, 2018, the House passed
H.R. 6316 under suspension of the rules by voice vote.
SMALL BUSINESS RUNWAY EXTENSION ACT OF 2018
(H.R. 6330)
Summary
H.R. 6330 would amend the Small Business Act to modify the
method for prescribing size standards for small business
concerns.
Legislative History
H.R. 6330 was introduced by Representative Steve Knight on
July 11, 2018. It was referred to the Committee on Small
Business. The Committee met in open session on July 18, 2018
and ordered H.R. 6330 reported favorably, as amended, to the
House by voice vote. H.R. 6330 passed the House on September
28, 2018 under suspension of the rules by voice vote. On
December 6, 2018, the Senate passed H.R. 6330.
THE 7(A) REAL ESTATE APPRAISAL HARMONIZATION ACT
(H.R. 6347)
Summary
H.R. 6347 would adjust the real estate appraisal thresholds
under the 7(a) program to bring them into line with the
thresholds used by federal banking regulators.
Legislative History
H.R. 6347 was introduced on July 12, 2018 by Representative
Dwight Evans. It was referred to the Committee on Small
Business. The Committee met in open session on July 18, 2018
and ordered H.R. 6347 reported favorably, as amended, to the
House by voice vote. On September 25, 2018, the House passed
H.R. 6347 under suspension of the rules by voice vote.
SMALL BUSINESS ACCESS TO CAPITAL AND EFFICIENCY (ACE) ACT
(H.R. 6348)
Summary
H.R. 6348 would adjust the real estate appraisal thresholds
under the Small Business Investment Act's 504 program to bring
them into line with the thresholds used by federal regulators.
Legislative History
H.R. 6348 was introduced by Representative John Curtis on
July 12, 2018. It was referred to the Committee on Small
Business. The Committee met in open session on July 18, 2018
and ordered H.R. 6348 reported favorably, as amended, to the
House by voice vote. On September 25, 2018, the House passed
H.R. 6348 under suspension of the rules by voice vote.
INCENTIVIZING FAIRNESS IN SUBCONTRACTING ACT OF 2018
(H.R. 6367)
Summary
H.R. 6367 would amend the Small Business Act to specify
what credit is given to prime contractors under their
subcontracting plans for contracting with certain small
subcontractors and to provide an alternative dispute process
for prime contractor non-payment to small subcontractors.
Legislative History
H.R. 6367 was introduced by Representative Al Lawson on
July 13, 2018. It was referred to the Committee on Small
Business. The Committee met in open session on July 18, 2018
and ordered H.R. 6367 reported favorably, as amended, to the
House by voice vote. H.R. 6367 passed the House on September
25, 2018 under suspension of the rules by voice vote.
ENCOURAGING SMALL BUSINESS INNOVATORS ACT
(H.R. 6368)
Summary
H.R. 6368 would encourage R&D small business set asides, to
encourage SBIR and STTR participants to serve as mentors under
the Small Business Administration's mentor-protege program and
to promote the use of interagency contracts.
Legislative History
H.R. 6368 was introduced by Representative Adriano
Espaillat on July 13, 2018. It was referred to the Committees
on Small Business, Science, Space, and Technology, and
Oversight and Government Reform. The Committee met in open
session on July 18, 2018 and ordered H.R. 6368 reported
favorably, as amended, to the House by voice vote. H.R. 6368
was included in the conference report for H.R. 5515, the John
S. McCain National Defense Authorization Act for FY 2019, which
passed the House on July 26, 2018 by a vote of 359-54 (Roll
Call Number 379), the Senate on August 1, 2018 by a vote of 87-
10 (Roll No. 181), was signed by the President on August 13,
2018 and became Public Law Number 115-232.
EXPANDING CONTRACTING OPPORTUNITIES FOR SMALL BUSINESSES ACT OF 2018
(H.R. 6369)
Summary
H.R. 6369 would amend the Small Business Act to eliminate
the inclusion of option years in the award price for sole
source contracts and institute a new oversight mechanism
ensuring sole source awards are made to eligible women-owned
and service-disabled veteran-owned small businesses.
Legislative History
H.R. 6369 was introduced by Representative Roger Marshall
on July 13, 2018. It was referred to the Committee on Small
Business. The Committee met in open session on July 18, 2018
and ordered H.R. 6369 reported favorably, as amended, to the
House. H.R. 6369 passed the House on September 25, 2018 under
suspension of the rules by a vote of 392-5.
CLARITY ON SMALL BUSINESS PARTICIPATION IN CATEGORY MANAGEMENT ACT OF
2018
(H.R. 6382)
Summary
H.R. 6382 would require the Small Business Administration
to report on information regarding the total amount of spending
across the government on contracts designated as best-in-class,
and the total spent on goods and services for certain small
businesses in an existing annual report, as soon as such
information is available in the Federal Procurement Database
System.
Legislative History
H.R. 6382 was introduced by Representative Alma Adams on
July 16, 2018. It was referred to the Committee on Small
Business. The Committee met in open session on July 18, 2018
and ordered H.R. 6382 reported favorably, as amended, to the
House by voice vote. On September 25, 2018, the House passed
H.R. 6382 under suspension of the rules by voice vote.
ACCESS TO SUFFICIENT CAPITAL FOR EVERYONE IN NATURAL DISASTER AREAS
(ASCEND) ACT OF 2018
(H.R. 6826)
Summary
H.R. 6826 would amend the Small Business Act to provide an
application extension for victims of Hurricanes Harvey, Irma,
and Maria. It also extends the collateral requirements for
disaster loans under the RISE After Disaster Act of 2015 for 5
years.
Legislative History
H.R. 6826 was introduced by Representative Nydia Velazquez
on September 13, 2018.
EXPRESSING SUPPORT FOR THE DESIGNATION OF APRIL 29, 2018 THROUGH MAY 5,
2018 AS NATIONAL SMALL BUSINESS WEEK
(H. RES. 840)
Summary
H. Res. 840 would designate the week of April 29, 2018
through May 5, 2018 as ``National Small Business Week.''
Legislative History
H. Res. 840 was introduced on April 24, 2018 by Chairman
Steve Chabot with Ranking Member Nydia Velazquez and all
Members of the Committee on Small Business. It was referred to
the C01mnittee on Small Business.
RECOGNIZING NOVEMBER 4, 2018 AS ``SMALL BUSINESS SATURDAY''
(H. RES. 1144)
Summary
H. Res. 1144 would designate November 24, 2018 as ``Small
Business Saturday'' and support efforts to increase awareness
of the value of locally owned small businesses.
Legislative History
H. Res. 1144 was introduced on November 13, 2018 by
Chairman Steve Chabot with Ranking Member Nydia Velazquez. It
was referred to the Committee on Small Business.
OVERSIGHT SUMMARY
Clause 1(d) of rule XI of the Rules of the House of
Representatives for the 115th Congress requires each standing
committee, not later than January 2 of each odd numbered year,
to submit to the House a report on the activities of that
committee, including a separate section summarizing the
oversight activities of that committee. The report shall also
include a delineation of any hearings held pursuant to clauses
2(n), (o), or (p) of rule XI related to waste, fraud and abuse
in government programs.
PART A
Full Committee Hearings
HEARING: ``REIMAGINING THE HEALTH CARE MARKETPLACE FOR AMERICA'S SMALL
BUSINESSES''
On February 7, 2017 the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Reimagining the Health Care Marketplace for America's
Small Businesses.'' The hearing was called to examine the
current health insurance marketplace for small firms, review
recent difficulties, and explore options to improve access,
affordability, and consistency in America's health insurance
market.
The Affordable Care Act made numerous and significant
changes to the way health care is financed, organized, and
delivered in the United States. The law included a multifaceted
set of interconnected provisions that addressed how the private
health insurance market functions.
Witnesses on the panel were: Mr. Tom Secor, President,
Durable Corporation, Norwalk, OH, testifying on behalf of the
National Small Business Association; Mr. Keith Hall, President
and CEO, National Association for the Self Employed,
Washington, DC; Mr. Kevin Kuhlman, Director of Government
Relations, National Federation of Independent Business,
Washington, DC; and Ms. Dania Palanker, Assistant Research
Professor, Center on Health Insurance Reforms, Health Policy
Institute, Georgetown University, Washington, DC.
At the hearing, Chairman Chabot stated that doing nothing
is not an option because the current system is in a death
spiral, and it is important to remember that the damage done by
the health care law was not limited to the new problems it
created for the health care marketplace. It also exacerbated
and made long-standing problems worse in that marketplace. Mr.
Secor testified that fewer and fewer small businesses,
especially those with fewer than 50 employees, offer health
insurance as an employee benefit. This is not because they do
not want to, or cannot find an insurance carrier in their
market; it is because they simply cannot afford to offer a
plan. He also emphasized that since the law was enacted, his
business has many fewer choices of health care law--approved
plans. Mr. Hall testified that his members view their health
insurance purchase as a business decision and unfortunately the
self-employed and micro-business owners currently do not
receive the same tax incentives as other businesses. Mr.
Kuhlman testified that because of the law, there has been a
significant 25 percent reduction in the offer rate for small
businesses between 2010 and 2015. He added that for the first
time ever, fewer than 30 percent of businesses with under 50
employees offered health insurance to their employees in 2015.
Ms. Palanker stated that small businesses were better off today
than they were prior to enactment of the law because of greater
choices in the types of benefits offered by the health care
laws' coverage mandates.
HEARING: ``START-UPS STALLING? THE TAX CODE AS A BARRIER TO
ENTREPRENEURSHIP''
On February 15, 2017, the Committee on Small Business S met
in Room 2360 of the Rayburn House Office Building for a hearing
titled ``Start-ups Stalling? The Tax Code as a Barrier to
Entrepreneurship.'' The hearing examined the extent to which
the tax code operates as a barrier to entrepreneurship.
The witnesses for the hearing were: Mr. Kyle Pomerleau,
Director of Federal Projects, Tax Foundation, Washington, DC;
Mr. David Burton, Senior Fellow, Economic Policy, The Heritage
Foundation, Washington, DC; Mr. Tim Reynolds, President,
Tribute Inc., Hudson, OH, testifying on behalf of the National
Small Business Association; and Mr. Troy Lewis, Tax Executive
Committee Immediate Past Chair, American Institute of CPAs,
Washington, DC.
Mr. Pomerleau focused on the tax treatment of business
losses, capital losses, and business investment, as well as the
relatively high tax rates on business income, as barriers to
entrepreneurial ventures that tend to run losses for some time
before turning a profit. Mr. Burton identified the four largest
sources of complexity in the tax law as: (1) capital cost
recovery; (2) inventory accounting; (3) employee benefit
taxation; and (4) international taxation; and he made about a
dozen recommendations for changes going forward. Mr. Reynolds
echoed some of Mr. Pomerleau's and Mr. Burton's concerns,
adding that his company, because it is an S corporation, cannot
avail itself of the research and experimentation (R&E) tax
credit because he is often personally subject to the
alternative minimum tax (AMT). Mr. Lewis addressed more than a
dozen issues that would help to reduce tax barriers to start-
ups; including defining and distinguishing compensation;
creating a safe harbor for employees who travel out of state;
and simplifying tax penalties and administration.
HEARING: ``SMALL BUSINESS CYBERSECURITY: FEDERAL RESOURCES AND
COORDINATION''
On March 8, 2017, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Small Business Cybersecurity: Federal Resources and
Coordination.'' The hearing was called to examine the steps the
federal government is taking to ensure that small businesses
have the tools they need to protect themselves from cyber
threats. Although many federal agencies provide cybersecurity
resources for small businesses, there is a lack of coordination
between the various agencies. The agencies should ensure that
small businesses can access these tools to protect and combat
cyber attacks in an efficient and effective manner.
Witnesses on the only panel were: The Honorable Maureen K.
Ohlhausen, Acting Chairman, Federal Trade Commission,
Washington, DC; Chuck Romine, Ph.D., Director, Information
Technology Lab, Gaithersburg, MD; Mr. Charles ``Tee'' Rowe,
President and CEO, America's Small Business Development
Centers, Arlington, VA; and Mr. Jim Mooney, President and CEO,
Chevron Federal Credit Union, Cybersecurity Committee Chair,
National Association of Federally Insured Credit Unions,
Arlington, VA.
At the hearing, Chairman Chabot stated that the federal
government needs to step up its game in protecting the cyber
security of small businesses. He said that federal agencies
tasked with providing small businesses with cybersecurity
resources can be even better coordinated and should reduce
duplicative resources and processes to ensure that small
businesses are equipped to deal with growing cyber threats. Ms.
Ohlhausen testified that data is an increasingly vital asset
for small businesses, and as companies collect more personal
information from consumers, the databases they create become
more attractive targets for criminals. She stated that the
Federal Trade Commission (FTC) is committed to protecting
consumer privacy and promoting data security in the private
sector using flexible tools. The FTC has undertaken substantial
efforts to promote data security in the private sector through
civil law enforcement, business outreach and consumer
education, policy initiatives, and recommendations to Congress
to enact legislation.
Dr. Romine testified that when implementing new
technologies, small businesses need to fully understand all of
the potential security risks created by connecting to the
Internet. The risks to systems are so complex and pervasive
that small businesses cannot reasonably be expected to be
experts in all areas of security, including properly
implementing security controls for complex system
configurations and assessing security features associated with
new and emerging technology. He also stated that the National
Institute of Standards and Technology has worked effectively
with industry and federal agencies to help protect the
confidentiality, integrity, and availability of information
systems. Mr. Rowe said that Small Business Development Centers
(SBDCs) have been working to spread awareness of cyber threats
to their clients by offering training programs at most SBDCs
and working to expand the coverage to the entire network. He
noted that pursuant to section 1841 of the National Defense
Authorization Act for 2017, America's SBDCs is working with the
Department of Homeland Security (DHS) and the Small Business
Administration (SBA) to develop a strategy to leverage the
collective resources of DHS, SBA and the national network of
SBDCs to provide the resources, training and assistance small
businesses will need. He added that a lot of the uncertainty
and confusion small businesses face now is a result of the
previous administration releasing cybersecurity regulations at
the very end of its term before it was adequately discussed.
Mr. Mooney stated that securing consumers' personal information
and financial accounts will require the entire payments
ecosystem to take an active role in addressing emerging
threats, and in turn require all industries to be proactive in
protecting consumers' personally identifiable and financial
information from the onset.
HEARING: ``MAKING WASHINGTON WORK FOR AMERICA'S SMALL BUSINESSES''
On March 22, 2017, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Making Washington Work for America's Small
Businesses.'' The hearing was called to allow small business
owners to outline their priorities and provide the Committee
with ideas about federal policies that will help them best grow
their businesses. A priority setting hearing, it helped to
inform future committee hearings, advocacy efforts, and
legislative priorities for the Committee on Small Business for
the 115th Congress.
Witnesses on the only panel were: Ms. Maxine Turner,
Founder, Cuisine Unlimited, Salt Lake City, UT, on behalf of
the United States Chamber of Commerce; Ms. Anne Chambers, Co-
Founder and CEO, Red212, Cincinnati, OH, on behalf of Women
Impacting Public Policy; Mr. Rutland ``Skip'' Paal, Owner,
Rutland Beard Floral Group, Baltimore, MD, on behalf of the
Society of American Florists; and Mr. David Borris, Owner,
Hel's Kitchen, Catering, Northbrook, IL, on behalf of the Main
Street Alliance.
At the hearing, Chairman Chabot stated that the issues
discussed are important because too often, small businesses get
the short end of the stick, which is counterproductive to the
economic health of the nation. All of the witnesses touched on
the similar themes of unnecessary regulation, tax compliance
burden and tax complexity, the cost of health care, and access
to capital as the paramount issues facing small firms. Ms.
Turner testified that the Chamber has heard from its members
about the torrent of red tape and overregulation that is
strangling established businesses and discouraging
entrepreneurship. Ms. Chambers said that capital is the
lifeline of business and the ability to secure capital is often
the determinant of an entrepreneur's opportunity to start or
grow a business. She also said that for women in particular,
accessing capital continues to be difficult. She noted that
while women-owned businesses generally ask for less funding--on
average, $35,000 less than male-owned counterparts--they
receive just 16 percent of all small business loans made each
year. Mr. Paal said the Affordable Care Act (ACA) and its
implementing regulations have hamstrung his business. While he
offered health insurance to his employees prior to enactment of
the ACA, he has seen his premiums raise, on average, 30 percent
per year since the law was passed. He also said he would like
to see Congress significantly simplify the tax code and make it
much more predictable from year to year. Mr. Borris noted that
the ACA stabilized health costs for his company, that sensible
regulation provides certainty to his business, and that
navigating the bureaucratic and legal obstacles to obtaining
requisite permits or licenses is often difficult and
burdensome.
HEARING: ``EVALUATING THE PAPERWORK REDUCTION ACT: ARE BURDENS BEING
REDUCED?''
On March 29, 2017, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Evaluating the Paperwork Reduction Act: Are Burdens
Being Reduced?'' With some limited exceptions, the Paperwork
Reduction Act (PRA) requires all executive departments and
independent regulatory agencies to obtain approval from the
Office of Management and Budget (OMB) in advance of collecting
identical information from or imposing an identical reporting
or recordkeeping requirement on 10 or more persons. The
Committee met to examine the PRA's effectiveness in reducing
the paperwork burden on small businesses and issues that may
warrant further scrutiny or legislative action.
The witnesses for the hearing were: Mr. Sam Batkins,
Director of Regulatory Policy, American Action Forum,
Washington, DC; Ms. Leah F. Pilconis, Environmental Law &
Policy Advisor, Associated General Contractors of America,
Arlington, VA; Mr. Frank Cania, Founder and President, driven
HR, Pittsford, NY, testifying on behalf of the Society for
Human Resource Management; and Ms. Sally Katzen, Professor of
Practice and Distinguished Scholar in Residence, New York
University School of Law, and Senior Advisor, Podesta Group,
Washington, DC.
Mr. Batkins began the hearing by describing the overall
burden of federal paperwork. Currently, federal paperwork
annually takes 11.6 billion hours to fill out and submit, which
is up from 6.9 billion hours in 1997. He further noted that
agency paperwork burden estimates often contain mistakes,
agencies routinely violate the PRA, and reforms such as
monetizing the costs of paperwork and moving more reporting
requirements online could make the PRA more effective. Ms.
Pilconis described the construction industry's experience
complying with federal information collection requests and
focused on those issued by the Environmental Protection Agency
(EPA). She discussed EPA paperwork requirements that overlap or
duplicate others, such as the National Pollutant Discharge
Elimination System and Spill Prevention Control and
Countermeasure Plan regulations and its Stormwater Pollution
Prevent Plan requirements. Ms. Pilconis also noted that
electronic information reporting presents new challenges,
costs, and burdens and suggested that the PRA may need to be
updated to account for the lifecycle costs of electronic
reporting and recordkeeping. Mr. Cania, the founder and
president of a small human resources consulting firm, discussed
several federal forms that his clients have difficulties
filling out correctly, including: the Affordable Care Act Form
1095-C, a tax form, and the United States Citizenship and
Immigration Services Form I-9. He suggested that federal
agencies should work with organizations like the Society of
Human Resource Management to beta test forms and data
collection tools before they are imposed to improve the design
of federal paperwork and the burden estimates. Ms. Katzen
discussed the importance of distinguishing between different
types of paperwork since different forms or reporting
requirements have different effects and consequences for small
businesses.
HEARING: ``TAKING CARE OF SMALL BUSINESS: WORKING TOGETHER FOR A BETTER
SBA''
On April 5, 2017, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Taking Care of Small Business: Working Together for a
Better SBA.'' The hearing allowed the Committee to hear from
the Honorable Linda McMahon, who was sworn in on February 14,
2017 as the 25th Administrator of the United States Small
Business Administration (SBA), about her priorities for
entrepreneurs and small businesses.
The sole witness for the hearing was the Honorable Linda
McMahon, Administrator, United States Small Business
Administration, Washington, DC.
Administrator McMahon discussed a wide variety of topics
including her plans for leading the SBA and improving its
programs by utilizing metrics to measure the outcomes, not
output, of its programs. She stressed the importance of
ensuring that all of the SBA's services are delivered
efficiently and effectively to its customers and making certain
that the agency and its resource partners are providing
services that small businesses need to grow, innovate, and
create jobs. Administrator McMahon also stated that the
Government Accountability Office's recommendations for the SBA
have been helpful in evaluating the agency's employees and
practices.
HEARING: ``SCAM SPOTTING: CAN THE IRS EFFECTIVELY PROTECT SMALL
BUSINESS INFORMATION?''
On April 6, 2017, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Scam Spotting: Can the IRS Effectively Protect Small
Business Information? As tax filing season heats up, so does
fraud season at the Internal Revenue Service (IRS). Identity
theft and fraudulent tax returns have been a growing problem
for individuals and small businesses alike. The Treasury
Inspector General for Tax Administration (TIGTA) is charged
with overseeing the IRS in the conduct of its job to ensure the
integrity of the tax collection system, including protecting
taxpayers from identity theft, putting systems into place to
identify fraudulent returns, and ensuring quality customer
service. The Committee met with the current Inspector General
to discuss the findings of their recent audits of the IRS'
performance in addressing these issues.
The sole witness for the hearing was the Honorable J.
Russell George, Inspector General, Treasury Inspector General
for Tax Administration, Washington, DC.
At the hearing, Mr. George discussed how TIGTA has provided
ongoing oversight and testimony on the issue of tax fraud-
related identity theft because of the adverse effect on both
the victims of this crime and the IRS. He also stated that
identity theft continues to remain on the IRS' list of top tax
scams. Mr. George testified that TIGTA has reported that the
IRS does not always effectively provide assistance to taxpayers
who report that they have been victims of identity theft,
resulting in an increased burden for those victims. He then
discussed many of the efforts that TIGTA has taken to combat
identity theft, including publishing scam-related telephone
numbers, public outreach, and criminal prosecutions.
HEARING: ``STORM WATCH: MAKING SURE THE SBA IS PREPARED''
On April 26, 2017, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Storm Watch: Making Sure the SBA is Prepared.'' The
hearing examined the U.S. Small Business Administration's
(SBA's) Disaster Loan Program, which offers loans to
individuals and businesses of all sizes to help recover from
declared disasters. The Committee reviewed the program to
ensure that it is prepared for the next major disaster.
The witnesses for the hearing were: Mr. James Rivera,
Associate Administrator, Office of Disaster Assistance, United
States Small Business Administration, Washington, DC; Mr.
Hannibal ``Mike'' Ware, Acting Inspector General, Office of
Inspector General, Small Business Administration, Washington,
DC; and Mr. William Shear, Director, Financial Markets and
Community Investment, Government Accountability Office,
Washington, DC.
The witness panel discussed the Disaster Loan Program and
what steps still need to be taken to better ensure that it is
ready for the next big disaster. SBA Associate Administrator
Rivera stressed in his testimony that SBA is ready. He stated
that SBA has made a number of key improvements that will help
it to better respond to disaster survivors. He emphasized that
SBA firmly believes that the reforms instituted will enable it
to be better prepared to efficiently and effectively respond to
the needs of disaster survivors. Both Mr. Ware and Mr. Shear
agreed that SBA's Disaster Loan Program had made great strides
since the days following Hurricane Katrina. But they had
concerns whether the program was truly prepared for the next
big disaster. Mr. Ware testified that the need to process loans
quickly, and in some instances in large volumes, poses many
complications and may create opportunities for dishonest
applicants to commit fraud and SBA personnel to make errors in
the lending process. Having effective internal controls, robust
technology design and resources, and training programs are keys
to mitigating risks to the taxpayer. Mr. Shear testified that
he was concerned whether the reserve corps will be up and ready
when that next major disaster strikes.
Mr. Ware agreed, saying he is concerned that SBA's reserve
corps is not necessarily trained sufficiently enough be able to
hit the ground running and to be able to effectively process
loan applications to cut down on errors and also to expedite
the process. Mr. Shear further observed that SBA had not
effectively presented information on disaster loans in a way
that would help users efficiently find it, had not consistently
described key features and requirements of the loan process in
print and online resources, or clearly defined the financial
terminology used in loan applications. According to Mr. Shear,
absent better integration of, and streamlined access to,
disaster loan-related information, loan applicants may not be
aware of key information and requirements for completing the
applications. As Mr. Ware noted, each disaster has unique
circumstances and poses unforeseen challenges that SBA
personnel must adapt to and overcome to be successful.
Therefore, it is critical that the program is operated
effectively and efficiently.
HEARING: ``EMPOWERING SMALL BUSINESSES: THE ACCELERATOR MODEL''
On May 3, 2017, the Committee on Small Business met in Room
2360 of the Rayburn House Office Building for a heating titled
``Empowering Small Businesses: The Accelerator Model.'' The
hearing examined how business accelerators help entrepreneurs,
startups, and small businesses grow and create jobs. The
hearing gave Members of the Committee the opportunity to hear
from organizations that are directly involved in providing
private sector resources to small businesses.
The witnesses for the hearing were: Ms. Starr Marcello,
Executive Director, Polsky Center for Entrepreneurship and
Innovation's Edward L. Kaplan New Venture Challenge, University
of Chicago, Chicago, IL; Mr. Darrin Redus, Sr., Vice President,
Minority Business Accelerator, Cincinnati USA Regional Chamber,
Cincinnati, OH; Ms. Carolyn Rodz, Founder/Chief Executive
Officer, Circular Board, Houston, TX; and Dr. Stephen Tang,
President/Chief Executive Officer, University City Science
Center, Philadelphia, PA.
The witness panel discussed how business accelerators scale
companies through a fixed-term, cohort-based program that
focuses on a mentorship model and concludes with a demo day
presentation. Ms. Marcello outlined the University of Chicago's
top-ranked accelerator and its impact on the Chicago region,
including the importance of the fixed-term nature of
accelerators. Mr. Redus discussed how some accelerators are
benefitting regions and cities by concentrating on economic
development. He also explained how the Cincinnati USA Regional
Chamber's Minority Business Accelerator is helping to scale
African American and Hispanic owned businesses. Ms. Rodz
discussed how her business accelerator utilizes a 100 percent
virtual model to target female entrepreneurs by reducing
geographic barriers. Dr. Tang detailed the programs that
operate at the Science Center including the Phase 1 Ventures
and the Digital Health Accelerator. Aside from the ways
accelerators are assisting small businesses, the witness panel
touched on the benefits of the SBA's Growth Accelerator Fund
Competition.
HEARING: ``SBA'S 7(A) LOAN PROGRAM: A DETAILED REVIEW''
On May 17, 2017, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``SBA's 7(a) Loan Program: A Detailed Review.'' As a way
to review the United States Small Business Administration's
(SBA) 7(a) Loan Program's ability to help creditworthy small
businesses obtain capital, this hearing offered Members of the
Committee the opportunity to hear from SBA officials directly
involved in administering the program.
The witnesses for the hearing were: Ms. Linda Rusche,
Director, Office of Credit Risk Management, Office of Capital
Access, United States Small Business Administration,
Washington, DC; and Mr. William Manger, Associate
Administrator, Office of Capital Access, United States Small
Business Administration, Washington, DC.
The government witness panel discussed the role and
resources of the Office of Credit Risk Management (OCRM) with
regard to overseeing SBA's 7(a) Loan Program. While Mr. Manger
provided a high level overview of the lending program, Ms.
Rusche shared details of how OCRM oversees lenders.
Specifically, Ms. Rusche discussed the Loan and Lender
Monitoring System (L/LMS), the risk measurement system which is
known as PARRiS, and the reviews and examinations process. Ms.
Rusche described the credit elsewhere test, along with lender
non-compliance with the test. When asked about the complexity
of SBA's loan programs, Mr. Manger explained how he would like
to streamline the process, along with an idea to potentially
overhaul SBA's standard operating procedures (SOP). As a
response to a question about access to capital, Mr. Manger
suggested that SBA can always improve their methods in reaching
out to potential borrowers.
HEARING: ``ACCOMPLISHMENTS AND CHALLENGES AT THE SBA'S OFFICE OF
INTERNATIONAL TRADE''
On May 23, 2017, the Committee on Small Business met in
2360 Rayburn House Office Building to examine the efforts of
the United States Small Business Administration's (SBA) Office
of International Trade (OIT) to increase exports, coordinate
export promotion activities with other federal agencies, and
assist United States small businesses' engagement in the global
marketplace.
Increasing small business exports continues to be a top
priority for both United States lawmakers and the federal
government. While nearly 300,000 small businesses are currently
exporting to foreign markets, many small businesses face
significant challenges in getting their goods and services
abroad. To help address these challenges, Congress redirected
the SBA to increase its role in export activities, including
export counseling and financing. The Committee heard directly
from the SBA about its ongoing efforts to assist small
businesses seeking to engage in the international trading
system. The sole witness on the panel was Mr. Peter Cazamias,
Associate Administrator, Office of International Trade, United
States Small Business Administration, Washington, DC.
Chairman Chabot stated that increasing small business
exports has long been a top priority for the Committee. Mr.
Cazamias said that although there are over 28 million small
businesses in the United States, fewer than 5 percent can claim
to be exporters. He acknowledged that there is room for
improvement, which he stated could be addressed in three ways:
the need for information; the need for capital; and the need
among small businesses for overseas promotional services and
market access. Mr. Cazamias assured the Committee that he is
committed to ensuring that our small business exporters find
the support they need to expand into international markets.
HEARING: ``A CAUTIONARY TALE: A REVIEW OF SBA'S FAILED FY 2014 AGENCY
RESTRUCTURE''
On June 14, 2017, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``A Cautionary Tale: A Review of SBA's Failed FY 2014
Agency Restructure.'' The hearing examined how the Small
Business Administration (SBA) managed its FY 14 Voluntary Early
Retirement Authority (VERA) and Voluntary Separation Incentive
Payment (VSIP) program. SBA failed to effectively manage and
implement its FY 2014 VERA-VSIP program. As a result, SBA spent
over $2.1 million for early retirements that were not properly
restructured.
The witnesses for the hearing were: Mr. Hannibal ``Mike''
Ware, Acting Inspector General, Office of Inspector General,
Small Business Administration, Washington, DC; and Mr. Joseph
Loddo, Chief Operating Officer, Small Business Administration,
Washington, DC.
Acting Inspector General Ware testified that the Office of
Inspector General conducted an audit in response to inquiries
from Congress and hotline complaints. He stated that these
complaints said the program was not rolled out correctly, and
there was not any planning. Mr. Ware testified that his
office's audit determined that SBA did not accomplish its
stated goals of the VERA/VSIP program. Mr. Loddo agreed that
SBA poorly managed the FY 2014 VERA/VSIP program. Mr. Loddo,
however, promised the Committee that such a poor VERA/VSIP
rollout will never happen on his watch.
Mr. Ware assigned three causes to SBA's failed VERA/VSIP:
(1) the lack of any planning that would have aligned with the
Office of Personnel Management's (OPM) requirements and SBA's
stated goals; (2) lack of tracking to determine who left and
what positions would need to restructured; and (3) the Chief
Human Capital Officer's poor guidance that allowed the HR
office to simply backfill positions. Mr. Ware further stated
that it appeared that SBA rushed to implement something they
were not exactly ready for. Further, the Office of Human
Resources Solutions--responsible for planning the VERA/VSIP and
the OPM justification--did not include most of the SBA
leadership in the planning for the VERA/VSIP. Therefore, the
VERA/VSIP plan did not factor in their insight, expertise and
experience. Their absence from the table also caused
miscommunication and misinformation. Mr. Loddo testified that
there was no transparency, no communication, and it was
implemented in 30 days. He said that is not the way you would
do a VERA/VSIP. Mr. Loddo also confirmed that the VERA/VSIP
rollout caused a tremendous morale problem particularly within
the Office of Human Resources Solutions. Exacerbating the
morale problem, the Chief Human Capital Officer sent a letter
to SBA employees encouraging SBA to ignore OPM guidelines and
the SBA plan for the VERA/VSIP.
Mr. Loddo testified that the SBA is currently restructuring
and reorganizing the entire agency. Mr. Loddo was preparing to
present the recommendations of this restructure and
reorganization to Administrator Linda McMahon in an effort to
streamline the agency.
HEARING: ``PARTNERS IN COMMERCE: THE TRADE PROMOTION COORDINATING
COMMITTEE''
On June 21, 2017, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Partners in Commerce: The Trade Promotion Coordinating
Committee.'' The hearing examined the Trade Promotion
Coordinating Committee (TPCC) and its efforts to partner with
federal, state, and local trade promotion agencies to help
America's small businesses increase exports and thrive in the
global marketplace.
Exporting is a critical component for the long-term growth
and viability of small businesses and the United States economy
overall. In 2016, total U.S. exports reached $2.2 trillion.
According to the U.S. International Trade Commission (ITC),
those exports helped support nearly 11.5 million jobs.
Exporting provides small businesses with the opportunity to
reach new markets, increase revenue, grow their business, and
ultimately create needed jobs. The benefits of exporting are
clear, but many small businesses do not have the knowledge,
resources, or capital to navigate the trade process; therefore,
they simply do not export.
Witnesses on the panel were: Mr. Patrick Kirwan, Director,
Trade Promotion Coordinating Committee (TPCC), International
Trade Administration, United States Department of Commerce,
Washington, DC; Mr. Peter J. Cazamias, Associate Administrator,
Office of International Trade, United States Small Business
Administration, Washington, DC; and Ms. Ann Pardalos, Manager,
International Trade and Investment Office, Missouri Department
of Economic Development, Jefferson City, Missouri.
At the hearing, the TPCC representatives discussed their
strategy to leverage existing federal, state, and local
resources and explained the steps they are taking to strengthen
their partnerships and better coordinate with TPCC member
agencies. The goal is to more effectively provide small
businesses with the necessary tools and support to increase
exports and create new jobs in the United States. Mr. Cazamias
provided an overview of the priorities for Office of
International Trade (OIT) and its role as chair of the TPCC's
Small Business Working Group. Mr. Kirwan explained that the
Department of Commerce's International Trade Administration is
the primary agency responsible for strengthening the
competitiveness of U.S. industry in the global marketplace,
promoting U.S. exports, monitoring compliance with U.S. trade
agreements, and enforcing U.S. trade laws. He also spoke about
ongoing efforts to enhance coordination among federal, state,
and local trade promotion agencies. Finally, Ms. Pardalos
explained how State International Development Organizations
(SIDO) helps state international trade agencies serve American
exporters by sharing innovative ideas and resources and
developing policies that help more small businesses export at
the local level. She noted that SIDO works closely with its
federal trade partners, including the Trade Promotion
Coordinating Committee, the International Trade Administration,
and the U.S. Small Business Administration.
Chairman Chabot said that greater collaboration between
state and federal trade agencies would help to ensure that
America's small businesses have opportunities to export. He
also encouraged the federal agencies to continue working
together with state and local partners, and that the TPCC make
a greater effort to share client information with one another
to improve coordination of the services provided by the TPCC.
HEARING: ``HELP OR HINDRANCE? A REVIEW OF SBA'S OFFICE OF THE CHIEF
INFORMATION OFFICER''
On July 12, 2017, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Help or Hindrance? A Review of SBA's Office of the
Chief Information Officer.'' The hearing examined whether the
Small Business Administration's (SBA) Office of the Chief
Information Officer (OCIO) is operating efficiently and
effectively. Over the years, the OCIO has struggled to fulfill
its most important functions: to conduct effective oversight
over the agency's: (1) IT investments; and (2) IT security.
Government watchdogs have issued numerous reports outlining the
OCIO's many failures and flaws.
The sole witness for the hearing was Ms. Maria Roat, Chief
Information Officer, Small Business Administration, Washington,
DC.
In her testimony, Ms. Roat acknowledged that the Office of
the Chief Information Officer was struggling upon her arrival.
She testified that it was clear that transformation was
overdue. She stated that when she arrived, she and her team
embarked on a fast-paced journey to change how the SBA builds,
buys, and manages information technology to support small
businesses and entrepreneurs. According to Ms. Roat, her first
12 months are critical to making lasting improvements.
Evaluating her progress, Ms. Roat testified that by January she
made a significant amount of progress in stabilizing the
environment. At this point, she said her team is taking steps
to modernize, such as moving all their systems to the cloud.
When asked about the biggest challenge she faced when she
became the Chief Information Officer, Ms. Roat testified that
it was stabilizing the IT environment and filling the vacancies
with the right people. She emphasized that her office must
continue to attract, hire, and retain the right talent and to
develop the entire SBA IT workforce. She agreed that the high
rate of turnover at the CIO position has negatively affected
the office and the entire organization. To strengthen IT
leadership, Ms. Roat has installed a leadership team to avoid
gaps. For example, she has hired a Deputy Chief Information
Officer and a Chief Technology Officer--two positions that have
often been vacant. She said she has also been building a team
that is dedicated to the mission, and not just there to deploy
desktops or laptops.
Ms. Roat also noted that her office is working to continue
to improve IT security. As she stated, building security in by
design is important because you cannot have a hard outer shell
and a ``soft squish'' inside. In case there is a breach, her
office has updated SBA's incident response procedures.
Additionally, Ms. Roat is making sure SBA understands its
network environment. Understanding how the network operates
normally will put SBA in a better position to detect a security
breach.
In sum, Ms. Roat testified that to overcome the inherent
inertia of the status quo, we are making a radical and
difficult, but deeply considered and well-planned turn, moving
to an environment where the CIO is a partner to and enabler of
the business of SBA. The Office of the Chief Information
Officer must transition from being just an office that does
computers to a service organization.
HEARING: ``REVERSING THE ENTREPRENEURSHIP DECLINE''
On July 19, 2017, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Reversing the Entrepreneurship Decline.'' The hearing
provided the Committee an opportunity to understand the
entrepreneurship trends, challenges, and opportunities that
exist in the United States. This hearing also examined how
entrepreneurship influences leading economic indicators and
potential solutions to promote new and existing small
businesses.
Witnesses on the panel were: Gregory Crawford, Ph.D.,
President, Miami University, Oxford, Ohio; Ms. Karen Kerrigan,
President & CEO, Small Business & Entrepreneurship Council,
Vienna, VA; and Mr. Joe Schocken, CEO, Broadmark Capital,
Seattle, WA.
The panel discussed current barriers to entrepreneurship
and solutions that would promote increased business formation.
Dr. Crawford mentioned that Miami's curriculum fosters an
entrepreneurial mindset across the entire university.
Entrepreneurship opportunities include internships, corporate
partnerships, and case competitions that can lead to job
placements and even new business ideas. Ms. Kerrigan's
testimony addressed the current state of entrepreneurship,
including barriers and potential solutions to address the
entrepreneurial deficit. She supported a variety of reforms in
her testimony including lower and simpler taxes, health care
reform, regulatory reform, improved access to capital, and
improved broadband infrastructure for small business and
entrepreneurs. Mr. Schocken emphasized the importance of the
innovation economy on economic growth and job creation and
labeled what he believes are the most significant obstacles for
new business creation.
HEARING: ``PROTECTING SMALL BUSINESSES FROM CYBER ATTACKS: THE
CYBERSECURITY INSURANCE OPTION''
On July 26, 2017, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Protecting Small Businesses from Cyber Attacks: the
Cybersecurity Insurance Option.'' The hearing examined how
cybersecurity insurance solutions can help small businesses
recover from a cyber attack as well as the challenges small
businesses face in selecting a cybersecurity insurance policy,
and the hurdles insurers must overcome to offer viable and
comprehensive cybersecurity insurance solutions.
Small businesses rely on information technology more than
ever, yet the very tools that make small businesses competitive
have put them in the crosshairs of cyber attackers.
Unfortunately, it has become increasingly evident that no
matter how well-protected a small business' information
technology system may be, it is practically impossible to be
hack-proof. As a result, many corporate executives are giving
consideration to cyber insurance policies as part of the
solution. The global cyber insurance market is expected to
reach $14 billion by 2022, with a compound annual growth rate
of nearly 28 percent from 2016 to 2022.
Witnesses on the panel were: Mr. Robert Luft, President,
SureFire Innovations, Cincinnati, Ohio; Ms. Erica Davis, Senior
Vice President, Head of Specialty Products Errors & Omissions,
Zurich Insurance, North America, Washington, DC; Mr. Eric
Cernak, Vice President, Cyber Risk Practice Leader, Munich Re
U.S., Hartford, CT; and Mr. Daimon Geopfert, National Leader
and Principal, Security and Privacy Consulting, Risk Advisory
Services, Southfield, MI.
At the hearing, the panel discussed how cybersecurity
insurance can mitigate losses from cyber incidents, including
data breaches, business interruption, and network damage that
might otherwise destroy a small business. The witnesses also
noted that insurance underwriters face difficulties in
calculating cyber risk due to a lack of data and the factors
that impact the scope and cost of a cyber liability policy,
including the size and type of business, the number of
customers, the type of data and information the business
stores, and the business' online exposure. Finally, the panel
cautioned that the cyber insurance marketplace is relatively
new and faces significant challenges to becoming a singular and
comprehensive solution to cyber attacks against small
businesses.
Mr. Luft provided a small business owner's experience with
acquiring a cybersecurity insurance policy. He stated that it
is critically important that a small business owner, when
selecting an agent for their cybersecurity policies, stay
within the sphere of knowledgeable cybersecurity agents, as
they will be able to better assist with identifying the
appropriate policy for the level of coverage required per the
business. Ms. Davis explained that businesses face difficult
decisions about cybersecurity and how best to manage their
risks: deciding whether they should retain the residual risk or
transfer it through the purchase of a cyber insurance product.
She also noted that the role of insurance is continuously
increasing as customers are now seeking industry feedback and
risk insights. Mr. Cernak explained that a reinsurer, a company
that provides insurance for insurers, for primary insurers
provides reinsurance to share in the risk of loss, helps
primary insurers underwrite cyber risk and develop products,
and provides other services to primary insurers that are
writing cyber insurance specifically for small businesses.
Finally, Mr. Goepfert said that the current state of security
governance within small organizations limits the benefits of
cybersecurity insurance as risk mitigation.
HEARING: ``EXPEDITING ECONOMIC GROWTH: HOW STREAMLINING FEDERAL
PERMITTING CAN CUT RED TAPE FOR SMALL BUSINESSES''
On September 6, 2017, the Committee on Small Business met
in Room 2360 of the Rayburn House Office Building for a hearing
titled ``Expediting Economic Growth: How Streamlining Federal
Permitting Can Cut Red Tape for Small Businesses.'' The hearing
examined how federal permitting requirements burden small
businesses.
The witnesses for the hearing were: Mr. Philip Howard,
Chair, Common Good, New York, NY; Mr. Louis Griesemer,
President, Springfield Underground, Inc., Springfield, MO; Mr.
Mark Hayden, General Manager, Missoula Electric Cooperative,
Missoula, MT; and Ms. Margot Dorfman, CEO, U.S. Women's Chamber
of Commerce, Washington, DC.
The witnesses provided testimony detailing how small
businesses across industries must overcome a number of hurdles,
including wading through regulatory overlap, enduring lengthy
delays, and bearing increased costs, as they try to obtain all
of the appropriate federal permits before launching projects.
For example, Mr. Howard testified that the regulatory overlap
causes confusion and extra costs for small businesses. He
explained that obtaining a permit to start a business, or to
build anything, requires going to multiple agencies, often at
federal, state, and local levels. These agencies rarely
coordinate their requirements. Often their demands are
duplicative, and sometimes conflict with one another. They do
not honor the practical implications of the regulations--the
costs, time constraints, and diversion of energy. The witnesses
testified about how the federal permitting process forces small
businesses to endure lengthy delays waiting for permitting
decisions. Mr. Hayden, the General Manager for an electric
cooperative in Montana, said that he fully recognized the fires
burning in Montana today were all lightning sparked, but also
realize the increased risk that long delays in federal approval
permit applications, inadequate fuels reduction programs, and
other factors bring to his co-op and infrastructure.
Mr. Griesemer, a small business owner in Springfield,
Missouri, explained that the current federal permitting process
places the burden of proof on small businesses to show that
they do not fall within a certain agency's or law's
jurisdiction. He testified that a ``regulated until proven
otherwise'' approach is costly and difficult for any small
business, particularly a small company without the resources
for dedicated compliance staff that larger corporations employ.
He said this is not an efficient use of resources for either
the company or the agencies, and is one that punishes
businesses that are trying to comply and care about the
environment.
Mr. Howard testified that the current regulatory structure
is flawed, and that ultimately no one seems to be in charge. He
said there is no one with the responsibility to ask, ``What's
the right thing to do here?'' He also noted that no one in
government has the job of balancing the demands of different
agencies. Instead, he described American regulation as a dense
jungle. For small business owners, the status quo is not an
option. As Mr. Hayden said, we need streamlined, expedited
procedures that allow for timely implementation of projects to
protect the long-term health of our forests, our small
businesses, and the overall economies of the communities
served.
HEARING: ``SERVING SMALL BUSINESSES: EXAMINING THE EFFECTIVENESS OF
HUBZONE REFORMS''
On September 13, 2017, the Committee on Small Business met
in Room 2360 of the Rayburn House Office Building for a hearing
titled ``Serving Small Businesses: Examining the Effectiveness
of HUBZone Reforms.'' The hearing examined legislation updating
the Small Business Administration's (SBA) Historically
Underutilized Business Zones (HUBZone) Program, which seeks to
provide federal contracting opportunities to small businesses
in economically distressed areas of the country. H.R. 3294 is a
bipartisan, comprehensive HUBZone reform bill designed to
address concerns brought by small businesses as well as the
Government Accountability Office (GAO).
The HUBZone Program, authorized in 1997, was intended to
stimulate economic development by increasing employment and
capital investment through the use of federal contracting
preferences to small businesses operating in economically
distressed areas. The Government Accountability Office
underwent a series of reports examining the Program and
identified several weaknesses. The Committee on Small Business
met with HUBZone small business owners, industry groups, and
the Small Business Administration to identify challenges facing
HUBZone small business owners and potential legislative
remedies. H.R. 3294 is the first legislative step towards
resolving some of the challenges and weaknesses identified by
small businesses and the GAO.
Witnesses on the panel were: Ms. Shirley Bailey, Co-Owner
and Executive Vice President and Chief Operating Officer, GCC
Technologies, LLC, Oakland, MD, testifying as Board Chair of
the HUBZone Contractor's National Council; Mr. Robert A.
Schuerger, II, Principal & Attorney at Law, Law Offices of
Robert A. Schuerger Co., LPA, Columbus, OH, Mr. Dennis DuFour,
President, The Data Entry Company, Oakland, MD, and Mr. Carlos
Melendez, Chief Operating Office & Co-Founder, Wovenware, San
Juan, PR.
At the hearing, Ms. Bailey discussed the importance of the
provision in H.R. 3294 that modified the HUBZone designated
area formulation to a 5-year time model, stating that this
change will benefit all HUBZone small businesses regardless of
if located in an urban or rural area. Mr. Schuerger emphasized
that the provision expanding rural small businesses would be
particularly helpful for small businesses located in such
communities, such as his own. Mr. DuFour testified that the
provision in H.R. 3294 freezing the HUBZone designations until
the year 2020 will be particularly beneficial to save jobs and
businesses that are facing loss of the HUBZone status in the
next few years. Mr. Melendez highlighted the provision in H.R.
3294 that mandates the SBA collect performance metrics that
effectively measure the impact of the Program on underserved
communities, noting that these metrics will help Congress and
the Small Business Administration take action in the future to
make further improvements to the Program.
HEARING: ``SMALL BUSINESS TAX REFORM: MODERNIZING THE CODE FOR THE
NATION'S JOB CREATORS''
On October 4, 2017, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Small Business Tax Reform: Modernizing the Code for
the Nation's Job Creators.'' The purpose of the hearing was to
examine how the United States tax code affects small businesses
and how changes proposed in H.R. 3717, the Small Business
Owners' Tax Simplification Act of 2017, could impact the
nation's job creators. H.R. 3717 is a bipartisan small business
tax bill introduced by Chairman Steve Chabot (R-OH) and Ranking
Member Nydia Velazquez (D-NY) as a result of numerous hearings
and research.
The witnesses for the hearing were: Ms. Kristie Arslan,
Entrepreneur-In-Residence, Small Business & Entrepreneurship
Council, Vienna, VA; Ms. Taylor Wyatt, President, MotionMobs,
Birmingham, AL; Mr. Miguel Centeno, Partner, Shared Economy
CPA, Redondo Beach, CA; and Ms. Caroline Bruckner, Managing
Director, Kogod Tax Policy Center, American University,
Washington, DC.
Each witness discussed how the tax code was not built for
small businesses. Rather than promoting job creation and growth
for small businesses, the panelists said the tax code is overly
complicated and causes uncertainty. Moreover, the panelists
collectively described how the tax code has not kept pace with
America's technology-focused small businesses, entrepreneurs,
and startups. In a comprehensive manner, Ms. Arslan discussed
how tax cuts could benefit both small businesses and
corporations. As an entrepreneur who was about to launch a new
sharing economy startup, Ms. Wyatt described the importance of
worker classification decisions within the tax code. Mr.
Centeno focused his comments on the growth and momentum of
sharing economy companies. Ms. Bruckner spoke extensively on
the topic of quarterly-estimated payment deadlines and 1099
filing thresholds. Each panelist stated that H.R. 3717 would
provide equity to small businesses, entrepreneurs, and startups
as they deal with the tax code.
HEARING: ``EVALUATING THE PAPERWORK REDUCTION ACT PART II: ARE BURDENS
BEING REDUCED?''
On October 11, 2017, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Evaluating the Paperwork Reduction Act Part II: Are
Burdens Being Reduced?'' The Committee held a hearing on March
29, 2017 on the Paperwork Reduction Act's (PRA) effectiveness
and small business issues with the PRA. This hearing continued
to examine the PRA and how agencies are reducing paperwork
burdens on small businesses.
The witnesses for the hearing were: Dr. Steven Fine, Acting
Assistant Administrator and Acting Chief Information Officer,
U.S. Environmental Protection Agency, Washington, DC; Mr.
Stephen Guertin, Deputy Director for Policy, U.S. Fish and
Wildlife Service, Washington, DC; Mr. Gundeep Ahluwalia, Chief
Information Officer, U.S. Department of Labor, Washington, DC;
and Mr. Todd Simpson, Chief Information Officer, U.S. Food and
Drug Administration, Silver Spring, MD.
The witnesses provided testimony detailing how their
agencies comply with the PRA and their efforts to reduce the
burden of paperwork requirements on small businesses. For
example, Dr. Fine discussed the ways the Environmental
Protection Agency (EPA) is reducing reporting and recordkeeping
burdens. For example, the agency obtains information from other
sources instead of the public. Additionally, EPA is increasing
using information technologies to reduce burdens by
streamlining the information collection process. Mr. Guertin
testified that the Fish and Wildlife Service (FWS) is
considering ways to collect information from its constituents
in the least burdensome way. He stated that even with the PRA,
information collection can be a burden on the public, so they
strive to limit the information and paperwork requirements they
place on the public. One way they accomplish this is by making
a number of resources available electronically.
Mr. Ahluwalia testified that the Department of Labor (DOL)
has managed to control its overall paperwork burden on the
public. He stated that DOL's paperwork burden has remained
virtually flat over the last 12 years. Mr. Simpson provided
examples of how the Food and Drug Administration (FDA) assists
small businesses with paperwork requirements. He said FDA
employs seminars, workshops, educational conferences,
information materials, and contact via email and a toll-free
telephone number. FDA also offers access to regional and small
business advisors and administrative and scientific support.
When asked why small businesses have not seen a relief in
paperwork burdens, the witnesses acknowledged that more can be
done. Mr. Guertin said the Fish and Wildlife Service stands by
the work that it is doing, and plans to harness emerging
technologies to reach more effective partnerships within the
federal government put much of the information needs onto
automated systems to minimize the burden.
HEARING: ``SMALL BUSINESS CAPITAL ACCESS: SUPPORTING COMMUNITY AND
ECONOMIC DEVELOPMENT''
On October 20, 2017, the Committee on Small Business met in
Studio Cat the Enterprise Building in Philadelphia, PA for a
field hearing titled ``Small Business Capital Access:
Supporting Community and Economic Development.'' Access to
capital is key for entrepreneurs seeking to start new ventures
and expand existing ones. The hearing examined the role of
affordable capital for small businesses and their local
communities. The hearing also explored capital access programs
working to promote affordable lending products for small
businesses, especially those in distressed areas.
The witnesses for the hearing were: Ms. Dafina Williams,
Vice President of Public Policy, Opportunity Finance Network,
Philadelphia, PA; Ms. Leslie Benoliel, President, Entrepreneur
Works, Philadelphia, PA; Mr. Lin Thomas, Chief Executive
Officer, EMSCO Scientific Enterprises, Philadelphia, PA; and
Mr. Steve Dorcelien, Owner, Bright Yellow Creamery,
Philadelphia, PA.
Acting Chairman Fitzpatrick began the hearing by stating
that access to capital is one of the most important
responsibilities of small business owners, but that it can also
be one of the most difficult challenges. Ms. Williams testified
about the role that community development financial
institutions, or CDFIs, play in helping small business access
affordable financing. Ms. Benoliel testified about three main
challenges that stymie small business owners' access to
capital: low starting wealth, limited access to capital, and a
``trust gap.'' Mr. Thomas testified that small businesses must
have access to increased, innovative, and relaxed mainline bank
underwriting in order to grow and develop. Mr. Dorcelien shared
his experiences as a rising entrepreneur and how community
institutions helped him to launch a successful small business.
HEARING: ``HIRING MORE HEROES: A REVIEW OF SBA'S OFFICE OF VETERANS
BUSINESS DEVELOPMENT''
On November 8, 2017, the Committee on Small Business met in
2360 of the Rayburn House Office Building for a hearing titled
``Hiring More Heroes: A Review of SBA's Office of Veterans
Business Development.'' The Committee examined the United
States Small Business Administration's (SBA) Office of Veterans
Business Development's (OVBD) efforts to transition our
nation's veterans from the battlefield to the small business
realm. As the majority of veteran-owned businesses are small
businesses, it is crucial that veterans have the tools and
resources they need to get off the ground once they return
home.
Our nation's veterans make up a significant percentage of
the American workforce. However, the employment rate for
veterans historically has lagged behind the rate of their
nonveteran peers. Additionally, the Department of Labor's
Bureau of Labor Statistics also estimates that veterans have a
lower labor force participation rate than nonveterans aged 18
and older, at 50.6 percent and 65.7 percent, respectively. This
means that, overall, more nonveterans above the age of 18 are
available for work or are seeking employment more actively than
veterans. In order to reverse the trend of the declining labor
force participation rate among the veteran population, the
hearing examined whether the existing resources available to
veterans, specifically at the federal level, are working to
achieve their intended goals.
The witness on the panel was Ms. Barbara Carson, Associate
Administrator, Office of Veterans Business Development, United
States Small Business Administration, Washington, DC.
Chairman Chabot began the hearing by stating that many
veterans choose to start a small business after serving our
country because they often learn skills such as leadership and
discipline during their time in the military. He also stated
that although the SBA does help veterans transition into the
workforce, there is always more that can be done for our
nation's heroes. Ms. Carson testified that the SBA promotes and
supports veteran small business ownership by administering
programs, formulating policy, and administering grants to
assist veterans, active duty, National Guard and Reserve
service members, and military spouses. She also outlined many
programs offered by the OVBD, such as Veterans Business
Outreach Centers (VBOCs), government contracting assistance,
and loan programs, such as the Military Reservist Economic
Injury Disaster Loan program. Ms. Carson also acknowledged some
of the challenges facing the Office, such as improving outreach
and the upcoming deadline to rece1iify VBOCs. Ms. Carson
testified that she was willing to work alongside Congress to
ensure that America's military men and women have the tools and
resources they need to start and grow a business.
HEARING: ``FEDERAL GOVERNMENT AND SMALL BUSINESSES: PROMOTING GREATER
INFORMATION SHARING FOR STRONGER CYBERSECURITY''
On November 15,2017, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Federal Government and Small Businesses: Promoting
Greater Information Sharing for Stronger Cybersecurity.'' Small
businesses are prime targets for cyber attackers and the threat
continues to grow. Unfortunately, small business owners face an
uphill battle in protecting themselves from bad actors because
they often lack the resources required to employ the best
defenses. As the federal government and private sector continue
to take steps to strengthen small business cybersecurity, the
lack of information sharing between federal and private
partners poses a major hurdle to effectively combatting cyber
attacks. The hearing examined how federal agencies can
encourage greater information sharing with small businesses and
provide timely assistance and resources when a cyber attack
occurs. Additionally, the hearing examined the policies that
discourage small businesses from engaging with federal agencies
for cybersecurity assistance.
The witnesses for the hearing were: Mr. Rob Arnold, Founder
and Chief Executive Officer, Threat Sketch, LLC, Winston-Salem,
NC; Ms. Ola Sage, Chief Executive Officer, e-Management, Silver
Spring, MD; Mr. Morgan Reed, President, The App Association,
Washington, DC; and Mr. Thomas Gann, Chief Public Policy
Officer, McAfee, LLC, Reston, VA.
The private sector witness panel discussed the importance
of information sharing between small businesses and the federal
government while also acknowledging that information sharing
policies could be improved. Mr. Arnold addressed some of the
needs and challenges surrounding cyber information sharing,
including fragmentation, overuse of classification, and
improving the collection and dissemination of information. Ms.
Sage testified that small businesses' reluctance to share
cybersecurity information could be reduced through incentives
like expanding Cybersecurity Information Sharing Act (CISA)
protections for small businesses and providing tax incentives.
Mr. Reed said the federal government could better protect small
businesses in three ways: improving information sharing
activities; making cybersecurity frameworks and best practices
more workable for small businesses; and ensuring a legal and
policy environment that enhances small businesses' abilities to
manage cyber risks. Mr. Gann discussed a few of the federal
information sharing programs currently available to small
businesses through agencies such as the Department of Homeland
Security (DHS). He also made recommendations to improve
cybersecurity for small businesses, such as moving to the Cloud
and encouraging cyber insurance for small businesses.
HEARING: ``HIGHWAY TO HEADACHE: FEDERAL REGULATIONS ON THE SMALL
TRUCKING INDUSTRY''
On November 29, 2017, the Committee on Small Business met
in Room 2360 of the Rayburn House Office Building for a hearing
titled ``Highway to Headache: Federal Regulations on the Small
Trucking Industry.'' The hearing examined how federal
regulations affect the small bucking industry.
The witnesses for the hearing were: Mr. Monte Wiederhold,
President, B.L. Reever Transport, Inc., Maumee, OH, testifying
on behalf of the Owner-Operator Independent Drivers
Association; Mr. Marty DiGiacomo, Owner, True Blue
Transportation, Harrisburg, NC; testifying on behalf of the
National Association of Small Trucking Companies; Mr. Stephen
Pelkey, Chief Executive Officer, Atlas Pyro Vision
Entertainment Group, Inc., Jaffery, NH, testifying on behalf of
the American Pyrotechnics Association; and Mr. Robert Garbini,
President, National Ready Mixed Concrete Association, Silver
Spring, MD.
The witnesses provided testimony detailing how small
businesses, including small trucking companies, the
pyrotechnics industry, and the ready-mixed concrete industry,
are affected by federal regulations. All four witnesses
addressed some of the major regulations that impact their
business or industry, including the Federal Motor Carrier
Safety Administration's Electronic Logging Device (ELD)
mandate, hours of service regulations, and other issues. Mr.
DiGiacomo testified that ELDs do not help to address safety and
should be optional, rather than mandated.
The witnesses also addressed other issues, such as adequate
and safe parking and rest areas for truck drivers. For example,
Mr. DiGiacomo, testified that ELDs can prevent drivers from
stopping at a location that does not have adequate facilities
for basic physical needs or the location where they do stop may
not have any parking spots. Mr. Wiederhold added that lack of
adequate parking is one of the most serious issues in trucking.
Mr. Pelkey, a small business owner in the fireworks
industry, emphasized the importance of agencies recognizing how
regulations impact small businesses, especially ones that rely
on the trucking industry for part of their business. He stated
that if small businesses are to survive, regulatory agencies
need to do a better job in recognizing the differences between
small and big businesses. What works for large, long haul
drivers may be different from what works for small independent
drivers.
All four witnesses also emphasized that a one-size-fits-all
approach to federal regulations does not work for small
businesses. For example, Mr. Wiederhold testified that the one-
size-fits-all approach has left the federal government
complicit in driving the safest truckers on the road out of the
industry through overregulation. Similarly, Mr. Garbini stated
that regulations should not be one-size-fits-all, because it is
rarely the case. In fact, the small trucking industry and the
industries it supports are examples of the adverse effects of
regulation on small businesses.
HEARING: ``STRENGTHENING SBA'S 7(A) LOAN PROGRAM''
On January 17, 2018, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Strengthening SEA's 7(a) Loan Program.'' The purpose
of the hearing was to examine the United States Small Business
Administration's (SBA) 7(a) Loan Program and how changes
proposed in H.R. 4743, the ``Small Business 7(a) Lending
Oversight Reform Act of 2018,'' could strengthen oversight and
bolster the integrity of the program for small businesses and
American taxpayers. H.R. 4743 was introduced as a bipartisan
and bicameral SBA lending reform bill by Chairman Steve Chabot
(R-OH) and Ranking Member Nydia Velazquez (D-NY) as a result of
numerous hearings.
The witnesses for the hearing were: Ms. Cindy Blankenship,
Vice Chairman, Bank of the West, Grapevine, TX, testifying on
behalf of the Independent Community Bankers of America; Ms.
Patricia Husic, President and Chief Executive Officer, Centric
Financial Corporation, Harrisburg, PA, testifying on behalf of
the American Bankers Association; Ms. Sonya McDonald, Executive
Vice President and Chief Lending Officer, Randolph-Brooks
Federal Credit Union, Universal City, TX, testifying on behalf
of the National Association of Federally-Insured Credit Unions
(NAFCU); and Mr. Tony Wilkinson, President and Chief Executive
Officer, National Association of Government Guaranteed Lenders,
Washington, DC.
The private sector witness panel that represented financial
institutions that utilize SBA's capital access programs
testified in support of the changes proposed in H.R. 4743.
While all four witnesses discussed the importance of codifying
SBA's Office of Credit Risk Management and SBA's Lender
Oversight Committee, Ms. Blankenship also discussed the
importance of stable funding for small businesses that require
SBA's services. When asked about the provision in the bill that
requires SBA to conduct a portfolio risk analysis, Ms. Husic
commented that the provision is a good risk management
practice. In addition to providing examples of how her credit
union services 7(a) loans, Ms. McDonald shared with the
Committee an overview of the Memorandum of Understanding that
SBA renewed with NAFCU this past fall, to increase credit
union's utilization of SBA loan products. When asked about the
credit elsewhere test, Mr. Wilkinson explained how the current
credit elsewhere definition is outdated and confusing due to
the usage of geographic limiting language. With regard to the
changes to the credit elsewhere test in H.R. 4743, Mr.
Wilkinson explained that those provisions will provide much
needed clarity for lenders.
HEARING: ``SMALL BUSINESS INFORMATION SHARING: COMBATING FOREIGN CYBER
THREATS''
On January 30, 2018, the Committee on Small Business met in
Room 2361 of the Rayburn House Office Building for a hearing
titled ``Small Business Information Sharing: Combating Foreign
Cyber Threats.'' The hearing examined H.R. 4668, the Small
Business Advanced Cybersecurity Enhancements Act of 2017, and
discussed how federal agencies are facilitating greater
information sharing with small businesses that are vulnerable
to foreign-backed cyber attacks.
As small businesses increasingly rely on foreign technology
products and services, they become even more susceptible to
cyber attacks. Many small business owners are underequipped to
protect themselves from basic cyber attacks and face
significant hurdles in guarding against sophisticated foreign
state-backed cyber actors. As the Committee has learned in past
hearings, some foreign-backed firms have taken steps to expose
small businesses' information technology systems as a means of
infiltrating America's critical infrastructure. and weakening
our national security. A key component in combating these
cybersecurity vulnerabilities is strengthening the federal
government's engagement with the private sector.
Witnesses on the panel were: Mr. Howard Marshall, Deputy
Assistant Director, Cyber Division, Federal Bureau of
Investigations, Washington, DC; and Mr. Richard Driggers,
Deputy Assistant Secretary, Office of Cybersecurity and
Communications, United States Department of Homeland Security,
Washington, DC.
Chairman Chabot began the hearing by mentioning Hikvision,
a Chinese security camera company that manufactured security
cameras with a major vulnerability allowing them to be hacked
and remotely controlled. Many of these cameras are owned by
small businesses. The panel then discussed the importance of
increasing cybersecurity awareness for small businesses as they
can easily fall victim to foreign cyber attacks. Mr. Marshall
testified that both the number and sophistication of cyber
threats is on the rise. He listed a number of prevalent cyber
threats that are specific to small businesses, including
business email compromise, ransomware, and the Internet of
Things. He also discussed the FBI's private sector engagement,
including public outreach, distributing reports and information
regarding specific threats, and a number of public-private
partnerships. He testified that the FBI Cyber Division
regularly coordinates initiatives for engagement with private
sector partners with the goal of ultimately closing
intelligence gaps.
Mr. Driggers echoed many of Mr. Marshall's comments, saying
that cyber threats remain one of the most significant risks for
small businesses. He discussed DHS' resources for assisting
small businesses, including the National Cybersecurity and
Communications Integration Center, or NCCIC. He also testified
that DHS has been working alongside SBA to develop a strategy
to effectively respond to small businesses' cybersecurity
needs, as directed by the National Defense Authorization Act
for Fiscal Year 2017. Both witnesses also endorsed H.R. 4668,
testifying that it would provide small businesses with greater
access to cybersecurity information and ultimately encourage
further information sharing between the public and private
sectors.
HEARING: ``JOB CREATION, COMPETITION, AND SMALL BUSINESS' ROLE IN THE
UNITED STATES ECONOMY''
On February 14, 2018, the Committee on Small Business met
for a hearing titled, ``Job Creation, Competition, and Small
Business' Role in the United States Economy.'' The hearing
provided Committee Members with the opportunity to discuss new
research conducted by Goldman Sachs regarding the effect of
access to capital on small firms' growth and expansion. The
hearing also explored economic trends that show small firms'
access to capital, particularly in large urban and remote rural
areas, has been slower to recover. Additionally, the hearing
featured small business owners who have graduated from Goldman
Sachs 10,000 Small Businesses program, offering insight as to
what private sector resources can be available to small firms
seeking assistance to grow.
Witnesses on the only panel were: Mr. Steven H. Strongin,
Head, Global Investment Research Division, Goldman Sachs, New
York, NY; Mr. J.R. Foster, President and CEO, Robert Louis
Group, Cincinnati, OH; and, Ms. Jessica Johnson-Cope,
President, Johnson Security Bureau, Inc., Bronx, NY.
Chairman Chabot stated small firms continue to experience a
rigid lending environment. He added that while large companies
can turn to debt and equity markets to raise capital, small
businesses all over the country regularly turn to conventional
bank lending to finance their projects. Additionally, it was
pointed out that recent research from Goldman Sachs has shown
that while some areas of the nation have experienced a more
open credit market, the same cannot be said for largely urban
and predominantly rural areas. Mr. Strongin testified that even
as the American economy is more than 100 months into the
current recovery--now the third longest on record--the ``small
business economy'' has continued to face some serious
challenges. He added that this hearing coincided with a summit
hosted by the Goldman Sachs entitled: ``10,000 Small
Businesses: The Big Power of Small Business.'' The aim of this
initiative is to renew the focus on the vital relationship
between entrepreneurship and economic growth, including the
link between small business formation and innovation, as well
as economic and social mobility for American workers. Mr.
Foster said he found himself lost in the sea of managing
employees, customers, contractors, payroll, marketing, and the
like and needed something more than his corporate career had
taught him and the Goldman Sachs 10,000 Small Businesses
program has helped him increase his revenue by 100% each year.
Ms. Johnson-Cope testified that she faced many challenges as
she grew her businesses and that the current business
environment, especially with limited access to working capital,
makes it increasingly difficult for small businesses to
survive.
HEARING: ``WORKFORCE DEVELOPMENT: CLOSING THE SKILLS GAP''
On February 26, 2018, the Committee on Small Business met
in Boilermakers Local Lodge No. 13 in Newportville, PA, for a
field hearing titled ``Workforce Development: Closing the
Skills Gap.'' The Committee examined ways in which federal
programs help or hinder workforce development initiatives aimed
at supporting small businesses. The hearing explored methods in
which programs can help to close the skills gap while also
connecting a new generation of workers with rewarding jobs in
industries that lack qualified applicants.
The witnesses for the hearing were: Mr. Patrick Eiding,
President, Philadelphia Council AFL-CIO, Philadelphia, PA; Ms.
Susan Herring, Interim Executive Director, Center for Workforce
Development, Bucks County Community College, Newtown, PA; and
Mr. Alex Halper, Director of Government Affairs, Pennsylvania
Chamber of Business and Industry, Harrisburg, PA.
Acting Chairman Fitzpatrick opened the hearing by
explaining the skills gap and how this lack of qualified
applicants is negatively impacting small businesses throughout
Pennsylvania and across the United States. Mr. Eiding's
testimony detailed the challenges the manufacturing industry is
experiencing as a result of the skills gap. He explained that
reforms to the education system and emphasized that career and
technical education (CTE) are key to addressing those
challenges. Ms. Herring discussed the CTE opportunities
available at Bucks County Community College and the importance
of encouraging participation in apprenticeships to provide
candidates with necessary skills. Mr. Halper discussed the
responsibility that businesses must play in providing workforce
development training to ensure a robust labor force. Acting
Chairman Fitzpatrick, with the concurrence of the witnesses,
highlighted the role that addiction has played in limiting
workforce participation, particularly in the manufacturing
industry and in numerous apprenticeship programs.
HEARING: ``HOW RED TAPE AFFECTS COMMUNITY BANKS AND CREDIT UNIONS: A
GAO REPORT''
On Tuesday, February 27, 2018 at 2:00p.m., the Committee on
Small Business met in Room 2360 of the Rayburn House Office
Building for a hearing titled ``How Red Tape Affects Community
Banks and Credit Unions: A GAO Report.'' The purpose of the
hearing was to examine a report by the United States Government
Accountability Office (GAO) assessing how regulations impact
community banks and credit unions (GA0-18-213). The hearing
provided Members of the Committee with the opportunity to
explore the regulations that are impacting the institutions
that are instrumental in delivering capital to the nation's
small businesses.
The witness for the hearing was: Mr. Michael Clements,
Director, Financial Markets and Community Investment, United
States Government Accountability Office, Washington, DC.
In the fall of 2015, House Small Business Committee
Chairman Steve Chabot requested a GAO study on the impact
financial regulations have on community banks and credit
unions. With the study recently completed, Mr. Clements
testified in front of the Committee that GAO identified the
Home Mortgage Disclosure Act, the implementing regulations of
the combined Truth-in-Lending Act and the Real Estate
Settlement Procedures Act, and the Bank Secrecy Act as the most
burdensome regulations affecting small financial institutions.
Additionally, Mr. Clements discussed with the Committee that
GAO made a number of recommendations to financial regulators on
steps they should take to reduce red tape and compliance
burdens. With small businesses traditionally utilizing
conventional bank borrowing to finance their development,
financial regulations that are deemed burdensome, can severely
impact access to capital.
HEARING: ``REGULATORY REFORM AND ROLLBACK: THE EFFECTS ON SMALL
BUSINESSES''
On March 7, 2018, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Regulatory Reform and Rollback: The Effects on Small
Businesses.'' The hearing examined the effects of Congress and
the President's regulatory reform and rollback efforts on small
businesses.
The witnesses for the hearing were: Mr. Karen Hamed,
Executive Director of the Small Business Legal Center, National
Federation of Independent Business, Washington, DC; Mr. Patrick
Hedren, Vice President of Labor, Legal & Regulatory Policy,
National Association of Manufacturers, Washington, DC; Mr.
Randy Noel, Chairman, National Association of Home Builders,
Washington, DC; and Ms. Lisa Heinzerlig, Justice William J.
Brennen, Jr., Professor of Law, Georgetown Law, Washington, DC.
The witnesses provided testimony detailing how federal
regulations continue to be a problem for America's small
business owners, as they bear a disproportionate amount of the
regulatory burden. For example, Ms. Harned testified that
almost half of small businesses view regulation as a very
serious or somewhat serious problem. She further testified that
the key drivers for this regulatory burden are compliance
costs, difficulty understanding regulatory requirements, and
extra paperwork. Similarly, Mr. Hedren testified that small and
medium-sized manufacturers experience regulatory burdens
differently than larger ones because they lack the economies of
scale that larger businesses use to spread the costs of
compliance, such as monitoring new or changing requirements,
implementing new or different processes, completing paperwork,
and working with regulatory agencies to resolve disputes.
Despite the problems that small businesses currently face
when complying with regulations, the witnesses also stated that
things are getting better. Mr. Hedren testified that 94.6
percent of manufacturers were positive about their own
company's outlook, which is an all-time high. Similarly, Mr.
Noel testified that the home building industry and small
businesses have been significant beneficiaries of efforts to
reduce costly regulations, and builders have entered 2018 with
a great deal of optimism. Ms. Harned said America's small
business owners view the President's commitment to rolling back
unnecessary, burdensome, and duplicative regulations as one of
his Administration's greatest accomplishments in his first year
in office. The Trump Administration has reduced the number of
pages in the Federal Register by 36 percent, and has exceeded
its goal of eliminating two regulations for every new one
proposed by eliminating 22 regulations for every new one in
fiscal year 2017.
However, despite all the work that Congress and the
President have done to reduce the regulatory burden on small
businesses, the witnesses emphasized that more needs to be
done. Mr. Noel provided examples of specific regulations that
still need to be addressed, such as the Occupational Safety and
Health Administration's multiemployer policy, the Environmental
Protection Agency's lead renovation, repair, and painting
program, the Department of Labor's apprenticeship program, and
Endangered Species Act regulations. Ms. Harned, Mr. Hedren, and
Mr. Noel all emphasized the importance of reforming the
regulatory process, which must be addressed by Congress. The
witnesses supported numerous regulatory reforms that would help
give small businesses a stronger voice in the rulemaking
process and require agencies to more closely assess how their
proposed regulations would impact small businesses.
Additionally, Ms. Heinzerling stressed the importance of
considering how large scale deregulatory initiatives can pit
one small business against another and how focused regulatory
streamlining can better serve small entities.
HEARING: ``DISPARITIES IN ACCESS TO CAPITAL: WHAT THE FEDERAL
GOVERNMENT IS DOING TO INCREASE SUPPORT FOR MINORITY-OWNED FIRMS''
On March 12, 2018, the Committee on Small Business met at
the Jacksonville Chamber of Commerce, 3 Independent Dr.,
Jacksonville, FL for a field hearing titled ``Disparities in
Access to Capital: What the Federal Government Is Doing to
Increase Support For Minority Owned Firms.'' This hearing
focused on the challenges small businesses face with Small
Business Administration (SBA) lending programs, traditional
bank loans, private investment capital, and other alternative
financing.
Witnesses on the panel were: Mr. Jimmy Van Horn, Lead
Lender Relations Specialist, United States Small Business
Administration, Jacksonville, FL; Ms. Hillary Almond, Owner,
Almond Engineering, Jacksonville, FL; Ms. Roslyn Phillips, Vice
President, The Hester Group, Jacksonville, FL; and Mr. Dane
Grey, President, Elite Parking Services of America,
Jacksonville, FL.
The panel discussed trends in small business access to
capital as well as their own struggles with obtaining
financing. Mr. Van Horn outlined how the SBA guarantees small
business loans and provided statistics on the growth of certain
SBA programs. For example, the SBA Microloan program, which
provides loans of up to $50,000, has seen a year-over-year
increase of 5 percent. Ms. Almond discussed how she became an
entrepreneur and mentioned some of the difficulties associated
with obtaining capital. Ms. Phillips mentioned several of the
reasons why small businesses struggle to obtain capital,
including the lack of a relationship with financial
institutions, unawareness of available resources, and
insufficient financial documentation to convey past
performance. Mr. Grey discussed how he grew his business from a
part time hobby in college to a 400-employee business with
operations across the country.
HEARING: ``THE STATE OF TRADE FOR AMERICA'S SMALL BUSINESSES''
On April 11, 2018, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``The State of Trade for America's Small Businesses.''
The hearing examined the State Trade and Export Promotion
(STEP) Grant Program and the federal government's overall
efforts to increase small business exports. Additionally, the
Committee explored recent trade policy developments and their
impact on America's small business exporters.
Increasing small business exports continues to be a top
priority for both United States lawmakers and the federal
government. International trade policy affects nearly every
type of small business. Whether a business directly exports an
agricultural commodity, imports a component part, or sells
foreign merchandise, global trade influences its operations and
competitiveness. The trade agreements that the federal
government negotiates play a critical role in determining
whether a small business is able to compete in the global
market, because small firms have limited resources and
personnel to comply with foreign requirements it acts as a
trade barriers.
Witnesses on the panel were: Mr. Chuck Wetherington,
President, BTE Technologies, Inc., Hanover, MD, testifying on
behalf of the National Association of Manufacturers; Mr. Ken
Couch, Director, Product Management, ComSonics, Inc.,
Harrisonburg, VA, testifying on behalf of the State
International Development Organizations; and Mr. Raymond
Keating, Chief Economist, Small Business and Entrepreneurship
Council, Vienna, VA.
At the healing, the Committee heard from small businesses
and technology service experts on how proposed changes to the
tariff schedule and stronger enforcement strategies could
impact American manufacturers and service-oriented small
businesses. While nearly 300,000 small businesses are currently
exporting to foreign markets, many small businesses face
significant challenges in getting their goods and services
abroad. Mr. Wetherington mentioned that some of the challenges
small businesses face are similar to those of large businesses,
such as tariffs, lack of transparency, discriminatory policies,
and weak intellectual property (IP) protections. Mr. Couch
talked about many of the trade barriers specific to small
businesses. He stated that the main challenge small businesses
face is an investment risk--smaller companies are more
skeptical to invest their resources without any known return.
Mr. Keating discussed the importance of free trade for small
businesses and the American economy, stating that free trade
reduces costs through enhanced competition, lowers costs for
consumers, opens new markets and opportunities for businesses,
and feeds economic growth.
HEARING: ``AN EXAMINATION OF THE SMALL BUSINESS ADMINISTRATION'S 7(A)
LOANS TO POULTRY FARMERS''
On April 18, 2018, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``An Examination of the Small Business Administration's
7(a) Loans to Poultry Farmers.'' The hearing examined the Small
Business Administration (SBA) Office of Inspector General's
(OIG) recent evaluation of the SBA's 7(a) Program loans to
poultry farmers.
The witnesses for the hearing were: Mr. Hannibal ``Mike''
Ware, Acting Inspector General, SBA, Washington, DC; and Mr.
William M. Manger, Associate Administrator, Office of Capital
Access, SBA, Washington, DC.
OIG examined the universe of 7(a) agricultural loans from
FY2012 to FY2016 as well as a more thorough review of a sample
of poultry loans. OIG found that the 7(a) loans made to growers
did not meet regulatory and SBA requirements for eligibility:
large poultry companies (integrators) exercised such control
over the growers through contracts, operating procedures, and
other mandates that growers ceased to be independent businesses
and became affiliates of the integrators. Under current SBA
size standard regulations and requirements, large companies are
not eligible for SBA loans. Given the evidence of affiliation,
OIG found that from FY2012 to FY2016, SBA guaranteed
approximately $1.8 billion of 7(a) loans that may be
ineligible.
SBA agreed with OIG's recommendations to review the sample
of loans cited in the report as well as to review arrangements
between integrators and growers in regard to current
affiliation rules and regulations and to establish and
implement additional controls or actions if needed.
To increase access to capital, the SBA offers small firms
guarantees through private lenders that participate in the 7(a)
Loan Program, whereby loan proceeds can be used for general
business purposes. The program does not provide direct loans to
participating small businesses; rather, SBA guarantees the
repayment of loans made by lenders. To ensure the integrity of
the 7(a) Loan Program for small businesses that truly require
SBA's capital access resources, House Small Business Committee
Chairman Steve Chabot (R-OH) and Ranking Member Nydia Velazquez
(D-NY) introduced H.R. 4743, the ``Small Business 7(a) Lending
Oversight Reform Act of 2018.'' Senators James Risch (R-ID) and
Jeanne Shaheen (D-NH) likewise introduced the companion
legislation, S. 2283, at the same time. With the aim of
increasing SBA's oversight functions, H.R. 4743 proposes a
number of reforms to increase lender oversight while providing
certainty to small businesses as they face an uncertain lending
environment. H.R. 4743 passed the House Committee on Small
Business S. 2283 passed the Senate Committee on Small Business
and Entrepreneurship in March of 2018.
HEARING: ``AMERICAN INFRASTRUCTURE AND THE SMALL BUSINESS PERSPECTIVE''
On April 25, 2018, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``American Infrastructure and the Small Business
Perspective.'' The Committee examined the small business
perspective of the development and use of our nation's
infrastructure. In particular, the hearing considered how
surface transportation and access to broadband promote economic
growth among small businesses. The hearing also explored some
of the challenges that small businesses face without a robust
infrastructure system.
A reliable American infrastructure system is key to the
growth of the United States economy and the success of our
nation's small businesses. Small firms both build our nation's
infrastructure and rely upon it to create jobs, promote
competition, and get their goods to the market. The American
infrastructure system is a widely-encompassing umbrella,
including roads, bridges, railways, waterways, sea ports,
airports, broadband deployment, and more. Providing a reliable
and secure infrastructure is one arena where federal, state,
and local governments can play a major role in supplying the
tools for success for America's small businesses.
Witnesses on the panel were: Ms. Marsia Geldeti-Murphey,
Chief Operating Officer, W. James Taylor, Inc., Belleville, IL,
testifying on behalf of the American Society of Civil
Engineers; Mr. Bill Schmitz, Vice President, Sales and Quality
Control, Gernatt Asphalt Company, Collins, NY, testifying on
behalf of the National Stone, Sand, and Gravel Association; Mr.
Kevin Beyer, General Manager, Farmers Mutual Telephone Company
and Federated Telephone Cooperative, Chokio, MN, testifying on
behalf of NTCA--The Rural Broadband Association; and Mr. Bob
Dagostino, President and CEO, Dagostino Electronic Services,
Inc., testifying on behalf of the National Electrical
Contractors Association.
Chairman Chabot opened the hearing by noting that American
small business owners often feel the effects of our nation's
broken infrastructure system the most. He also stated that
surface transportation and access to broadband are areas where
there is room for significant improvement. Ms. Geldert-
Murphey's testimony focused on the infrastructure investment
gap, and noted that failure to meaningfully invest in
infrastructure can affect businesses large and small,
households, and even economic Gross Domestic Product. Mr.
Schmitz discussed many of the federal regulations that can act
as barriers for small businesses, such as federal permitting
and the Clean Water Act. He also stated that a long-term plan
for the Highway Trust Fund is crucial for small businesses in
rural areas. Mr. Beyer addressed the importance of broadband
deployment for rural America and the ways it can help small
businesses and households to access health care and education
and keep small businesses competitive. Finally, Mr. Dagostino
shared the perspective of an electrical contractor, and said
his industry struggles with on-time payments and finding
skilled workers.
HEARING: ``READY, WILLING, AND ABLE TO WORK: HOW SMALL BUSINESSES
EMPOWER PEOPLE WITH DEVELOPMENTAL DISABILITIES''
On May 9, 2018, the Committee on Small Business met in Room
2360 of the Rayburn House Office Building for a hearing titled
``Ready, Willing, and Able to Work: How Small Businesses
Empower People with Developmental Disabilities.'' The hearing
examined the role small businesses have played in employing
individuals with differing abilities and the lessons that have
been learned.
The witnesses for the hearing were: Ms. Angela Timashenka
Geiger, President and CEO, Autism Speaks, Washington, DC; Mr.
Dave Friedman, Founder and CEO, AutonomyWorks, Downers Grove,
IL; Mr. John Cronin, Co-Founder and Chief Happiness Officer,
John's Crazy Socks, Melville, NY, (accompanied by Mr. Mark X.
Cronin, Co-Founder and President, John's Crazy Socks); and Ms.
Lori Ireland, President, Extraordinary Ventures, and Vice Chair
Autism Society of America, Chapel Hill, NC.
One segment of American society that is often overlooked
when discussing economic opportunities through new job growth
is the special needs community. A common strategy to reduce
barriers to employment is to provide workplace accommodations,
which may include: flexible schedule; mentoring and on the job
training; personal care attendants; special equipment or
modified work space; modified work duties; or transportation
assistance. Accommodations for individuals with developmental
disabilities are generally low cost. Given the innovation,
flexibility, and diversity of small businesses, they can offer
inclusive environments for employees with developmental
disabilities.
Since the Committee's May 2016 hearing on this topic, three
recent trends in small business opportunities for individuals
with developmental disabilities have emerged. (1) The growing
number of small businesses created by parents (or groups of
parents) or other advocates with the mission of hiring
individuals with autism or other developmental disabilities.
While these businesses are mission driven, they are for-profit
businesses, not charities. (2) The increase of entrepreneurs
with developmental disabilities owning and operating micro-
businesses or being self-employed. These include artisans or
inventors selling their products or individuals providing a
service. (3) Businesses, both large and small, have announced
initiatives to diversify their workforces by hiring individuals
with developmental disabilities.
Small businesses play a crucial role in our nation's
economy, but just as important is the role small businesses
play in the community. Members of the Committee heard from
employers and organizations who have been pioneers in providing
job opportunities to individuals whose contributions can be
overlooked.
HEARING: ``INTELLECTUAL PROPERTY 101: HOW SMALL BUSINESS OWNERS CAN
UTILIZE INTELLECTUAL PROPERTY PROTECTIONS IN THEIR BUSINESSES''
On May 16, 2018, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Intellectual Property 101: How Small Business Owners
Can Utilize Intellectual Property Protections in Their
Businesses.'' The hearing examined how small business owners
have used intellectual property protections to help their
businesses and the issued they have faced when navigating the
intellectual property processes.
The witnesses for the hearing were: Ms. Michal Rosenn,
General Counsel, Expa, New York, NY; Mr. David Graham, CEO,
Code Ninjas LLC, Pearland, TX, testifying on behalf of the
International Franchise Association; Mr. Rick Carnes,
President, Songwriters Guild of America, Inc.; and Ms. Joan
Fallon, DC, Founder and CEO, Curemark, Rye, NY.
The witnesses provided testimony detailing the importance
of intellectual property protections for small businesses
owners and the challenges they face. For example, Ms. Rosenn
discussed the experiences that startups have with patents and
the intellectual property system. She testified that filing for
patents is a long and expensive process, but a patent is a
valuable asset for a business. However, Ms. Rosenn explained
that even with various patent reforms, abuse of the patent
system still exists. She testified that for many startups and
other small businesses, the only interaction they ever have
with the patent system is through predatory patent litigation.
She described the experience that one startup company had when
it was sued in a patent infringement case.
Mr. Graham testified that intellectual property, especially
trademarks, can play a key role in ensuring brand protection
and providing consistent quality for businesses who franchise.
He explained that without intellectual property protections,
his company would not have been as successful as it was and he
would not have been able to franchise his business across the
country. Mr. Graham stated that franchises should be understood
as a system of licensing intellectual property where each
individual franchise is a small business that hires and fires
their own workers, but the brand controls the look and feel of
the system so that the customer's experience is consistent.
Copyright protections are another type of intellectual
property that play an important role for creative industries,
including songwriters. Mr. Carnes explained how most
songwriters are self-employed small businessmen and women who
are completely reliant on copyright protections to survive. He
explained that in the current digital environment, songwriters
are especially vulnerable to piracy and unauthorized
distribution of their work. Copyright protections allow them to
fight back, but he suggested that some reforms can be made to
help small business owners more effectively enforce their
copyrights.
Finally, Dr. Fallon discussed how patents have been vital
to her business in the science field and have helped her
discover important drugs for various neurological disorders.
She testified that intellectual property forms the basis of her
company. She explained how patents can grow value at all stages
in a company's lifecycle, and are especially critical for
startups to help provide assurance to investors. Patents also
can provide a competitive advantage for small businesses, allow
for licensing and joint ventures, and are often critical in
obtaining funding. She also discussed the gap between the
number of female patent holders and male patent holders.
HEARING: ``MILLENNIALS AND THE GIG ECONOMY''
On Wednesday, June 6, 2018 at 11:00 A.M., the Committee on
Small Business met in Room 2360 of the Rayburn House Office
Building for a hearing titled ``Millennials and the Gig
Economy.'' The purpose of the hearing was to explore the
relationship between small businesses and the gig economy.
Specifically, this heating examined the increasing number of
millennials pursuing careers within the gig economy, while
considering how this economic trend is impacting small
businesses.
The witnesses for the hearing were: Ms. Betsy Dougert,
Director of Communications, SCORE Association, Herndon, VA; Mr.
Ryan Morris, Owner, Ruff House Dog Training, Stafford, VA; Ms.
Anne Kirby, Founder, The Sweet Core, Lancaster, PA; and Mr.
Steven Olikara, Founder and President, Millennial Action
Project, Washington, DC.
Chairman Chabot explained the gig economy as a marketplace
of workers whose businesses are a collection of individual
projects or ``gigs.'' Ms. Dougert discussed the relationship
between small businesses and the gig economy. Statistics have
shown that small businesses are hiring independent contractors
or gig workers at a higher rate than traditional employees. As
a gig worker himself, Mr. Morris highlighted the increased
freedom and flexibility that the gig economy offers. This
increased flexibility is widely seen as a key factor in the
growth of the gig economy. As the gig economy continues to
grow, the concept of coworking has grown as well. Ms. Kirby
spoke about the importance of coworking in providing gig
workers with community support and networking opportunities,
both of which contribute to an entrepreneur's ability to scale
their business in the long term. Mr. Olikara commented on the
lack of employer sponsored retirement or healthcare programs
and the potential policy solutions to these issues moving
forward.
HEARING: ``THE IMPACT OF CATEGORY MANAGEMENT ON THE SMALL BUSINESSES
INDUSTRIAL BASE''
On June 13, 2018 the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``The Impact of Category Management on the Small
Business Industrial Base.'' The hearing continued the
Committee's longstanding oversight examining the use of
contract bundling and consolidation in the federal procurement
system.
The federal government spends over $300 billion dollars on
goods and services each year. In order to seek efficiencies and
manage this spending, the Office of Management and Budget (OMB)
expanded upon previous attempts at contract consolidation,
resulting in the current category management strategy. The
purpose of category management, as originally developed, was to
track and analyze market research data to better capture what
the federal government was buying and how it was spending in
order to increase efficiencies and achieve cost savings. Used
in this manner, category management can be a valuable tool to
the federal government. However, category management has been
taken a step further; the OMB mandated a targeted increase in
spending through ``best-in-class'' contract vehicles and a
decrease in individual contracts. This has the potential
consequence of funneling contract dollars and awards towards
specific, few contract vehicles which have only a handful of
vendors, both large and small, operating on each vehicle. This
federal spending approach may have deleterious impacts on small
businesses who do not operate on these ``best-in-class''
vehicles, particularly for emerging small businesses, by
reducing the number of available opportunities for small
businesses and by making it increasingly difficult to compete
for government contracts. As OMB continues to implement
category management government-wide, the impacts to the small
business industrial base should be considered.
Witnesses on the panel were: Ms. Shirley Bailey, CEO and
Managing Member of MSC Management Services, LLC in Oakland, MD,
testifying on behalf of the HUBZone Contractors National
Council; Mr. Alan Chvotkin, Executive Vice President and
Counsel of the Professional Services Council in Arlington, VA;
Ms. Beth Laurie Strum, Vice President of Business Development
of Volanno, formerly known as IT WORKS, Washington DC,
testifying on behalf of the U.S. Women's Chamber of Commerce;
and Ms. ML Mackey, CEO of Beacon Interactive Systems, Waltham,
MA, testifying on behalf of the National Defense Industrial
Association.
Ms. Bailey explained that category management will not only
have harmful impacts on small businesses but also may also harm
agencies abilities to meet their small business goals. Mr.
Chvotkin questioned whether category management will help
agencies meet their mission objectives. He explained that
labeling a contract as ``best-in-class'' after the contract has
already been awarded harms small businesses that did not
compete for a spot on that contract. Ms. Strum noted that this
framework restricts competition to a handful of vendors which
harms the industrial base and also advocated for more on-
ramping opportunities for existing ``best-in-class'' contract
vehicles. Ms. Mackey stated that this policy dilutes the
innovative and agile advantages that small businesses bring to
federal procurement.
HEARING: ``EXPLORING THE STATE OF WESTERN KENTUCKY'S SMALL BUSINESSES''
On June 18, 2018, the Committee on Small Business met in
the Paducah Bank Room, Paducah Area Chamber of Commerce,
Paducah, Kentucky, for a field hearing titled ``Exploring the
State of Western Kentucky's Small Businesses.'' Small business
leaders shared their experiences and provided the Committee
with recommendations about federal policies that will help them
grow their businesses and create jobs.
The witnesses for the hearing were: Mr. Bruce Kimbell,
President, First Community Bank of the Heartland, Clinton, KY;
Mr. Leon Owens, President, Swift & Staley, Inc., Paducah, KY;
Mr. Edward Musselman, Owner, Musselman Properties, Paducah, KY;
and Mr. Jonas Neihoff, Owner, Socially Present, Paducah, KY.
While large companies regularly raise capital through debt
and equity markets, small businesses often finance their
endeavors with personal assets or commercial bank borrowing.
Unfortunately, the lending environment around the country for
small businesses continues to be stagnant. According to
research, the total value of loans by small domestic banks has
remained flat since the recession and depressed as compared to
levels before the recession. With capital options limited,
small businesses often turn to the SBA to finance their
projects. The SBA, which was created in 1953 by the Small
Business Act, administers several programs designed to assist
small businesses, including capital access programs that aim to
bridge the debt and equity gaps that exist in the marketplace.
Mr. Kimbell testified about the role of community banks in
providing small businesses access to credit and about how H.R.
4743, the Small Business 7(a) Lending Oversight Reform Act,
would improve SBA's 7(a) loan program. Mr. Owens explained the
impact of H.R. 5236, the Main Street Employee Ownership Act, on
small business and employees and provided recommendations about
how successful small businesses could continue to participate
in small business programs after they have slightly exceeded
their size standards.
Across every industry, small business owners continue to be
burdened by federal regulations. The cost in time and money to
research, understand, and comply with regulations continues to
be a problem for small businesses, and federal agencies have
not always taken the proper steps to ensure they are adequately
assessing how they are impacting small businesses when issuing
new regulations. Complying with federal regulations continues
to be one of the biggest challenges for America's small
businesses. Both Congress and President Trump have taken steps
to reduce the regulatory burden on small businesses by rolling
back and revising existing regulations. The President has also
taken steps to reform the regulatory process and require
federal agencies to review their existing regulations and
identify candidates for removal or revision. Mr. Musselman
discussed the historic tax credit, a provision of H.R. 1, the
Tax Cuts and Jobs Act, and provided recommendations to reform
Obamacare's employer mandate. Mr. Neihoff testified about the
importance of finding a local mentor who can guide
entrepreneurs and new small businesses through the process of
starting a business.
HEARING: ``THE PERSPECTIVE OF RURAL SMALL BUSINESSES IN NORTH
MISSISSIPPI''
On June 18, 2018, the Committee on Small Business met for a
field hearing titled, ``The Perspective of Rural Small
Businesses in North Mississippi.'' The hearing took place at in
Southaven, MS at the ServPro Training Center, 1160 Stateline
Road East. The hearing highlighted how rural small businesses
in Mississippi are faring in today's economy and the outlook
going forward.
Witnesses on the only panel were: Mr. Pat Woods, Owner,
Woods Farm Supply, Inc., Byhalia, MS; Mr. Geoffrey Carter,
Founder, President and CEO, Hyperion Technology Group, Inc.,
Tupelo, MS; Mr. Michael Hatcher, President Michael Hatcher &
Associates, Inc., Olive Branch, MS; and Mr. Jason Bailey,
President and CEO, Summit Management Services, LLC, Oxford, MS.
Chairman Chabot discussed the regulatory and tax reform
efforts of Congress and President Trump and how that has been
beneficial for small businesses in the economy. Congressman
Kelly echoed Chairman Chabot's statements on the benefits of
regulatory and tax reform efforts of the federal government,
but pointed out that more progress needs to me made in the
areas of access to capital, rural broadband deployment, and the
difficulty small firms are experiencing finding qualified
employees to fill open positions. Mr. Woods testified that he
has seen a significant growth in the small business sector of
North Mississippi's economy due in large part to the regulatory
and tax reform efforts the federal government has taken in the
past 18 months. Mr. Carter testified that since the 2016
election, his workforce had grown by 30 percent, the company's
revenue had doubled, and was currently seeking a new facility
as they had outgrown their current one. Mr. Hatcher also
pointed to tax reform as a catalyst for growth in rural
businesses in his area. Mr. Bailey stated that his outlook for
his small business is optimistic, but the federal government
ought to continue to find regulations that are unnecessarily
burdensome.
HEARING: ``COMMUNITIES THAT THINK SMALL AND WIN BIG''
On Wednesday, June 20, 2018, the Committee on Small
Business met in Room 2360 of the Rayburn House Office Building
for a hearing titled ``Communities That Think Small and Win
Big.'' The purpose of the hearing was to highlight localities
that have developed thriving small business ecosystems. The
hearing examined key elements of a business-friendly
environment as well as the socioeconomic returns on small
business investment. Witnesses reviewed economic development
policy strategies, best practices, and local success stories.
Localities use a variety of policy tools to address
business concerns, including operating costs, operating
conditions, and quality of life. The panel touched on familiar
themes, including regulations, taxes, access to capital, and
access to resources. The witnesses explained how they tailor
economic development strategies to meet the specific needs of
their community and businesses they wanted to attract.
Witnesses on the panel were: Mr. Greg Prestemon, President
and CEO, EDC Business and Community Partners, St. Charles, MO;
Mr. Derek Miller, President and CEO, Salt Lake Chamber and
Downtown Alliance, Salt Lake City, UT; Ms. Vanessa Wagner,
Small Business and Entrepreneurship Manager, Loudoun County
Department of Economic Development, Ashburn, VA; and Mr. Gregg
Bishop, Commissioner, New York City Department of Small
Business Services, New York, NY.
HEARING: ``ZTE: A THREAT TO AMERICA'S SMALL BUSINESSES''
On June 27, 2018, the Committee on Small Business met in
Room 2360 Rayburn House Office Building for a hearing-titled
``ZTE: A Threat to America's Small Businesses.'' The hearing
examined the imminent threat posed to America's small
businesses by the Chinese telecommunications firm Zhongxing
Telecommunications Equipment Corporation (ZTE) and provided
Committee Members the opportunity to hear from national
security experts and representatives of cybersecurity firms on
steps the Administration can take to protect small businesses
and American citizens from the dangers presented by ZTE. The
hearing also investigated ongoing efforts by both the public
and private sectors to reduce the challenges small businesses
face in dealing with illicit Chinese-backed enterprises.
As small businesses increasingly rely on foreign technology
products and services, they become even more susceptible to
cyber attacks. As the Committee has learned in past hearings,
some foreign-backed firms have taken steps to expose small
businesses' information technology systems as a means of
infiltrating America's critical infrastructure and weakening
national security. Foreign governments--through subversive
tactics--can employ state-backed firms to orchestrate cyber
attacks, cyber espionage, and other national strategic
objectives, making it difficult to identify the responsible
entity. Vulnerabilities in the information technology supply
chain are especially at risk because foreign telecommunications
firms are capable of exploiting these weaknesses to carry out
criminal activities.
Witnesses on the panel were: Mr. David Linger, President
and CEO, TechSolve, Inc., Cincinnati, OH; Mr. Andy Keiser,
Visiting Fellow, National Security Institute, Antonin Scalia
Law School, George Mason University, Arlington, VA; and Mr.
Matthew G. Olsen, President, IronNet Cybersecurity, Kensington,
MD.
Chairman Chabot noted the years long investigation into
ZTE's nefarious activities and efforts to subvert United States
export control laws and the subsequent judgements brought
against ZTE. The panel discussed the importance of holding ZTE
accountable for its misdeeds. Mr. Linger testified that typical
IT cyber-attacks and both foreign and domestic espionage will
continue to target manufacturers and devastate these companies,
their customers, and supply chain primes. He also stated that
there is fierce competition for intellectual property and
industrial control systems that are largely left unguarded, and
that their systems are increasingly connected through the use
of IOT devices, robotics, and human-machine interfaces to
improve automation and decrease costs. Mr. Keiser said that
part of China's vision includes dominance in fields that have
dual economic and military benefit. He stated that in 2015,
Chinese leaders unveiled the ``Made in China 2025'' strategic
plan which focuses on the country becoming the world's leader
in high-tech fields, squarely within the learned and stolen
expertise of ZTE and Huawei. Mr. Olsen observed that ZTE has
proven to be a particularly bad actor, flouting U.S. export
control laws and deceiving regulators. He also said that the
U.S. government found ZTE to be in violation of U.S. sanctions
against Iran and North Korea, by using various U.S. components
in systems it sold to those two countries and, when the
Commerce Department released its findings against ZTE in 2016,
it disclosed evidence of the company's guilt. He noted that one
document, signed by several senior ZTE executives, reportedly
cautioned that American export laws were a risk because the
company was selling to all five major embargoed countries--
Iran, Sudan, North Korea, Syria and Cuba.
HEARING: ``INNOVATION NATION: HOW SMALL BUSINESSES IN THE DIGITAL
TECHNOLOGY INDUSTRY USE INTELLECTUAL PROPERTY''
On July 11, 2018, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Innovation Nation: How Small Businesses in the Digital
Technology Industry Use Intellectual Property.'' The hearing
examined how small business owners in the digital technology
industry utilize intellectual property (IP).
The witnesses for the hearing were: Mr. Frank Cullen, Vice
President of U.S. Policy, The Global Innovation Policy Center,
U.S. Chamber of Commerce, Washington, DC; Mr. Morgan Reed,
President, ACT I | The App Association, Washington, DC; Mr.
Christopher Mohr, Vice President for Intellectual Property and
General Counsel, Software & Information Industry Association,
Washington, DC; and Mr. Chris Israel, Executive Director,
Alliance for U.S. Startups & Inventors for Jobs, Washington,
DC.
The witnesses provided testimony detailing the role of IP
for small business owners in the digital technology industry.
Mr. Cullen provided an overview of the importance of IP in the
United States and how IP rights drive competitiveness and
economic growth. He also testified about the Global Innovation
Policy Center's International IP Index that is published every
year, which showed that the United States is the top-scorer for
its overall IP system. Mr. Cullen also stressed the importance
of educating small business owners to help them understand how
IP can help them succeed and which form of IP is most relevant
to their type of business.
Mr. Reed testified about the importance of IP for small
mobile software companies. He stated that IP is usually at the
forefront of his members' minds and emphasized the importance
of an IP system that is accessible and useful to small,
innovative, software-driven companies.
Mr. Mohr explained how a sound and uniform IP system exists
in the United States and has been working for software
companies. He discussed how IP-intensive industries continue to
grow and provide jobs, and research and development investments
have been growing faster than any other industry. He also
stated how each IP protection helps small software companies
grow from small ones to large ones.
Mr. Israel focused on the importance of IP protections to
receive funding from investors. His testimony discussed how the
United States patent system has been eroded by court decisions
and changes in the law. Mr. Israel provided the results of a
study detailing the trends in venture capital investment in
recent years. He testified that even though venture capital
investment has increased over the past 15 years, the portion
committed to small businesses in important technology sectors
such as medical devices and wireless communications has
declined. Mr. Israel provided specific recommendations and
actions that the United States Patent and Trademark Office can
take to reform some of the issues that his members face in the
patent system.
HEARING: ``THE TAX LAW'S IMPACT ON MAIN STREET''
On July 25, 2018, the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``The Tax Law's Impact on Main Street.'' The purpose of
the hearing was to examine how the recently enacted tax reform
package affected small businesses. The hearing allowed Members
of the Committee the opportunity to hear directly from small
business owners regarding the impact the law has had on their
operations and their company's outlook.
The witness for the hearing were: Mr. Wettlin Treppendahl,
Owner, Treppendahl's Super Foods, Woodville, MS, on behalf of
the National Grocers Association; Mr. Tibi Czentye, Chief
Executive Officer, All Pro Solutions, Rock Hill, SC; Mr. Gary
Ellerhorst, President/CEO, Crown Plastics Co., Harrison, OH;
and Ms. K. Davis Senseman, Founder, Davis Law Office,
Minneapolis, MN, on behalf of the Main Street Alliance.
On December 22, 2017, President Donald Trump signed the Tax
Cuts and Jobs Act into law. With economic data responding
positively to the tax reform package, one measure will come
from small business owners on the ground. In Committee
testimony and responses to Member questions, all three small
business witnesses said the Tax Cuts and Jobs Act was
beneficial to their businesses and a step in the right
direction. Mr. Treppendahl said the tax reform package allowed
his supermarket to invest in new freezer doors and provide
raises to employees. Mr. Czentye, the chief executive of a
digital archiving business, said that because of the Tax Cuts
and Jobs Act, optimism in his South Carolina community is
soaring and that the fourth quarter forecasts for his business
have increased exponentially. Mr. Ellerhorst said that combined
with the booming economy and deregulation, the tax reform
package will have a significant impact moving forward. Ms.
Senseman commented on the need for timely regulations,
particularly in the area of the pass-through tax deduction. She
noted that small firms wishing to take advantage of the
provision were in limbo because they had been given no rules of
the road, further creating uncertainty and complexity for the
current tax year.
HEARING: ``SURVEYING STORMS: A DEEPER DIVE INTO SBA'S DISASTER
RESPONSE''
On Wednesday, September 5, 2018, the Committee on Small
Business met in Room 2360 of the Rayburn House Office Building
for a hearing titled ``Surveying Storms: A Deeper Dive into
SBA's Disaster Response.'' The purpose of the hearing was to
examine the United States Small Business Administration's (SBA)
disaster response to the 2017 storm season. The hearing
provided Members of the Committee the opportunity to hear
directly from the SBA regarding the agency's actions during the
2017 storm season and SBA's disaster response moving forward.
The witness for the hearing was: Mr. James Rivera,
Associate Administrator, Office of Disaster Assistance, SBA,
Washington, DC.
Mr. Rivera testified before the Committee regarding the
response SBA provided to disaster victims during the 2017 storm
season, which included Hurricane Harvey, Hurricane Irma, and
Hurricane Maria, all of which made landfall within weeks of
each other. In the past, SBA has struggled while responding to
major disasters, namely Hurricane Katrina in 2005 and Hurricane
Sandy in 2012. While discussing the unique challenge of
responding simultaneously to three major disasters, Mr. Rivera
detailed how SBA's Disaster Loan Program assisted 2017 disaster
victims, including how the program is administered.
Specifically, Mr. Rivera testified that SBA moved with alacrity
and approved $1 billion dollars in loans for the 2017
hurricanes in half the amount of time compared to previous
disasters. Although the recovery for 2017 storm victims
continues, to date, SBA has approved over $7.2 billion of loans
to those impacted by Hurricanes Harvey, Irma, and Maria.
Acknowledging that SBA needs to continue to make improvements
with its disaster response, Mr. Rivera outlined for the
Committee areas the agency is addressing including ongoing
customer service to victims and barriers to the application
process. Finally, Mr. Rivera noted the importance of making the
collateralization requirements for disaster loans permanent at
$25,000 instead of $14,000 if the provision is allowed to
expire.
HEARING: ``NOW HIRING: HOW THE OPIOID EPIDEMIC AFFECTS SMALL
BUSINESSES''
On September 13, 2018, the Committee on Small Business met
in Room 2360 of the Rayburn House Office Building for a hearing
titled ``Now Hiring: How the Opioid Epidemic Affects Small
Businesses.'' Specifically, the hearing examined the decline in
the labor forceparticipation rate due to the epidemic and the
challenges that small businesses experience in finding
qualified workers as a result.
Witnesses on the panel were: Mr. Ben Gitis, Director of
Labor Market Policy, American Action Forum, Washington, DC; Ms.
Katie Van Dyke, Director, Ohio Small Business Development
Center, Cleveland State University, Cleveland, OH, testifying
on behalf of America's SBDC; and Ms. Lisa Allen, President &
CEO, Ziegenfelder Company, Wheeling, WV.
Chairman Chabot opened the hearing by noting that although
small business optimism has reached a record 45-year high,
finding and retaining qualified workers has become a recent
challenge for many small businesses. He also stated that many
working age men and women are out of the labor force due to
opioids, and that the opioid crisis has taken a toll on many
small businesses and communities. Mr. Gitis discussed how the
growing use of prescription painkillers and other opioids has
led to a declining labor force participation in the United
States economy. He also stated that, although the declining
labor force affects all businesses and communities, the effects
are most heavily felt by small businesses with under 50
employees. Ms. Van Dyke provided details about resources that
are on the ground working to educate employers and employees
about the opioid crisis, such as the Ohio SBDC's workshop
called ``The Opioid Crisis in the Workplace: The Proactive Role
Employers Can Take.'' She also discussed the direct results of
the opioid crisis on Ohio, noting that in 2016, overdose deaths
due to opioids increased by 39 percent and that Ohio saw the
third largest increase in overdose deaths among the states. Ms.
Allen testified about her business, the Ziegenfelder Company,
and how they have worked to combat the opioid crisis in their
community by hiring recovering addicts. She discussed how
working with the local community is important for fostering a
safe environment for her employees to recover and prosper.
PART B
Subcommittee Hearings
HEARING: ``STATE OF THE SMALL BUSINESS ECONOMY''
On February 16, 2017, the Subcommittee on Economic Growth,
Tax, and Capital Access of the Committee on Small Business met
in Room 2360 of the Rayburn House Office Building for a hearing
titled ``State of the Small Business Economy.'' The hearing
examined current economic indicators that measure the health of
the economy, with a specific focus on the effect of policy
uncertainty on economic growth and entrepreneurship growth. The
hearing also examined general concerns that small business
owners are confronting in 2017.
According to the Bureau of Economic Analysis, economic
activity in 2016, as measured by gross domestic product (GDP),
grew by just 1.6 percent. With small businesses comprising 42
percent of the private sector payroll and 99.9 percent of all
businesses, small businesses have the potential to be
significant drivers of economic growth. However, barriers such
as increasing health care costs, regulatory burdens, and an
increasingly complex tax code have made it harder to start,
maintain, and grow a business.
Witnesses on the panel were: Stan Veuger, Ph.D., Resident
Scholar, American Enterprise Institute, Washington, DC; Mr.
Victor Hwang, Vice President, Entrepreneurship, Ewing Marion
Kauffman Foundation, Kansas City, MO; Ms. Holly Wade, Director,
Research and Policy Analysis, NFIB Research Foundation,
Washington, DC; and Ms. Bob Bland, CEO and Founder, Manufacture
NY, Brooklyn, NY.
The panel discussed how to promote growth in the small
business economy and the primary concerns of small businesses.
Dr. Veuger provided an overview of the small business economy
and discussed how policy uncertainty can dampen economic
growth. Mr. Hwang outlined the state of entrepreneurship in the
United States, and described the Kauffman Foundation's new Zero
Barriers to Startup Challenge to address the entrepreneurship
deficit. Ms. Wade used survey data of NFIB member businesses to
show that health insurance costs, regulatory compliance costs,
and tax complexity are three primary concerns of many small
businesses. Finally, Ms. Bland described New York City's
fashion industry and discussed the industry's challenges.
HEARING: ``LEARNING FROM HISTORY: IDEAS TO STRENGTHEN AND MODERNIZE THE
HUBZONE PROGRAM''
On March 2, 2017, the Subcommittee on Contracting and
Workforce met in Room 2360 of the Rayburn House Office Building
for a hearing titled ``Learning from History: Ideas to
Strengthen and Modernize the HUBZone Program.'' The hearing was
the first in a series of hearings assessing the HUBZone
program, starting with a study of overarching themes identified
in reports issued by the Government Accountability Office (GAO)
and the Small Business Administration (SBA) Office of Inspector
General (OIG) over the past twenty years.
The HUBZone Program, authorized in 1997, was intended to
stimulate economic development by increasing employment and
capital investment through the use of federal contracting
preferences to small businesses operating in economically
distressed areas. GAO and OIG issued nine reports total
examining the HUBZone program. Six major themes arose from
these reports: (1) SBA continues facing technology and
communications issues; (2) diffusion of benefits and
underutilization of HUBZone-designated areas may undermine the
purpose of the HUBZone program; (3) performance metrics are
still lacking; (4) the HUBZone program has been vulnerable to
fraud in the past; (5) SBA's certification and decertification
processes improved while the recertification process needs
strengthening; and (6) SBA relies on the threat of prosecution,
site visits, and status protests to mitigate fraud.
Witnesses on the panel were: Mr. William Shear, Director,
Financial Markets and Community Investment, GAO, Washington DC;
Mr. Hannibal ``Mike'' Ware, Acting Inspector General, SBA,
Washington DC; Ms. Shirley Bailey, Co-Owner and Executive Vice
President and Chief Operating Officer, GCC Technologies, LLC,
Oakland, MD, testifying as Board Chair of the HUBZone
Contractor's National Council; and Mansooreh Mollaghasemi,
Ph.D., President and CEO, Atria Technologies, LLC, Orlando, FL.
At the hearing, Mr. Shear discussed the evolution of the
HUBZone Program, specifically areas of weakness identified in
prior reports and data on the economic characteristics of
HUBZone-designated areas. Mr. Ware testified that inaccurate
procurement data was a top management challenge in the HUBZone
program. He noted that federal agencies reporting their small
business goals to SBA were receiving HUBZone small business
goaling credit for ineligible firms, putting to question the
amount of HUBZone dollars reported. Ms. Bailey testified that
the HUBZone Program serves an important socioeconomic
utilization goal and that the Program had a substantial impact
on HUBZone communities. She also identified a number of
proposed legislative solutions. Dr. Mollaghasemi shared her
personal experience as a HUBZone small business owner and
stressed the importance of increased transparency and
expediency within the HUBZone application process.
HEARING: ``AN OVERVIEW OF SBA'S 7(A) LOAN PROGRAM''
On March 9, 2017, the Subcommittee on Investigations,
Oversight, and Regulations of the Committee on Small Business
met in Room 2360 of the Rayburn House Office Building for a
hearing titled ``An Overview of SBA's 7(a) Loan Program.'' The
hearing examined the United States Small Business
Administration's (SBA) 7(a) Loan Program to ensure the
effectiveness of the program in helping creditworthy small
businesses obtain capital. The hearing gave Members of the
Subcommittee the opportunity to hear directly from financial
institutions participating in the program.
The witnesses for the hearing were: Ms. Sonya McDonald,
Executive Vice President/Chief Lending Officer, Randolph Brooks
Federal Credit Union, Universal City, TX, testifying on behalf
of the National Association of Federally-Insured Credit Unions;
Ms. Cindy Blankenship, Vice Chairman, Bank of the West,
Grapevine, TX, testifying on behalf of the Independent
Community Bankers of America; Mr. Tony Wilkinson, President and
Chief Executive Officer, National Association of Government
Guaranteed Lenders, Washington, DC; and Mr. Edward C. Ashby
III, President and Chief Executive Officer, Surrey Bank &
Trust, Mount Airy, NC, testifying on behalf of the American
Bankers Association.
The witnesses discussed the requirements of the 7(a) Loan
Program, along with its recent growth in terms of loan
approvals, loan amounts and the congressionally-authorized
lending limit. When asked about improvements that the SBA could
make with regard to the program, Ms. McDonald highlighted an
idea of utilizing best practices, which included publishing a
list of unwritten rules and the importance of raising the
credit unions' Member Business Lending Cap. Ms. Blankenship
discussed the uptick in demand in business optimism since the
2016 elections, along with parameters required for the ``credit
elsewhere test.'' She also highlighted the importance of having
a stable funding environment with regard to the
congressionally-authorized lending limit and suggested an
improvement can be made to the limit by switching to a two-year
authorization level. When asked about the tools that are
available at the Office of Credit Risk Management (OCRM) within
SBA, Mr. Wilkinson said it is important that OCRM receive the
appropriate funding and the appropriate staff to fulfill lender
oversight. He mentioned that he believes the ``credit elsewhere
test'' is clear, but legislation could potentially make it
clearer. Mr. Wilkinson also described how there are likely
lenders that have used the 7(a) Loan Program when conventional
lending was available, but he described how that is where the
role of lender oversight at SBA enters the conversation. Mr.
Ashby discussed how his state of North Carolina has seen an
uptick in poultry lending and that the SBA One platform has not
fully been implemented.
HEARING: ``CAFETERIA PLANS: A MENU OF NON-OPTIONS FOR SMALL BUSINESS
OWNERS''
On March 16, 2017, the Subcommittee on Economic Growth,
Tax, and Capital Access of the Committee on Small Business met
in Room 2360 of the Rayburn House Office Building for a hearing
titled ``Cafeteria Plans: A Menu of Non-Options for Small
Business Owners.'' The Subcommittee met to examine why small
business owners are not treated like larger employers in
offering cafeteria plan benefits. The Subcommittee also
considered the effects of this policy on small business
employees and whether the policy should be changed.
The witnesses for the hearing were: Ms. Jennifer Brown,
Manager of Research, National Institute on Retirement Security,
Washington, DC; Ms. Paula Calimafde, Chair, Small Business
Council of America, Bethesda, MD; Ms. Elise Feldman, President,
Feldman Benefit Services, Springfield, NJ; and Mr. Matt Tassey,
Treasurer, National Association of Insurance and Financial
Advisors, Portland, ME.
Ms. Brown laid a foundation from an academic perspective,
detailing the enactment, legislative history, and development
of Section 125 cafeteria plans. Ms. Calimafde noted that
cafeteria plans are not widely offered by small businesses,
suggesting that removing the restriction on pass-through owners
from participating in such plans would result in an increase in
their use. She also made several other recommendations to
improve Section 125. Ms. Feldman mentioned that her pass-
through clients routinely ask when they will be able to
participate in their cafeteria plans. However, she also
observed that many pass-through owners, even if allowed to
participate, would not be able to do so based solely on the
fact that their small size makes compliance with the non-
discrimination rules virtually impossible. Mr. Tassey focused
his testimony on two recommendations to improve cafeteria
plans: (1) make pass-through owners eligible to participate;
and (2) add qualified long-term care insurance to the benefits
available under cafeteria plans.
HEARING: ``THE FUTURE OF AMERICA'S SMALL FAMILY FARMS''
On March 23, 2017, the Subcommittee on Agriculture, Energy,
and Trade of the Committee on Small Business met in Room 2360
of the Rayburn House Office Building for a hearing titled ``The
Future of America's Small Family Farms.'' The hearing provided
the Subcommittee an opportunity to review the economic
contributions of small family farms to the health of the United
States economy. The hearing also assessed historical and
current trends in the industry, as well as the issues small
family farms are confronting.
Witnesses on the panel were: John D. Lawrence, Ph.D.,
Associate Dean and Director for Extension and Outreach, College
of Agriculture and Life Sciences, Iowa State University, Ames,
IA; Mr. Tim White, Owner, TA White Farm LLC, Lexington, KY,
testifying on behalf of the National Cattlemen's Beef
Association; Ms. Sarah Rickelman, Manager, Degener-Juhl Farms,
Hudson, IA, testifying on behalf of the Iowa Farm Bureau; and
Mr. Chuck Conner, President and CEO, National Council of Farmer
Cooperatives, Washington, DC.
Small family farms remain an important component of the
agriculture industry and make up an overwhelming number of the
farms in the United States. They also grow a significant
percentage of crops that are vital to the nation's food supply.
However, with net farm income falling over the past few years,
it has become harder than ever to make a profit as a small
family farm. Furthermore, issues such as tax burdens,
regulatory burdens, and difficulty exporting increase costs and
decrease income potential.
The panel discussed how to improve the state of small
family farms and identified primary concerns of the industry.
Dr. Lawrence provided an overview of the farm economy and
mentioned the ongoing challenges for small family farms. He
said that expanding access to markets, capital, technology, and
information would benefit small family farms the most. Mr.
White testified about his experience in operating a small
cattle farm in Kentucky. He also mentioned issues affecting
both cattle ranchers and small family farms, such as low
commodity prices, burdensome regulations, and the estate tax.
Ms. Rickelman also discussed the difficulty of running a small
farm amid low commodity prices, and said a strong Farm Bill is
needed to protect against periods of low prices. She reiterated
the importance of trade for small family farms, and supports
allowing farmers to be able to deduct interest expenses.
Finally, Mr. Conner discussed important issues for farmer
cooperatives, which include tax reform, access to international
markets, and improved infrastructure for rural areas.
HEARING: ``SBA'S ENTREPRENEURIAL DEVELOPMENT PROGRAMS: RESOURCES TO
ASSIST SMALL BUSINESSES''
On March 30, 2017, the Subcommittee on Contracting and
Workforce of the Committee on Small Business met in Room 2360
of the Rayburn House Office Building for a hearing titled
``SBA's Entrepreneurial Development Programs: Resources to
Assist Small Businesses.'' The hearing examined the United
States Small Business Administration's (SBA) Entrepreneurial
Development (ED) Programs and gave Members of the Subcommittee
the opportunity to review the major technical assistance
programs and to hear directly from SBA's resource partners.
The witnesses for the hearing were: Mr. W. Kenneth Yancey,
Jr., Chief Executive Officer, SCORE, Herndon, VA; Ms. Antonella
Pianalto, President and Chief Executive Officer, Association of
Women's Business Centers, Washington, DC; Mr. Charles Rowe,
President and Chief Executive Officer, America's Small Business
Development Centers, Burke, VA; and Mr. Joseph C. Sharpe, Jr.,
Director, The Veterans Employment & Education Division, The
American Legion, Washington, DC.
The witness panel provided the Subcommittee with an
overview of the resources available to small businesses through
SBA's ED Programs. Mr. Yancey discussed the data driven focus
of SCORE and recent improvements SCORE has made with regard to
client and volunteer diversity. When asked how to improve
access to capital for women-owned businesses, Ms. Pianalto
highlighted the importance of education and financial literacy.
She also discussed the process of establishing a new Women's
Business Center (WBC), which entails an initial location
decision from SBA and then a grant proposal process. Mr. Rowe
focused his remarks on the importance of coordination among all
of the ED programs and he said extra attention is needed within
rural and less populated areas. Mr. Rowe also highlighted the
role of Small Business Development Centers (SBDCs) in disaster
recovery. When asked about the geographic limitations of
Veterans Business Outreach Centers (VBOCs), Mr. Sharpe
discussed the need for enhanced public-private partnerships.
HEARING: ``SMALL BUSINESS: THE KEY TO ECONOMIC GROWTH''
On April 27, 2017, the Subcommittee on Economic Growth,
Tax, and Capital Access of the Committee on Small Business met
in Room 2360 of the Rayburn House Office Building for a hearing
titled ``Small Business: The Key to Economic Growth.'' The
hearing provided the Subcommittee with an opportunity to
further understand the causes of economic growth, the benefits
associated with economic growth, and current limits on economic
growth in the United States. This hearing also examined how
small businesses are a vital catalyst for economic growth.
Witnesses on the panel were: Robert Barro, Ph.D., Paul M.
Warburg Professor of Economics, Harvard University, Cambridge,
MA; Mr. Andrew Sherman, Partner, Seyfarth Shaw LLP, Washington,
DC; Mr. Stephen Moore, Distinguished Fellow, Project for
Economic Growth, Institute for Economic Freedom and
Opportunity, The Heritage Foundation, Washington, DC; and Chad
Stone, Ph.D., Chief Economist, Center on Budget and Policy
Priorities, Washington, DC.
The panel discussed the determinants of economic growth,
and how small businesses play an integral part in creating
economic growth. Dr. Barro provided a historical and
international analysis of economic growth. He stated that the
most vital determinants for economic growth are the regulatory
environment, ease of doing business, and human capital. Mr.
Sherman discussed the importance of entrepreneurs and small
businesses to economic growth. In order to improve the success
of entrepreneurs and small businesses, Mr. Sherman stressed the
importance of human capital, R&D partnerships with small
businesses and the government, reliable and fair intellectual
property laws, and access to capital. Mr. Moore explained how
improving GDP growth would reduce the federal deficit, reduce
poverty, and improve schools. However, in order to spur growth,
Mr. Moore argued that Congress needs to enact policies like tax
reform that would encourage small businesses to flourish. Dr.
Stone discussed the constraints on economic growth over the
next decade.
HEARING: ``IMPROVING THE SMALL BUSINESS INNOVATION RESEARCH AND SMALL
BUSINESS TECHNOLOGY TRANSFER PROGRAMS''
On May 4, 2017, the Small Business Committee Subcommittee
on Contracting and Workforce and the Committee on Science,
Space, and Technology Subcommittee on Research and Technology
met in Room 2318 of the Rayburn House Office Building for a
joint hearing titled ``Improving the Small Business Innovation
Research and Small Business Technology Transfer Programs.'' The
hearing was called because the Committee on Small Business and
the Committee on Science, Space, and Technology were interested
in collaborating on legislation making minor adjustments and
improvements to the Small Business Innovation Research (SBIR)
and the Small Business Technology Transfer (STTR) Programs in
2017. Witnesses from both the public and private sectors
discussed potential adjustments and improvements to the
programs.
Witnesses on the first panel were: Mr. Joe Shepard,
Associate Administrator, Office of Investment and Innovation,
United States Small Business Administration, and Mr. John
Neumann, Director, Natural Resources and Environment, United
States Government Accountability Office. Witnesses on the
second panel were: Mr. John Clanton, Chief Executive Officer,
Lynntech Inc., College Station, TX; John Langford, Ph.D.,
Chairman and CEO, Aurora Flight Sciences Corporation, Manassas,
VA; Mr. Ron Shroder, CEO and President, Frontier Technologies
Inc., Beavercreek, OH, testifying on behalf of the Small
Business Technology Council; Ms. Angela Alban, President and
CEO, SIMETRI, Inc., Winter Park, FL; and Clinton Rubin, Ph.D.,
SUNY Distinguished Professor and Chair, Department of
Biomedical Engineering, Director, Center for Biotechnology,
Stony Brook University, Stony Brook, NY.
Mr. Shepard began the testimony by detailing the numerous
success stories of businesses that had their start in the SBIR
program, such as Qualcomm, MedImmune, and iRobot and
recommended that legislation ought to include extensions to
several pilot programs currently maintained by the
participating agencies such as the Administrative Funding,
Direct to Phase II, and the Civilian Agencies Commercialization
Pilot Program. Mr. Neumann stated that there has been
relatively low instances of waste, fraud, and abuse within the
SBIR and STTR programs.
Mr. Clanton expressed support for continuation of the
Administrative Funding and Direct to Phase II pilot programs.
Dr. Langford stated that while his company has since graduated
out of the SBIR program, his business would not be as
successful as it is today with the early stage funding the SBIR
program provides for truly innovative ideas. Mr. Shroder
stressed the importance for our country to be world leaders in
a strong Research and Development culture and how much the SBIR
and STTR Programs have been such an important piece of that.
Ms. Alban testified that the SBIR and STTR programs are ideally
suited for creating opportunities for small businesses
throughout our country to stimulate technological innovation
and economic growth. Dr. Rubin testified that the National
Institutes of Health Phase 0 pilot program has been beneficial
to creating new small business out of the university setting
and urged its continuation.
HEARING: ``ALL WORK AND NO PAY: CHANGE ORDERS DELAYED FOR SMALL
CONSTRUCTION CONTRACTORS''
On May 25, 2017, the Subcommittee on Contracting and
Workforce and Subcommittee on Investigations, Oversight and
Regulations of the Committee on Small Business met in Room 2360
of the Rayburn House Office Building for a joint hearing titled
``All Work and No Pay: Change Orders Delayed for Small
Construction Contractors.'' The hearing examined the effect of
agency delays in the approval and payment of contract
modifications, known as ``change orders,'' on federal
construction contracts.
Changes to a contract, commonly known as ``change orders,''
are ubiquitous on construction projects. Change orders may be
issued unilaterally: by the government without the contractor's
consent. Small construction contractors are increasingly
frustrated by the slow approval and lack of payment by federal
agencies for change order work completed. While the change
order approval and/or payment is pending, small contractors
must continue to perform the changed work and finance these
efforts entirely out-of-pocket. Small contractors often lack
the resources and working capital to sustain their businesses
during this waiting period. Many small businesses are
subcontractors on federal construction projects, thus are last
to receive payment. Furthermore, federal agencies may be
engaging in unethical negotiating strategies, forcing
contractors to accept lower payment amounts. Federal agencies
may be waiting until the end of a construction project to
process and pay for change order work. They may also be
leveraging the claims process unfairly by requiring small
contractors initiate a claim in order to receive payment on the
changed work completed. Unlike the government, small
contractors do not have the time or resources to litigate
claims for the potential benefit of being paid pennies on the
dollar; this often results in small contractors settling with
the agency for amounts less than owed. Because of these issues,
small contractors may decide to leave the federal marketplace,
which reduces competition and increases prices for the agency
and taxpayer.
Witnesses on the panel were: Mr. Edward DeLisle, Co-Chair,
Federal Contracting Group, Cohen Seglias Pallas Greenhall &
Furman PC, Philadelphia, PA; Mr. Andy Brown, Vice President,
GlenMar Construction, Clackamas, OR, testifying as Co-Chair of
the Small Business Committee for the Associated General
Contractors of America; Mr. Greg Long, President and Owner,
Long Electric Company, Napa, CA, testifying as a member of the
National Electrical Contractors Association Northern California
Chapter's Board of Directors; and Ms. E. Colette Nelson, Chief
Advocacy Officer, American Subcontractors Association Inc.,
Alexandria, VA, testifying on behalf of the Construction
Industry Procurement Coalition.
At the hearing, Mr. DeLisle provided an overview of change
orders, the process for submitting a change order, and major
issues facing small businesses bringing claims against federal
agencies. Mr. Brown stressed that for many small contractors,
change orders are considered a ``necessary evil'' and have
immense negative impacts on a small business's cash flow and
project schedule. Mr. Long highlighted the cost-dispute issue,
which is the most commonly cited reason for change order
delays, and how that impacts payment bonds. Ms. Nelson
testified that the federal government's rules are inadequate
pertaining to minimum requirements on when the government must
review and approve contractors requests for equitable
adjustments (REAs), and in some cases agency policy is to
routinely defer consideration of REA's to the end of a
construction project.
HEARING: ``A REVIEW OF SBA'S 504/CDC LOAN PROGRAM''
On June 29, 2017, the Subcommittee on Economic Growth, Tax,
and Capital Access of the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``A Review of SBA's 504/CDC Loan Program.'' The hearing
provided Members of the Subcommittee with the opportunity to
hear directly from program participants about the loan program,
the role of Certified Development Companies (CDCs), and the
economic development requirements that are outlined in the
program.
The witnesses for the hearing were: Ms. Natasha Merz, Vice
President, Langley Federal Credit Union, Newport News, VA,
testifying on behalf of the National Association of Federally-
Insured Credit Unions (NAFCU); Mr. Wayne Williams, Senior Vice
President, Business Finance Group, Fairfax, VA; Ms. Barbara A.
Vohryzek, President/Chief Executive Officer, National
Association of Development Companies (NADCO), Washington, DC;
and Mr. Sherwood Robbins, Managing Director, Seedcopa, Exton,
PA.
The witnesses discussed the details of the 504/CDC Loan
Program and the ways in which small business owners use the
program. Ms. Merz discussed the loan program from the lenders
perspective and described the importance of a lender partnering
with the right CDC. As a CDC practitioner, Mr. Williams
discussed the program from the CDC's lens. Mr. Williams also
described the recent refinancing policy change with the
Subcommittee. As head of NADCO, Ms. Vohryzek provided a high-
level overview of the program. She was also given the
opportunity to describe the fluctuating growth rate that the
program is currently experiencing. When asked about
improvements that can be made to the program, Mr. Robbins
suggested increasing the awareness and marketing of the
program.
HEARING: ``THE PUERTO RICO OVERSIGHT, MANAGEMENT, AND ECONOMIC
STABILITY ACT: STATE OF SMALL BUSINESS CONTRACTING''
On July 13, 2017, the Subcommittee on Contracting and
Workforce and the Subcommittee on Economic Growth, Tax, and
Capital Access of the Committee on Small Business met in Room
2360 of the Rayburn House Office Building for a joint hearing
titled ``The Puerto Rico Oversight, Management, and Economic
Stability Act: State of Small Business Contracting.'' The
Puerto Rico Oversight, Management, and Economic Stability Act
(PROMESA) includes a provision requiring the Government
Accountability Office (GAO) to study the application and
utilization of the Small Business Administration's federal
contracting preference programs in Puerto Rico. This hearing
examined the GAO's findings, including the use of the Small
Business Administration's (SBA) contracting programs in Puerto
Rico and challenges Puerto Rican small businesses face in
obtaining federal contracting opportunities.
The witnesses for the hearing were: Mr. William Shear,
Director of the Financial Markets and Community Investment Team
at GAO in Washington D.C.; and Mr. Robb Wong, Associate
Administrator of the Office of Government Contracting and
Business Development at the SBA in Washington, D.C.
Mr. Shear discussed the GAO report findings and highlighted
the fact that most of the contracts won by small businesses in
Puerto Rico were won through full and open competition, rather
than through SBA's federal contracting programs. Mr. Wong
stated that the SBA has many resources available to educate
Puerto Rican small businesses on these federal contracting
programs and will work with Congress to further discuss
solutions to assist small businesses in Puerto Rico and
nationwide.
HEARING: ``21ST CENTURY MEDICINE: HOW TELEHEALTH CAN HELP RURAL
COMMUNITIES''
On July 20, 2017, the Subcommittee on Agriculture, Energy,
and Trade and the Subcommittee on Health and Technology of the
Committee on Small Business met in Room 2360 of the Rayburn
House Office Building for a joint hearing titled ``21st Century
Medicine: How Telehealth Can Help Rural Communities.'' The
hearing examined the current utilization of telehealth services
and how expansion of telehealth services could benefit small
businesses and rural communities.
The witnesses for the hearing were: Ms. A. Nicole Clowers,
Managing Director, Health Care Team, United States Government
Accountability Office, Washington, DC; Ms. Barb Johnston, Chief
Executive Officer and Co-Founder, HealthLinkNow, Sacramento,
CA; Mr. Michael Adcock, Administrator, Center for Telehealth,
University of Mississippi Medical Center, Jackson, MS; and
David Schmitz, Ph.D., President, National Rural Health
Association, Washington, DC.
Telehealth is the use of online, video, and telephone
communication to deliver health care services that either
replace or supplement existing health care services. While
telehealth can benefit many stakeholders, this hearing focused
on how expanding telehealth can benefit small businesses and
rural communities. Telehealth can benefit small physician
practices and other local small businesses. Telehealth allows
patients to access medical care without traveling long
distances. Not only does this allow rural physicians to
increase patient traffic, but other small businesses benefit
from patients staying nearby and keeping dollars in the
community. Telehealth may attract physicians to relocate to
rural areas. The ability to expand their reach to patients
outside of their community may lead physicians to consider
opening or relocating their practices in rural areas.
Telehealth may also offer an individual physician more
flexibility with operating his or her small business. Corporate
telehealth programs help small businesses lower costs and
maintain productivity. Some employers are offering telehealth
services within the workplace as a convenient option for
employees seeking medical care. Keeping employees well can
reduce health care spending and increase or maintain
productivity.
The federal government uses telehealth in the Medicare,
Medicaid, the Department of Defense (DOD), and Veterans Affairs
(VA) health care programs. The services available vary and a
low percentage of these beneficiaries currently use telehealth.
Stakeholders cite Medicare's inadequate payment and coverage
restrictions as barriers to low utilization of telehealth.
Medicaid, where covered services are determined by the state,
and DOD restrictions are less severe, but utilization is still
low. VA beneficiaries, including many in rural areas, use
telehealth services the most. A majority of states have parity
laws that require commercial health insurance companies to
cover telehealth services the same as in-person services. Many
stakeholders believe that commercial insurers are increasing
their coverage of telehealth services due to patient demand and
cost reductions.
CMS has granted waivers to several models and
demonstrations that have the potential to expand the use of
telehealth. Additionally, bipartisan legislation has been
introduced that, if enacted, would expand the use of telehealth
for Medicare beneficiaries by expanding the covered services
and the locations they can be offered and how providers are
reimbursed.
HEARING: ``EXAMINING THE SMALL BUSINESS LABOR MARKET''
On September 7, 2017, the Subcommittee on Economic Growth,
Tax, and Capital Access of the Committee on Small Business met
in Room 2360 of the Rayburn House Office Building for a hearing
titled ``Examining the Small Business Labor Market.'' The
hearing provided Committee Members with an opportunity to
understand recent trends in the labor market and how they
affect small businesses. This healing also examined how current
challenges locating and retaining employees with the proper
skills affect the ability of small businesses to operate and
expand in order to grow the American economy.
Witnesses on the panel were: Dr. Michael Farren, Research
Fellow, Mercatus Center, George Mason University, Arlington,
VA; Mr. Bruce Seilhammer, Electrical Construction Group
Manager, SECCO, Inc., Camp Hill, PA, testifying on behalf of
the Independent Electrical Contractors, Inc. (IEC); Mr. Carlos
Castro, President, Todos, Inc., Woodbridge, VA, testifying on
behalf of the National Grocers Association; and Mr. Gardner
Carrick, Vice President of Strategic Initiatives, The
Manufacturing Institute, Washington, DC.
The panel discussed the current skills gap in the labor
market and identified potential solutions to reduce the amount
of job vacancies in the United States. Dr. Farren analyzed the
size of the skills gap for the labor market and suggested
solutions such as tax incentives for employee training to
improve the skill set of American workers. Mr. Seilhammer noted
that although the median salary for an electrician was $52,720,
finding candidates to become electricians is harder than ever.
Mr. Castro mentioned several regulations that impede small
businesses' ability to find, hire, and retain employees,
including the health care insurance mandate and the United
States Department of Labor's joint employer standard. Mr.
Carrick outlined the challenges small manufacturers have in
finding employees. Based on demographic trends as well as
growth in the industry, he estimated that there will be roughly
2 million vacancies just in manufacturing by 2025.
HEARING: ``TECH TALKS: HOW SBA ENTREPRENEURIAL DEVELOPMENT PROGRAMS
HAVE EVOLVED WITH TECHNOLOGY''
On September 14, 2017, the Subcommittee on Health and
Technology met in Room 2360 of the Rayburn House Office
Building for a hearing titled, ``Tech Talks: How SBA
Entrepreneurial Development Programs Have Evolved with
Technology.'' This hearing provided Committee Members with the
opportunity to learn about the ways the Small Business
Administration's entrepreneurial development training programs
are adopting new technology.
Witnesses on the panel were: Ms. Marsha Bailey, Founder and
CEO, Women's Economic Ventures, Santa Barbara, CA, testifying
on behalf of the Association of Women's Business Centers; Mr.
Scott Daughetiy, State Director, North Carolina Small Business
Technology Development Centers, Raleigh, NC, testifying on
behalf of America's SBDC; Ms. Bridget Weston Pollack, Vice
President for Marketing and Communications, SCORE Association,
Herndon, VA; and Mr. Brenton Peacock, Associate Director,
Veterans Business Outreach Center, Gulf Coast State College,
Panama City, FL.
Chairman Radewagen emphasized the importance of small
businesses adopting technology to remain competitive in the
modern marketplace. Ms. Bailey briefly spoke to the overall
success of Women's Business Centers (WBC) before highlighting
the basic technological programs that are offered at most
centers across the country. She recognized the benefits that
distance learning can offer to women entrepreneurs without a
geographically accessible WBC.
Mr. Daugherty said he believes Small Business Development
Centers (SBDC) can grow their existing technological training
programs by offering increased counseling on the pressing
issues of cybersecurity and emerging high cost online lending
sites. Additionally, he discussed the successful information
sharing strategies employed by SBDCs and the benefits of
America's SBDC peer accreditation process. Ms. Weston Pollack
discussed the SCORE Associations' extensive use of technology,
both administratively and programmatically. This combination of
technology in both aspects of the SCORE Association has allowed
for the expansive distance learning resources available through
the national association's website and the communications based
technological resources available to SCORE's 10,000+ volunteer
mentors. Mr. Peacock highlighted the personalized approach
Veterans Business Outreach Centers provide to their veteran
clients, taking the skills learned in combat and translating
those to successful business strategies.
HEARING: ``HIGH-TECH AGRICULTURE: SMALL FIRMS ON THE FRONTIER OF
AGRIBUSINESS''
On October 5, 2017, the Subcommittee on Agriculture,
Energy, and Trade met in Room 2360 of the Rayburn House Office
Building for a hearing titled, ``High-Tech Agriculture: Small
Firms on the Frontier of Agribusiness.'' The hearing examined
the rapid development of the agricultural technology (agtech)
industry, and prioritized the role of small businesses and
small family farms.
Private sector participation in agtech is booming, largely
because public investment in agriculture R&D has declined while
private sector access to technological innovation and
commercialization has increased. The most important player in
the agtech industry, the farmer, is the most likely to be
ignored as these new technologies are developed. As a result,
their technology adoption has remained low.
Witnesses on the panel were: Lisa Benson, Ph.D., Director,
Rural Development, American Farm Bureau Federation (Farm
Bureau), Washington, DC; Mr. Kevin Heikes, Co-Founder and Chief
Operating Officer, IN10T, Lenexa, KS; Mark Kester, Ph.D., Chief
Scientific Officer, AgroSpheres, LLC, Charlottesville, VA; and
Mr. Joe Guthrie, Senior Instructor, Agricultural Technology
Program, College of Agriculture and Life Sciences, Virginia
Polytechnic Institute and State University, Blacksburg, VA.
The witnesses highlighted familiar small business themes
operating within the agtech industry, including: access to
capital, intellectual property, regulatory burden, the rural-
urban divide, data security, trade barriers, labor shortages,
and tax complexity. Dr. Benson said agtech firms dominate the
Farm Bureau's rural entrepreneurial development programs. The
Farm Bureau, in response to the need for capital, held an
Agriculture Investment Summit for entrepreneurs and potential
investors. Mr. Heikes addressed the need for collaboration
among agtech stakeholders. His company links farms and
agribusinesses interested in precision technologies. According
to Dr. Kester, linkages with local farmers, as well as access
to startup resources, are keys to AgroSpheres' success. Mr.
Guthrie provided an overview of precision agriculture, which
includes technologies for capturing, aggregating, and analyzing
data to optimize farm management.
HEARING: ``FOSTERING WOMEN'S ENTREPRENEURIAL SUCCESS''
On October 12, 2017, the Subcommittee on Health and
Technology met in Room 2360 of the Rayburn House Office
Building for a hearing titled ``Fostering Women's
Entrepreneurial Success.'' The hearing examined the current
state of women's entrepreneurship in the United States, while
highlighting both the challenges women entrepreneurs experience
and the existing resources available to support women-owned
small businesses.
Witnesses on our panel were: Ms. Janice Green, President
and CEO, Jancare Private Health Services, Inc., Fishkill, NY;
Ms. Antonella Pianalto, President and CEO, Association of
Women's Business Centers, Washington, DC; Ms. Hester Clark,
President, Hester Group, Jacksonville, FL; and Ms. Jeannette
King, President and CEO, Strategic Resolution Experts, Inc.,
Martinsburg, WV.
Opening the hearing, Chairman Radewagen highlighted the
immense growth women-owned businesses have experienced over the
last decade, while acknowledging women entrepreneurs' continued
challenge of accessing adequate funding. Ms. Green shared her
path to entrepreneurship, emphasizing the importance of the
resources available through her local Women's Business Center,
the Women Enterprise Development Center, Inc. Additionally, Ms.
Green noted the value of increased access to mentorship and
access to capital for developing women-owned small businesses.
Ms. Pianalto discussed the importance of Women's Business
Centers in providing their communities with the resources women
entrepreneurs' need, while noting the continued effort required
to increase access to capital. Ms. Clark described her business
experience, starting as an entrepreneur of necessity through
growing her business with the help of a number of SBA programs,
including WBCs, SBDCs, and SCORE. Sharing a personal
entrepreneurship experience, Ms. King emphasized both the
positive experiences and the challenges she faced while growing
her business with the help of the SBA. Ms. King focused on the
exceptional support she received from her local SBA office,
while acknowledging the difficulties that come with SBA's small
business certification paperwork.
HEARING: ``OVERSIGHT IMPROVEMENTS NEEDED: SBA OIG'S REVIEW OF THE
MICROLOAN PROGRAM''
On October 12, 2017, the Subcommittees on Investigations,
Oversight, and Regulations and Economic Growth, Tax, and
Capital Access met in Room 2360 of the Rayburn House Office
Building for the purpose of examining the Small Business
Administration (SBA) Office of Inspector General's (OIG) audit
report on the SBA Microloan Program. On September 28, 2017, the
SBA OIG released an audit of the microloan program. The OIG
sought to determine: (1) whether SBA effectively implemented
actions--specifically OIG's recommendations from the 2009 audit
report--to improve program oversight; and (2) the extent that
SBA oversight was sufficient to measure program integrity. The
OIG determined SBA fell short on both counts.
The witnesses for the hearing were: Mr. Hannibal ``Mike''
Ware, Acting Inspector General, Office of Inspector General,
Small Business Administration, Washington, DC; and Mr. William
Manger, Associate Administrator, Office of Capital Access,
Small Business Administration, Washington, DC.
Mr. Ware testified that SBA did not effectively implement
all of the OIG's prior recommendations and that SBA did not
conduct adequate program oversight to measure program
performance and ensure program integrity. The OIG examined 52
microloan files--a statistical sample--and found several
discrepancies, errors, and/or insufficient data pursuant to
SBA's requirements. Mr. Ware stated that the internal control
weaknesses were due to SBA not having an overall site visit
plan, an adequate information system, available funding for
system improvements, or clear standard operating procedures. He
also said SBA management is focused on output based performance
measures instead of outcome measures.
To help it focus on output-based performance measures, Mr.
Ware stated that SBA needs to improve its IT system so it can
make program wide-type decisions. In fact, he said the OIG was
surprised that technical capabilities were not in place to
measure performance. After the OIG's 2009 audit, SBA had a
contract to make the necessary improvements and provided
screenshots to the OIG. Mr. Manger testified that SBA is
funding an evaluation to identify the best system to capture
all of the information that it needs.
Mr. Ware also testified that the intermediaries did not
have sufficient documentation to support that it originated and
closed 85 percent of the loans in accordance with SBA's
requirements. As a result, SBA's ability to validate microloan
data, conduct analyses across multiple programs and systems,
and capture outcome-based measures was impaired.
Mr. Ware offered four recommendations to SBA to improve
SBA's oversight of the Microloan program. Mr. Manger agreed
with the OIG's recommendations. He said that he recognized that
he needs to drive those changes home, and views the OIG's
report as a road map of how to strengthen the program.
HEARING: ``GAO AUDIT REVEALS HALF-MEASURES TAKEN BY SMALL BUSINESS
ADVOCATES''
On October 25, 2017, the Subcommittee on Contracting and
Workforce of the Committee on Small Business met in Room 2360
of the Rayburn House Office Building for a hearing titled ``GAO
Audit Reveals Half-Measures Taken by Small Business
Advocates.'' This hearing examined the results of a
comprehensive audit conducted by the Government Accountability
Office (GAO) on the Offices of Small and Disadvantaged Business
Utilization's (OSDBU) compliance with select Small Business Act
section 15(k) requirements. GAO assessed 24 federal agencies,
civilian and military, and found varying levels of
noncompliance. These section 15(k) requirements are critical to
ensuring OSDBUs can effectively advocate for small businesses
in the federal contracting arena. The Committee examined
requirements that indicated higher levels of noncompliance and
looked at the differences between larger and smaller
contracting agencies abilities to meet their statutory
responsibilities. The Committee also explored GAO's findings
regarding its review of the results of the Small Business
Procurement Advisory Council's (SBPAC) annual review of OSDBU
compliance.
The witnesses for the hearing were: Mr. William Shear,
Director of Financial Markets and Community Investment,
Government Accountability Office, Washington, DC; Mr. Robb
Wong, Associate Administrator, Office of Government Contracting
and Business Development, Small Business Administration,
Washington, DC; and Mr. Kevin Boshears, Director, Office of
Small and Disadvantaged Business Utilization, Department of
Homeland Security, Washington, DC.
Mr. Shear discussed the GAO report findings and highlighted
the fact that OSDBU noncompliance with any of the section 15(k)
requirements is noteworthy and further oversight action is
needed to ensure agencies strive to comply. Mr. Wong stated
that while the SBA leads the SBPAC, it views its role as a
collaborator, helping the OSDBUs share best practices and
encouraging compliance with the section 15(k) requirements. Mr.
Boshears shared examples of the importance of the OSDBU at DHS
and his role in relation to other senior-level procurement
officials and agency leaders, to ensure that small businesses
are given the maximum opportunities to contract with the
Department of Homeland Security.
HEARING: ``FINANCING THROUGH FINTECH: ONLINE LENDING'S ROLE IN
IMPROVING SMALL BUSINESS CAPITAL ACCESS''
On October 26, 2017, the Subcommittee on Economic Growth,
Tax, and Capital Access of the Committee on Small Business met
in Room 2360 of the Rayburn House Office Building for a hearing
titled ``Financing Through Fintech: Online Lending's Role in
Improving Small Business Capital Access.'' The hearing provided
Subcommittee Members with an opportunity to examine recent
trends in how small businesses obtain capital, the different
business models in the industry, and how online lending fits
into the overall lending landscape.
Witnesses on the panel were: Mr. William Phelan, President
and Co-Founder, PayNet, Inc., Skokie, IL; Ms. Katherine Fisher,
Partner, Hudson Cook, Hanover, MD; and Mr. Trevor Dryer, CEO,
Mirador, Portland, OR.
The panel discussed the scale and scope of the online
lending industry and how the industry helps improve small
business access to capital. Mr. Phelan mentioned that the
industry is partly a result of the credit gap that exists
because of burdensome regulations on traditional financial
institutions. He expects the industry to grow by 47 percent by
2020, in large part because online lenders have excelled at
lowering the cost of credit applications to small businesses.
Ms. Fisher outlined the landscape of financing options
available to small businesses, mentioning the difference
between traditional lending, fintech lending, and factoring.
She also discussed how regulations currently in place are
sufficient to protect small businesses. Mr. Dryer explained how
technology can reduce search costs for both borrowers and
lenders in order to bridge small business credit.
HEARING: ``OPERATING OR RULEMAKING? A REVIEW OF SBA'S OPAQUE STANDARD
OPERATING PROCEDURE PROCESS''
On November 2, 2017, the Committee on Small Business
Subcommittee on Investigations, Oversight, and Regulations met
in Room 2360 of the Rayburn House Office Building for a hearing
titled ``Operating or Rulemaking? A Review of SBA's Opaque
Standard Operating Procedure Process.'' The hearing examined
the Small Business Administration's (SBA) standard operating
procedures (SOP) process.
The witness for the hearing was: Mr. Joseph Loddo, Chief
Operating Officer, Small Business Administration, Washington,
DC.
In his testimony, Mr. Loddo stated that SOPs are used to
issue agency policy, the procedures for carrying out agency
policy, and the assignment of responsibility for duties. He
also stated that SOPs are official written communications that
initiate or govern action, conduct procedure or policy, or
relay information to multiple parties, both inside or outside
SBA. As essential guiding documents at SBA, SOPs serve as the
policies and procedures for both customer facing and internal
operations, and they all are approved and signed by the
Administrator.
Mr. Loddo also discussed a FY2015 Government Accountability
Office (GAO) report that recommended SBA set time frames for
periodically updating and reviewing SOPs. GAO also found that a
number of SOPs were outdated and needed to be revised. Mr.
Loddo testified that SBA program offices have undertaken a
complete review of all SOPs and ensured that all would be
updated in a timely fashion.
HEARING: ``INVESTING IN SMALL BUSINESSES: THE SBIC PROGRAM''
On November 7, 2017, the Subcommittee on Agriculture,
Energy, and Trade of the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a heating
titled ``Investing in Small Businesses: The SBIC Program.'' The
hearing examined the United States Small Business
Administration's (SBA) Small Business Investment Company (SBIC)
Program and provided Members of the Subcommittee an opportunity
to hear directly from program participants on how it impacts
small businesses in communities around the nation. Created in
the 1958 Small Business Investment Act, the SBIC Program
utilizes a private equity financing model to increase the
availability of long-term capital. SBICs are for-profit
enterprises that manage investment funds, but are licensed and
regulated by the SBA. Unique to the program, SBICs invest in
small businesses by leveraging private dollars with federal
dollars through a multistage process. SBICs do not directly
borrow federal money; rather, they raise private capital and
then apply for an SBIC license, which allows them to leverage
federal government funds.
The witnesses for the hearing were: Mr. Brett Palmer,
President, Small Business Investor Alliance (SBIA), Washington,
DC; Mr. Thies Kolln, Partner, AAVIN Private Equity, Cedar
Rapids, IA; Mr. Michael Painter, Managing Partner, Plexus
Capital, Raleigh NC; and Mr. Mark Walsh, Managing Director,
Ruxton Ventures, Chevy Chase, MD.
The private sector witness panel discussed the details of
the SBIC Program and how SBA oversees and licenses individual
SBICs. As head of the SBIA, the leading SBIC trade association,
Mr. Palmer provided a high-level overview of the program. As a
member of an SBIC in Cedar Rapids, Iowa, Mr. Kolln spoke
extensively about the rural/urban divide that is apparent in
private equity and the SBIC Program. Mr. Painter spoke about
the role SBA plays in the program and its intended regulatory
authority. As a former Associate Administrator in charge of
SBA's SBIC Program during the Obama administration, Mr. Walsh
shared how SBA's licensing process could be enhanced. He also
discussed the paperwork burden associated with the program.
HEARING: ``BRIDGING THE ENTREPRENEURIAL GAP: ADDRESSING BARRIERS TO
SMALL BUSINESS FORMATION AND GROWTH''
On December 11, 2017, the Subcommittee on Agriculture,
Energy, and Trade of the Committee on Small Business met in
Room 209 of the Village of Deerfield Hall, 850 Waukegan Road,
Deerfield, IL for a field hearing titled ``Bridging the
Entrepreneurial Gap: Addressing Barriers to Small Business
Formation and Growth.'' This hearing examined federal
regulations that inhibit entrepreneurs and provided
subcommittee Members with an opportunity to learn about the
current barriers to entrepreneurship. It also addressed
potential solutions to these challenges and methods utilized by
entrepreneurs to achieve prosperity, such as capitalizing on
emerging industries and fostering innovation.
Witnesses on the panel were: Mr. Steven Whittington,
Founder and Chief Executive Officer, LifeWorking Enterprise,
LLC, Lake Forest, IL; Ms. Meg Barnhart, Founder and Co-Creator,
The Zen of Slow Cooking, Lake Forest, IL; Mr. David Borris,
Owner, Hel's Kitchen Catering, Northbrook, IL; and Ms. Cheryl
Besenjak, Partner, Grow Well Farms, LLC, Hoffman Estates, IL.
The panel discussed starting their businesses and some of
the obstacles to expansion. Mr. Whittington testified about
starting LifeWorking Coworking, a shared community workplace
venue. To improve business conditions for small businesses and
entrepreneurs, Mr. Whittington supports minimizing regulatory
burdens, enhancing public-private partnerships, and improving
avenues for small businesses to obtain capital. Ms. Barnhart
discussed taking her passion for crockpot cooking and making a
business selling crockpot spice blends. However, she explained
that compliance with FDA labeling regulations can be expensive
and burdensome when bringing new products to the market. Mr.
Borris shared his story as a homemade food store owner for over
30 years, and testified that increasing consumer demand is his
greatest hurdle. Ms. Besenjak said that while she has been able
to receive grants from local large businesses for her indoor
farming business, she believes resources from the Small
Business Administration and the United States Department of
Agriculture are too intimidating for a small business owner to
navigate.
HEARING: ``ENGAGING ENERGY: SMALL BUSINESS RESOURCES AT THE DEPARTMENT
OF ENERGY''
On January 18, 2018, the Subcommittee on Agriculture,
Energy, and Trade met in Room 2360 of the Rayburn House Office
Building for a hearing titled ``Engaging Energy: Small Business
Resources at the Department of Energy.'' The subcommittee
examined the resources available to small businesses in the
energy sector through the Department of Energy (DOE). The
hearing analyzed the degree to which these programs are
effective at minimizing confusion regarding participation in
the federal contracting process and department-specific small
business programs.
The witness was Mr. Charles R. Smith, Director, Office of
Small and Disadvantaged Business Utilization, United States
Department of Energy, Washington, DC.
Subcommittee Chairman Rod Blum highlighted the importance
of small businesses competing in the DOE's federal contracting
process and the energy industry overall. Director Smith also
discussed a number of Department programs designed to assist
small businesses in the energy industry with development and
commercialization issues, including the Office of Energy
Efficiency and Renewable Energy's Small Business Vouchers
program and the Office of Nuclear Energy's Gateway for
Accelerated Innovation in Nuclear program. Additionally,
Director Smith explained DOE's federal contracting process,
DOE's Office of Small and Disadvantaged Business Utilization's
(OSDBU) resources that are available to existing or potential
federal contractors, and the Department's current prime small
business contracting goals. Chairman Blum said he is concerned
that the DOE is currently well under their small business
subcategory contracting goals and questioned Director Smith
about the OSDBU's plan to address this deficiency. He requested
that the Director provide that plan to the Committee within 60
days.
HEARING: ``RESTORING RURAL AMERICA: HOW AGRITECH IS REVITALIZING THE
HEARTLAND''
On February 15, 2018, the Subcommittee on Agriculture,
Energy, and Trade of the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled, ``Restoring Rural America: How Agritech is Revitalizing
the Heartland.'' The hearing continued the Committee's
examination of the rapidly developing agricultural technology
(agritech) industry In October 2017, the Subcommittee hearing
titled, ``High-Tech Agriculture: Small Firms on the Frontier of
Agribusiness,'' highlighted the role of small businesses and
the perspective of small family farmers. At this hearing,
Subcommittee Members heard from institutions driving agritech
entrepreneurship and innovation activity, which has spurred
rural revitalization.
On April 25, 2017 President Trump issued Executive Order
13790, Promoting Agriculture and Rural Prosperity in America,
which established the Interagency Task Force on Agriculture and
Rural Prosperity. There are a variety of agritech industry
development initiatives that can serve as models for the Task
Force. Cities, states, and regions are developing business-
friendly environments tailored to attract and retain the
agritech industry as a catalyst for community revitalization.
Agritech initiatives have emerged in traditional agricultural
areas such as Des Moines, Cedar Rapids, St. Louis, Durham,
Fargo, Memphis, and Salinas. The heartland has the ingredients
for technological innovation and prosperous communities, and it
is now focused on offering resources to support entrepreneurial
development in the region.
Witnesses on the panel were: Mr. Kevin Kimle, Director,
Agricultural Entrepreneurship Initiative, Iowa State
University, Ames, IA; Mr. Sam J. Fiorello, Chief Operating
Officer, Donald Danforth Plant Science Center, St. Louis, MO;
Mr. Pete Nelson, President, AgLaunch, and Vice President, Ag
Innovation, Memphis Bioworks Foundation, Memphis, TN; and
Michael Fernandez, Ph.D., Senior Fellow, Food Institute, George
Washington University, Washington, DC.
The panel discussed how diverse stakeholders in the
agritech industry are working together to attract startup
activity to the heartland. Mr. Kimle explained how his program,
the Agricultural Entrepreneurship Initiative, capitalize on the
research and development capacity of the ISU's Research Park to
train and retain graduates, enhance partnerships with industry
leaders, and attract talent to the area. Similarly, Mr.
Fiorello highlighted the Danforth Center's role in reversing
brain drain, attracting investment, and improving local
farmers' adoption of new technologies. Mr. Nelson described how
his team at Memphis Bioworks has implemented agritech
development efforts on a much larger scale in the five state
Delta Region. Mr. Fernandez, the minority witness, echoed the
rest of the panel about the industry driving rural
revitalization, and expressed the need for speedy regulatory
reforms to match rapid innovation.
Chairman Blum's questions focused on funding opportunities
for agritech startups in the Midwest, and the panel explained
that regional or industry specific venture firms would have a
greater impact than traditional technology venture firms that
are not familiar with the agriculture world. Rep. Schneider and
Rep. Radewagen asked about broadband and telecommunications
access, and the panel agreed that broadband access is the
keystone of rural revitalization. Rep. Curtis mentioned the
need for rural broadband within federal infrastructure
permitting reform. Rep. King and Rep. Comer stated the
importance of agricultural strength in their districts and
discussed the variety of impacts the agritech industry has made
in their communities.
HEARING: ``OCCUPATIONAL HAZARDS: HOW EXCESSIVE LICENSING HURTS SMALL
BUSINESS''
On February 27, 2018 the Subcommittee on Economic Growth,
Tax, and Capital Access of the Committee on Small Business met
in Room 2360 of the Rayburn House Office Building for a hearing
titled ``Occupational Hazards: How Excessive Licensing Hurts
Small Business.'' This hearing examined how easing occupational
licensing barriers could reduce workforce gaps and regulatory
costs for small businesses.
Witnesses on the panel were: Mr. C. Jarrett Dieterle,
Senior Fellow, R Street Institute, Washington, DC; Mr. Keith
Hall, President and Chief Executive Officer, National
Association for the Self-Employed, Annapolis Junction, MD; Mr.
Frank Zona, Owner, Zona Salons, Norwell, MA, testifying on
behalf of the Professional Beauty Association; and Morris
Kleiner, Ph.D., Professor, Humphrey School of Public Affairs,
University of Minnesota, Minneapolis, MN.
The panel outlined how occupational licensing affects small
businesses in a variety of industries and gave examples of ways
the federal government can help to alleviate this burden. Mr.
Dieterle explained how H.R. 6312, Alternatives to Licensing
that Lower Obstacles to Work Act of 2016, would provide a model
for states to follow that would decrease licensing burdens. He
also stated that H.R. 3446, Restoring Board Immunity Act of
2017, would provide incentives to state boards to review
licensing requirements. Mr. Hall discussed how excessive
licensing affects self-employed businesses. Specifically, he
stated that in a snapshot poll of his association's membership,
68 percent of business owners report that licensing hinders
their ability to operate their small business. Mr. Zona
explained how licensing affects his small salon, and how there
is a difficult balance that needs to be struck between finding
workers during periods of low unemployment, and ensuring that
workers have the proper training and experience. Dr. Kleiner
shared many of the negative effects of occupational licensing,
such as higher prices and job vacancies. He also provided
evidence of how licensing barriers lead to decreased interstate
mobility.
HEARING: ``DISCONNECTED: RURAL BROADBAND AND THE BUSINESS CASE FOR
SMALL CARRIERS''
On March 6, 2018, the Subcommittees on Health and
Technology, and Agriculture, Energy, and Trade of the Committee
on Small Business met in Room 2360 of the Rayburn House Office
Building for a hearing titled ``Disconnected: Rural Broadband
and the Business Case for Small Carriers.'' This hearing
examined the disparities between large, nationwide carriers and
small, rural carriers that contribute to the urban and rural
digital divide. Rural communities depend on small carriers to
provide internet and telecommunications service, where
nationwide providers may choose not to deploy broadband, or
provide inadequate service. Deploying broadband in these high-
cost areas requires a significant investment in capital, time,
and resources. The cost of investment, coupled with challenges
unique to small, rural carriers in offsetting costs, creates
barriers to competition and sustainability for small and rural
carriers in the mobile wireless marketplace. This hearing
identified challenges inherent in the current regulatory and
operational scheme that limit the ability of small carriers to
deploy broadband in rural America.
The witnesses for the hearing were: Ms. Erin Fitzgerald,
Regulatory Counsel, Rural Wireless Association Inc.,
Washington, DC.; Mr. Tim Donovan, Senior Vice President of
Legislative Affairs, Competitive Carriers Association,
Washington, DC.; Mr. Paul Carliner, Co-Founder, Bloosurf, LLC.,
Salisbury, MD.; and Mr. Denick Owens, Vice President of
Government Affairs, Western Telecommunications Alliance,
Washington, DC.
Ms. Fitzgerald highlighted the difficulty small carriers
face obtaining licenses for spectrum when the geographical area
of the license is too large and therefore unattainable or
unmaintainable for small caniers. Mr. Donovan spoke about the
need to ensure the Universal Service Fund is fully supported
and said it is crucial that funding is stable since these
resources play a critical role helping small carriers offset
the high cost of broadband deployment in rural areas. Mr.
Carliner discussed how some of the financial eligibility
requirements the Federal Communications Commission (FCC)
imposes can be overly restrictive for small providers. Mr.
Owens expressed concerns that repmting requirements imposed by
the FCC can be disproportionately burdensome for small caniers
who must expend valuable time and limited capital in order to
remain compliant.
HEARING: ``WORKFORCE DEVELOPMENT: ADVANCING APPRENTICESHIPS FOR SMALL
BUSINESS''
On Tuesday, March 20, 2018 at 2:00 p.m., the Committee on
Small Business Subcommittee on Contracting and Workforce met in
Room 2360 of the Raybum House Office Building to examine small
business participation in apprenticeship programs. This hearing
continued the Committee's exploration of strategies to mitigate
small business workforce challenges caused by the skills gap.
This hearing examined apprenticeship initiatives, specifically
the Department of Labor (DOL) Registered Apprenticeship (RA)
Program, which combines on-the-job learning and related
technical instruction.
The growing cost of higher education, coupled with lost
revenue caused by the skills gap, has increased demand for
apprenticeships from both workforce and industry. Industries
with the most active apprenticeships are: construction,
military, public administration, manufactuting, and
transportation. In 2017, the Department of Labor reported
533,607 active Registered Apprentices and 22,488 active RA
programs.
On February 15, 2017, President Trump issued Executive
Order (EO) 13801, ``Expanding Apprenticeships in America.'' The
EO called for federal agencies to promote apprenticeships,
review existing workforce development programs, and better
integrate industry needs. Specific directives included:
establishment of the Task Force on Apprenticeship Expansion;
cross-agency promotion and expanded opportunities for target
populations and occupations; and official recognition for
industry-recognized programs verified by third parties.
Witnesses on the panel were: Ms. Tammy Simmons, Vice
President, Human Resources and Marketing, Machine Specialties,
Inc., Whitsett, NC; Mr. Jeffrey Forrest, Vice President,
Economic and Workforce Development, College of the Canyons,
Santa Clarita, CA; Ms. Jeannine Kunz, Vice President, Tooling
U-SME, Cleveland, OH; and Mr. Jeff Mazur, Executive Director,
LaunchCode, St. Louis, MO.
The panel testified about small business participation in
the RA system and highlighted their role in administering
programs and collaborating with resource partners. Ms. Simmons
described her journey from apprenticeship skeptic to enthusiast
due to the positive impact apprentices have made on her
family's small manufacturing finn. As a regional workforce
development leader, Mr. Forrest explained the obstacles small
businesses face in recruiting and training employees and the
solutions available within the RA system. Ms. Kunz echoed many
of the observations presented by Mr. Forrest, and provided
greater detail on how small firms have utilized RA within the
manufacturing industry. Mr. Mazur explained how the software
industry has transformed the traditional skilled trades RA
model to meet the needs of technology startups.
Chairman Knight, Ranking Member Murphy, and SBC Chairman
Chabot probed the social biases that discourage students from
pursuing opportunities in the skilled trades. Witnesses
recommended outreach in schools, especially elementary and
middle schools, to show students a variety of industries,
skills, and employment pathways. From that foundation, the
witnesses supported outreach initiatives, such as industry days
and business visits, for older students that are looking for a
profession that is high tech, well-respected, and high paying.
Each witness stressed the importance of strong patinerships not
only to implement effective RA programs but also encourage
greater small business participation.
HEARING: ``COMMUNITY SUPPORT: ENTREPRENEURIAL DEVELOPMENT AND BEYOND''
On Thursday, April 12, 2018 at 11:00 A.M., the Committee on
Small Business Subcommittee on Investigations, Oversight, and
Regulations met in Room 2360 of the Rayburn House Office
Building for the purpose of examining the role small businesses
play in creating thriving communities. The hearing also
highlighted the ways in which community support is impmiant to
the success of small businesses. The discussion focused on
existing resources available to support the relationship
between small businesses and communities, and explored areas
for resource expansion.
The witnesses for the hearing were: Mr. Ara Bagdasarian,
CEO, Omnilert LLC, Leesburg, VA, testifying on behalf of
America's SBDC; Mr. Derrick Braziel, Founding Partner and
Managing Director, MORTAR Cincinnati, Cincinnati, OH,
testifying on behalf of SCORE; Ms. Stephanie Carter, President,
SCB Management Consulting, Upper Marlboro, MD, testifying on
behalf of the Association of Women's Business Centers; and Ms.
Tamara Bryant, Director, Veterans Business Outreach Center at
Fayetteville State University, Fayetteville, NC.
Chairman Kelly began the hearing by highlighting the
importance of the relationship between communities and small
businesses. This relationship is complex and reciprocal,
requiring effort and support from both parties to achieve
collective success. Mr. Bagdasarian discussed his experience in
working to create an entrepreneurial ecosystem within his local
community, emphasizing the important role the local Small
Business Development Center played in providing entrepreneurs
with the support they need to succeed. Mr. Braziel noted the
community growth that has resulted from MORTAR's partnership
with SCORE. This partnership is credited for not only providing
Cincinnati's entrepreneurs with skilled mentors, but also
bringing together people of differing generations and
backgrounds. Similarly, Ms. Carter commented that the
connections she gained through participation in her local
Women's Business Center has provided her with both a supportive
community as well as a pool of potential business partners. Ms.
Bryant spoke to the importance of community when working with
returning veterans and their families as a way of translating
expert military skills to the skills needed when starting or
growing a small business. Due to the limited number of Veterans
Business Outreach Centers, they rely not only on their internal
community to assist veterans, but also the larger Small
Business Administration's Entrepreneurial Development
community.
HEARING: ``SMALL BUSINESS RETIREMENT PLANS AND THE IRS' EMPLOYEE PLANS
FEE CHANGE.''
On Tuesday, April 17, 2018 at 10:00 a.m., the Subcommittee
on Economic Growth, Tax, and Capital Access of the Committee on
Small Business met in Room 2360 of the Rayburn House Office
Building for a hearing titled ``Small Business Retirement Plans
and the IRS' Employee Plans Fee Change.'' The purpose of the
hearing was to examine the importance of retirement plans for
small businesses and the recent employee plans fee change by
the Internal Revenue Service (IRS). The hearing provided
Members of the Committee the opportunity to hear directly from
the IRS regarding retirement plans and this fee change.
The witness for the hearing was: Ms. Sunita Lough, Project
Director, Tax Reform Implementation Office, Internal Revenue
Service, Washington, DC.
Ms. Lough, who is currently leading the implementation of
the tax reform law at the IRS, officially directs the Tax
Exempt and Government Entities division at the IRS. This office
oversees employee plans and their tax implications. Due to the
complexity of the IRS reporting requirements for retirement
plans, the IRS offers a set of compliance tools to reduce
burdens on businesses. Plan holders have the option of
utilizing the Self-Correction Program (SCP), the Voluntary
Correction Program (VCP), or the Audit Closing Agreement
Program. To utilize many of these tools, the IRS charges a user
fee to the plan holder. In January of 2018, the IRS amended its
user fee schedule that corresponds to its VCP tool. The user
fee schedule went from containing six user fees based on the
number of participants in a retirement plan to three user fees
based on a plans' asset size. With the lowest fee increasing
from $500 to $1,500, the Committee was concerned small
businesses would be burdened the most by this change. In
prepared testimony, Ms. Lough reported the fee change was made
based on the ``average time spent and complexity of each
case''. Responding to questions by Subcommittee Chairman Dave
Brat, Ms. Lough committed to streamlining the VCP process.
Additionally, Ms. Lough committed to increasing the utilization
of the SCP tool. The Committee intends to continue to track all
issues pertaining to small businesses offering retirement
plans.
HEARING: ``NO MAN'S LAND: MIDDLE-MARKET CHALLENGES FOR SMALL BUSINESS
GRADUATES''
On April 26, 2018 the Subcommittee on Contracting and
Workforce of the Committee on Small Business met in Room 2360
of the Rayburn House Office Building for a hearing titled ``No
Man's Land: Middle-Market Challenges for Small Business
Graduates.'' The hearing examined the challenges to growth and
success for businesses as they grow out of their small size
status.
As the gap between small and large contractors continues to
widen, the ability of a newly-graduated small business to
successfully navigate the middle market becomes an increasingly
challenging prospect. Businesses that exceed their small size
status are often faced with limited options, most commonly, to
either sell their company or acquire others, focus primarily on
subcontracting opportunities which inhibits growth, or to
deliberately limit their opportunities in order to remain
small. None of these options meet the goals that the Small
Business Administration's small business programs set out to
achieve, which is to promote the growth and success of small
businesses in order to increase competition and create a
healthy industrial base. Challenges facing these newly-
graduated firms or mid-size firms include the lack of empirical
data tracking the success of graduated small businesses, the
increasingly stiff competition mid-size companies face as they
compete against firms many times their size, additional
burdensome requirements that trigger once they transition from
small to other-than-small, and the changing procurement
landscape resulting in larger contracts and more complex
requirements. Because of these issues, many newly graduated
firms may decide to leave the federal marketplace which reduces
competition and increases prices for the agency and taxpayer.
Witnesses on the panel were: Mr. Stephen Ramaley,
Associate, Miles & Stockbridge in McLean, VA, testifying on
behalf of the Montgomery County Chamber of Commerce; Ms. Lisa
Firestone, President & Chief Executive Officer of Managed Care
Advisors in Bethesda, MD, testifying on behalf of Women
Impacting Public Policy; Mr. Mehul Sanghani, Chief Executive
Officer, Octo Consulting Group, Reston, VA; and Ms. Eminence
Griffin, Counsel and Director of Federal Procurement and
Information Technology Alliance for Public Sector, Information
Technology Industry Council, Washington DC.
At the hearing, Mr. Ramaley presented several legislative
options changing the formula in which the Small Business
Administration (SBA) calculates size, which would extend the
runway for small businesses reaching the upper limits of their
size threshold. Ms. Firestone provided her own experiences as a
small business owner on the cusp of losing her small size
status. Mr. Sanghani also provided his experiences as a mid-
size business owner and provided legislative solutions that
impact how contracting officers make contract awards. Ms.
Griffin voiced concerns over the SBA's use of the North
American Industry Classification System (NAICS) code as the
primary classification source for the SBA's size standards.
HEARING: ``TRAVEL AND TOURISM: A SMALL BUSINESS ANGLE''
On May 8, 2018 the Subcommittee on Economic Growth, Tax,
and Capital Access of the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Travel and Tourism: A Small Business Angle.'' This
hearing examined the economic impact of the travel and tourism
industries, how small businesses contribute to these
industries, and how travel and tourism can continue to
positively affect the United States economy.
Witnesses on the panel were: Ms. Rita McClenny, President
and CEO, Virginia Tourism Corporation, Richmond, VA; Mr. Steve
Shur, President, Travel Tech, Arlington, VA; Mr. Cam
Brensinger, Founder and CEO, NEMO Equipment, Inc., Dover, NH,
testifying on behalf of the Outdoor Industry Association; and
Ms. Jagruti Panwala, President and CEO, Wealth Protection
Strategies, Bensalem, PA, testifying on behalf of the Asian
American Hotel Owners Association.
The panel discussed the economic effects of the travel and
tourism industries and issues currently confronting them. Ms.
McClenny testified about the economic impact of travel and
tourism small businesses in the state of Virginia and the
United States. She stated that there are an estimated 14,000
leisure and hospitality businesses in the state of Virginia
with less than 20 employees. Mr. Shur described how small and
independent lodging businesses can utilize technology to find
new customers. In addition to bookings through online travel
sites, Mr. Shur cited a study by Cornell University that said
with a listing on an online travel site, small hotels and bed
and breakfasts can see a 9 percent increase in direct booking.
Mr. Brensinger discussed his decision to start his own outdoor
equipment company and how outdoor recreation has significantly
shaped the American economy. Ms. Panwala said the decline in
international visitors has been detrimental to the hotel
industry and that tax reform has positively affected it.
HEARING: ``HOTLINE TRUTHS II: AUDIT REVEAL INCONSISTENCIES IN DEFENSE
SUBCONTRACTING''
On May 17, 2018 the Subcommittee on Contracting and
Workforce of the Committee on Small Business met in Room 2360
of the Rayburn House Office Building for a hearing titled
``Hotline Truths II: Audit Reveals Inconsistencies in Defense
Subcontracting.'' The hearing examined an audit published by
the Department of Defense Inspector General (DODIG) that probed
the Department of the Army's administration of their Small
Business Act requirements.
To identify waste, fraud, and abuse in federal contracting,
the DODIG reviewed contracting activities for compliance with
the Small Business Act. Specifically, this latest report issued
in March 2018 examined two Army Contracting Command (ACC)
units, ACC-Redstone and ACC-Warren. For approximately half of
the contracts sampled, the DODIG found significant failures in
these units holding prime contractors accountable for meeting
their subcontracting goals and for conducting basic-level
administration activities regarding prime contractor's
subcontracting plans. This resulted in a denial of
approximately $915 million in subcontracting dollars to small
businesses. Six contracts, valued at $330.7 million, were
awarded without a subcontracting plan or a determination that a
subcontracting plan was not needed. Eleven contracts, valued at
$480 million, were not monitored post-award for prime
contractors' compliance with their negotiated subcontracting
plans. Five contracts, valued at $81.6 million, did not receive
any follow-up investigation with prime contractors that failed
to meet their subcontracting goals. One contract, valued at
$22.1 million, had an accepted individual subcontracting report
that misrepresented the amount of subcontract awards made by
the prime contractor. Additionally, the ACC units missed
opportunities to recoup liquidated damages of up to $82.3
million. The DODIG found that the main reasons for these
findings stemmed from a lack of training and standard operating
procedures from the Army on the administration of
subcontracting plans. Existing training focused heavily on the
pre-award process, with little guidance relating to post-award
responsibilities. The DODIG also found contracting officers did
not view subcontracting as a high priority, and high turnover
rates coupled with a lack of transition planning also
contributed to these findings.
Witnesses on the panel were: Mr. Michael Roark, Assistant
Inspector General of the Department of Defense, Alexandria, VA;
Mr. Tommy Marks, Director of the Army Office of Small Business
Programs of the Department of Defense, Washington, DC; and Ms.
Tiffany Scroggs, President of the Association of Procurement
Technical Assistance Centers, Washington, DC.
At the hearing, Mr. Roark presented his offices' findings
audit and also described the recommendations made by the DODIG
to the Army. Mr. Marks acknowledged his office's role in the
issues found by the DODIG and said his office will make
subcontracting a priority and close the DODIG's recommendations
as swiftly as possible. Ms. Scroggs presented the small
business perspective, stating that these findings are not
unique to the Army or the Department of Defense, but can be
seen across the federal government in both military and
civilian agencies.
HEARING: ``VETS FIRST? AN EXAMINATION OF VA'S RESOURCES FOR VETERAN-
OWNED SMALL BUSINESSES''
On June 7, 2018, the Committee on Small Business
Subcommittee on Investigations, Oversight, and Regulations met
in Room 2360 of the Rayburn House Office Building for a hearing
titled ``Vets First? An Examination of VA's Resources for
Veteran-Owned Small Businesses.'' This hearing examined the
resources for veteran-owned (VOSBs) and service-disabled
veteran-owned small businesses (SDVOSBs) at the Department of
Veterans Affairs (VA). Specifically, the hearing considered the
Veterans First Contracting Program (Vets First) and recently
proposed changes for procuring medical supplies.
The VA has many tools at its disposal to ensure that VOSBs
and SDVOSBs are able to succeed in the American economy. One of
these tools is Vets First, which was created by Congress in the
Veterans Benefits, Health Care, and Information Technology Act
of 2006. The Vets First program was designed to maximize the
participation of VOSBs and SDVOSBs in the federal marketplace
by providing the VA with contracting flexibilities for veteran
small businesses to assist them in doing business with the VA.
However, while Vets First was designed to assist the veteran
small business community, the VA has not consistently carried
out the intentions of Congress in practice. Rather than using
the law to increase VOSB and SDVOSB participation, the VA has
attempted to restrict its own sole source authority by adopting
rules and policies that increase barriers to its use.
The witnesses on the panel were: Mr. Scott Denniston,
Executive Director, National Veterans Small Business Coalition,
Centreville, VA; Mr. Bob Taylor, Chief Executive Officer,
Alliant Healthcare Products, Grand Rapids, MI; Ms. Cheryl
Nilsson, Chief Executive Officer, First Nation Group, LLC,
Niceville, FL; and Mr. Davy Leghorn, Assistant Director, The
American Legion, Washington, DC.
Chairman Kelly discussed some of the challenges that
veteran entrepreneurs face due to their backgrounds of service.
He also explained how Vets First seeks to help VOSBs and
SDVOSBs succeed in the federal marketplace, while also noting
that the VA does not use the program to its full potential. Mr.
Denniston testimony discussed in more detail how VA has failed
to follow Congressional intent in implementing Vets First,
especially in its recent restructuring of the VA's Medical-
Surgical Prime Vendor-Next Generation Program (MSPV). He also
discussed how this negatively affects many VOSBs and SDVOSBs,
potentially driving them away from the federal market or
undermining their business entirely. Mr. Taylor shared the
perspective of a SDVOSB, discussing the value that his company
brings to its business with the VA. He also debated some of the
common misconceptions that federal agencies often hold against
SDVOSBs. Ms. Nilsson, another SDVOSB owner, spoke about the
positive outcomes her business provides for veteran patients
that larger businesses caru1ot match. Mr. Leghorn proposed
alterative routes that the VA could take instead of continuing
on with its planned restructuring of MSPV.
HEARING: ``SHRINKING THE SKILLS GAP: SOLUTIONS TO THE SMALL BUSINESS
WORKFORCE SHORTAGE''
On June 14, 2018, the Subcommittee on Economic Growth, Tax,
and Capital Access of the Committee on Small Business met in
Room 2360 of the Rayburn House Office Building for a hearing
titled ``Shrinking the Skills Gap: Solutions to the Small
Business Workforce Shortage.'' This hearing examined the
current small business employment landscape, and provided an
opportunity for small business owners and experts to discuss
innovative solutions for the small business employee shortage.
Witnesses on the panel were: Mr. Todd Hitt, CEO, Kiddar
Capital, Falls Church, VA; Mr. Kelly McCreight, President and
CEO, Hamilton-Ryker IT Solutions, Nashville, TN, testifying on
behalf of the American Staffing Association; Ms. Angela Dine
Schmeisser, President and CEO, St. Marys Foundry, Inc., St.
Marys, OH; and Mr. Bryant Greene, Administrator, Always Best
Care Senior Services, Philadelphia, PA.
The panel discussed the economic impacts of the small
business workforce shortage. Mr. Hitt considered how the
decline in interstate mobility in the United States inhibits
matching available workers with hiring small businesses. Mr.
McCreight examined the challenges of finding and retaining
talent amid a 3.8 percent unemployment rate, and provided new
ways to incorporate technology to train workers. Specifically,
his company uses a virtual reality headset to train and test
prospective forklift drivers before they apply their skills to
the job. Ms. Dine Schmeisser outlined the importance of the
United States manufacturing industry, and discussed some of the
difficulties confronting small businesses in the industry. Mr.
Greene talked about how the growth in the senior healthcare
industry along with the low unemployment rate has particularly
affected small businesses such as his.
HEARING: ``ACCELERATING AGRICULTURE: HOW FEDERAL REGULATIONS IMPACT
AMERICA'S SMALL FARMERS''
On June 21, 2018, the Committee on Small Business
Subcommittee on Agriculture, Energy, and Trade met in Room 2360
of the Rayburn House Office Building for a hearing titled
``Accelerating Agriculture: How Federal Regulations Impact
America's Small Farmers.'' The hearing examined how federal
regulations affect small farmers.
The witnesses for the hearing were: Mr. Craig Martins,
Operations Manager, three Rivers FS, Dyersville, IA, testifying
on behalf of the National Council of Farmer Cooperatives and
GROWMARK, Inc.; Mr. John Weber, Owner, Valley Lane Farms, Inc.,
Dysart, IA, testifying on behalf of the National Pork Producers
Council; Mr. Glenn Brunkow, Co-Owner, Brush Creek Cattle
Company, Wamego, KS, testifying on behalf of the American Farm
Bureau Federation; and Ms. Laurie Ristino, Associate Professor
of Law, Director, Center for Agriculture and Food Systems,
Vermont Law School, South Royalton, VT.
Mr. Martins emphasized the importance of farmers being able
to operate without the oppressive weight of undue regulation.
He stated that it would be beneficial for stakeholders if
federal agencies included states when promulgating rules and
making regulatory decisions. Mr. Martins testified that
inconsistency and lack of clarity in regulations can result in
confusion in industries and does not create a safer
environment. He discussed various regulations, including a
crane and derricks in construction rule from the Occupational
Safety and Health Administration, chemical facility anti-
terrorism standards rule from the Department of Homeland
Security, and other regulatory reforms.
Mr. Weber testified that farmers cite compliance costs and
regulatory burdens as the primary obstacle to productivity, and
Congressional oversight over the regulatory process is
essential to reducing unnecessary red tape on farmers. Mr.
Weber discussed regulations that impact pork producers,
including a regulation from the Department of Agriculture's
Grain, Inspection, Packers and Stockyards Administration, the
Waters of the United States rule, organic livestock rule, and
hours of service from the Department of Transportation. His
testimony also discussed regulations that have been positive
for pork producers, including a swine slaughter inspection
system rule, alternative proteins, and agricultural visas.
Mr. Brunkow testified that excessive compliance costs
prohibit farmers from being able to reinvest in their farms or
save for the future. He also stated that a fair, transparent,
and updated regulatory process will greatly benefit the
agricultural industry, as well as taxpayers, small businesses,
and the environn1ent. Mr. Brunkow explained how a smoke
management plan implemented in Kansas was an example of
regulated industries working with their local regulators to
safely burn their fields.
Ms. Ristio testified that regulation of the agriculture
sector is essential to safeguard public safety and health, but
at the same time, in some cases regulations may be better
tailored to small farmers and food producers by taking into
account their different production methods and associated risks
in a way that ensures health and safety while allowing for
local innovation.
HEARING: ``ACHIEVING GOVERNMENT-WIDE VERIFICATION OF SERVICE-DISABLED
VETERAN-OWNED SMALL BUSINESSES''
On July 17, 2018, the Committee on Small Business
Subcommittee on Investigations, Oversight, and Regulations and
the Committee on Veterans Affairs' Subcommittee on Oversight
and Investigations met in Room 2360 of the Rayburn House Office
Building for a joint hearing titled ``Achieving Government-Wide
Verification of Service-Disabled Veteran-Owned Small
Businesses.'' This hearing examined the progress of the
Department of Veterans Affairs (VA) and the Small Business
Administration (SBA) in harmonizing definitions related to
service-disabled veteran-owned small businesses (SDVOSBs). The
hearing also examined SBA's readiness to assume the remaining
verification functions from the VA's Center for Verification
and Evaluation and the benefits of extending verification of
SDVOSBs government-wide.
Both the SBA and the VA operate procurement programs for
SDVOSBs. As a result of the two separate programs, there are
effectively two classes of SDVOSB--those verified by VA
pursuing VA contracts, and those which self-certify and pursue
contracts in all other agencies. Due to criticisms among the
veteran business community, the Small Business Committee and
Committee on Veterans' Affairs have held multiple joint
hearings on the differences between these procurement programs
and their duplicative, overlapping natures.
The witnesses on the panel were: Mr. Thomas Leney,
Executive Director, Small and Veteran Business Programs, United
States Department ofVeterans Affairs, Washington, DC; Mr. Robb
Wong, Associate Administrator, Office of Government Contracting
and Business Development, United States Small Business
Administration, Washington, DC; Mr. William Gould, Senior
Advisor, Office of the Administrator, United States Small
Business Administration, Washington, DC; and Mr. Davy Leghorn,
Assistant Director, The American Legion, Washington, DC.
Mr. Leney discussed the verification program at the VA and
expressed a willingness to work with SBA to take on a
government-wide verification function for SDVOSBs. Mr. Wong
stated that SBA is willing to take on that new responsibility,
but expressed concerns about having adequate funding and
support. He also provided useful background information about
SBA's website. Mr. Gould echoed Mr. Wong's concerns, and
provided more details regarding what SBA would need in order to
effectively verify SDVOSBs government-wide. Mr. Leghorn said a
government-wide verification system is important to service-
disabled veteran business owners and encouraged SBA and the VA
to work together to create a successful program.
HEARING: ``INVESTING IN RURAL AMERICA''
On July 24, 2018, the Subcommittee on Economic Growth, Tax,
and Capital Access and Subcommittee on Agriculture, Energy, and
Trade of the Committee on Small Business met in Room 2360 of
the Rayburn House Office Building for a joint hearing titled
``Investing in Rural America.'' This hearing examined venture
capital's role in helping small businesses access capital and
highlighted success stories of organizations that provide
resources to small businesses in rural America.
Witnesses on the panel were: Mr. Matthew M. McKenna,
Executive in Residence, Rural Opportunity Initiative, McDonough
School of Business, Georgetown University, Washington, DC; Ms.
Falon Donohue, Chief Executive Officer, VentureOhio, Columbus,
OH; Ms. Amy H. Gales, Executive Vice President, Regional
Agribusiness Banking Group, CoBank, Greenwood Village, CO; and
Mr. Ross Baird, President, Village Capital, Innovator-in-
Residence, Ewing Marion Kauffman Foundation, Alexandria, VA.
Mr. McKenna outlined how the Rural Opportunity Initiative
helps facilitate matching rural businesses with growth
potential to investors. Ms. Donohue discussed how to increase
capital access to states like Ohio, and recommended policy
changes to increase venture capital to small businesses. For
example, she suggested that the Dodd-Frank Act should be
reassessed to provide a narrower definition to allow banks to
participate in venture capital. Ms. Gales testified about the
financial products and initiatives CoBank offers to small
businesses in rural America. CoBank's services include flexible
loan products for cooperative farms, rural equity investments,
supporting youth farmers and entrepreneurs, and many others.
Mr. Baird noted that there is a credit gap for small businesses
that are too risky for a loan and yet too ``normal'' for
venture capital investment. He went on to discuss how his
company, Village Capital, is working toward providing financing
for small businesses in this category.
HEARING: ``SURVEYING STORMS: A DEEPER DIVE INTO SBA'S DISASTER
RESPONSE''
On Wednesday, September 5, 2018 at 11:00 a.m., the
Committee on Small Business met in Room 2360 of the Rayburn
House Office Building for a hearing titled ``Surveying Storms:
A Deeper Dive into SBA's Disaster Response.'' The purpose of
the hearing was to examine the United States Small Business
Administration's (SBA) disaster response to the 2017 storm
season. The hearing provided Members of the Committee the
opportunity to hear directly from the SBA regarding the
agency's actions during the 2017 storm season and SBA's
disaster response moving forward.
The witness for the hearing was: Mr. James Rivera,
Associate Administrator, Office of Disaster Assistance, SBA,
Washington, DC.
Mr. Rivera testified before the Committee regarding the
response SBA provided to disaster victims during the 2017 storm
season, which included Hurricane Harvey, Hurricane Irma, and
Hurricane Maria, all of which made landfall within weeks of
each other. In the past, SBA has struggled while responding to
major disasters, namely Hurricane Katrina in 2005 and Hurricane
Sandy in 2012. While discussing the unique challenge of
responding simultaneously to three major disasters, Mr. Rivera
detailed how SBA's Disaster Loan Program assisted 2017 disaster
victims, including how the program is administered.
Specifically, Mr. Rivera testified that SBA moved with alacrity
and approved $1 billion dollars in loans for the 2017
hurricanes in half the amount of time compared to previous
disasters. Although the recovery for 2017 storm victims
continues, to date, SBA has approved over $7.2 billion of loans
to those impacted by Hurricanes Harvey, Irma, and Maria.
Acknowledging that SBA needs to continue to make improvements
with its disaster response, Mr. Rivera outlined for the
Committee areas the agency is addressing including, ongoing
customer service to victims and barriers to the application
process.
HEARING: ``TROUBLED SKIES: THE AVIATION WORKFORCE SHORTAGE'S IMPACT ON
SMALL BUSINESSES''
On Wednesday, September 26, 2018 the Subcommittee on
Contracting and Workforce of the Committee on Small Business
met in Room 2360 of the Rayburn House Office Building for a
hearing titled ``Troubled Skies: The Aviation Workforce
Shortage's Impact on Small Businesses.'' The hearing examines
the pilot and mechanic shortage in the aviation industry in the
context of small businesses.
The aviation industry is facing two workforce issues
simultaneously: a pilot shortage and a mechanic shortage. This
scarcity arrives as demand for air travel and fleet size
increase. The U.S. aviation sector supports nearly 11 million
jobs contributing $1.6 trillion in economic activity. Small
businesses play a major role; over 90% of firms providing air
transportation, support, and manufacturing are considered small
by SBA's standards. Several organizations predict major pilot
shortages; for instance, Boeing projects needing 790,000 pilots
by 2037 and the RAND organization estimates needing 1000 Air
Force pilots by 2022 and a 10% Navy pilot shortfall by 2020.
The pilot shortage can be attributed in large part to a
significant number of baby boomer pilots retiring from the
workforce; increasing costs of flight training and education
with limited return on investment (i.e., lack of upward
mobility); and legislative changes that promote safety but
delay the pipeline of qualified pilots entering the marketplace
(i.e., by increasing flight time requirements from 250 hours to
1500 hours). There are similar predictions in mechanic
shortages; Boeing projects North American airlines will require
189,000 new technicians over the next decade. Causes
contributing to the mechanic shortage mirror those causing the
pilot shortage. Additionally, the disparity between older
planes and technological advances in modern aircraft require a
mechanic workforce with a diverse set of skills. Unfortunately
the technology disparity is exacerbated by the Federal Aviation
Administration's (FAA) outdated regulations governing the
curriculum for aviation maintenance technician schools. The
FAA's regulations were last updated in 1962. This shortage is
poised to significantly impact the U.S. economy; for instance,
the Aeronautical Repair Station Association projected a
potential $1.95 billion dollar economic loss to the aviation
industry if technician positions remain unfulfilled. Cancelled
or delayed flights due to a lack of pilots or service and
repair delays will disrupt air travel for consumers, delay the
transport of goods, prevent the ability to provide disaster
relief, and inhibit many other essential services fulfilled by
the aviation sector. Given that over 90% of businesses involved
in air transportation, support, and manufacturing are small
businesses, the disappearance of small businesses in the supply
chain will undoubtedly be felt across the aviation sector.
Witnesses on the panel were: Mr. Brett Levanto, Vice
President of Communications of the Aeronautical Repair Station
Association in Alexandria, VA; Mr. Martin Lenss, Airport
Director of the Eastern Iowa Airport in Cedar Rapids, IA; Ms.
Sarah Oberman Batiush, Chief Marketing Officer & Director of
Business Development of CI Jets in Camarillo, CA; and Mr.
Kenneth Witcher, Ph.D., Dean of the College of Aeronautics at
Embry-Riddle Aeronautical University in Daytona Beach, FL,
testifying on behalf of the Aerospace Industries Association.
At the hearing, Mr. Levanto described the overarching
issues surrounding the pilot and mechanic shortage,
highlighting the potential economic impact to small business
generally and the U.S. economy generally. Mr. Lenns described
the impact of the pilot and mechanic shortage on small,
regional airports and surrounding communities relying on the
local air transportation infrastructure. Ms. Bartush described
the difficulty small flight schools have in recruiting and
retaining trained pilots as flight instructors, further
exacerbating the pilot shortage. Mr. Witcher discussed the
aviation technician shortage and the impact the shortage has on
small maintenance and repair shops and their increasing lack of
ability to recruit a skilled workforce.
HEARING: ``THE LOCAL IMPACT OF ECONOMIC GROWTH''
On September 27, 2018, the Subcommittee on Economic Growth,
Tax, and Capital Access of the Committee on Small Business met
in Room 2360 of the Rayburn House Office Building for a joint
hearing titled ``The Local Impact of Economic Growth.'' This
hearing examined how the recent economic expansion is affecting
minority-owned small businesses.
Witnesses on the panel were: Mr. Larry Lopez, President,
Green JobWorks LLC, Baltimore, MD; Mr. Mansour Azimipour,
President, A&K Development Corporation, Locust Grove, VA; Ms.
Brenda Jones Barwick, President and CEO, Jones Public
Relations, Oklahoma City, OK; and Ms. Valarie J. Cofield,
President and CEO, Eastern Minority Supplier Development
Council, Philadelphia, PA.
Mr. Lopez discussed the benefits of recent policy changes
on both his small business and the general contracting
industry. For example, entry level unskilled workers are now
eligible for raises sooner than ever before, and demolition and
final cleaning divisions are winning more work for his
business. Mr. Azimipour discussed the importance of small
businesses to his community, and how the federal government
could further assist more rural small businesses. For example,
he advocated for increased access to broadband in rural areas,
as well as reduced underwriting requirements for banks that
lend to small businesses. Ms. Barwick mentioned how the
recently enacted Tax Cuts and Jobs Act allowed her to give out
bonuses, hire more workers, and increase salaries up to 10
percent for all employees. Ms. Cofield talked about the size
and scope of minority-owned small businesses, specifically that
the number of minority-owned small businesses is growing at
twice the national average.
PART C
Waste, Fraud, Abuse and Mismanagement
Of the hearings delineated above, the following were
devoted specifically to an examination of programs within the
Committee's jurisdiction with a focus on potential
mismanagement, waste, fraud and abuse.
HEARINGS ON SBA MANAGEMENT AND BUDGET
The Committee continued its oversight of the management of
SBA through hearings and meetings with agency officials and
stakeholder groups. In the Committee's Budget Views and
Estimates for Fiscal Year 2018, which were reported by the
Committee on March 1, 2017, Members of the Committee expressed
concern about the SBA's numerous management deficiencies, which
date back many years. Members noted their concern that
historically, SBA has not been effective in implementing new
technology, which is a critical component of decision making.
The SBA has also created entrepreneurial development programs
on its own initiative, which appear to duplicate programs in
the Small Business Act. The Committee's Views and Estimates
stressed that SBA must improve its oversight of lending program
participants, which was cited by the SBA's Office of the
Inspector General as one of the most serious issues facing the
agency.
Also in 2017, numerous SBA officials, industry
representatives and small business owners were questioned about
the operation of SBA programs. Hearings were held on SBA's
federal contracting programs on March 2, 2017, May 25, 2017,
July 13, 2017, September 13, 2017, Ap1il 26, 2018, June 13,
2018, and July 17, 2018. A full Committee bipartisan roundtable
on advanced small businesses and contracting issues was held on
November 14, 2017. Hearings were held on SBA's capital access
programs on March 9, 2017, May 17, 2017, June 28, 2017,
November 7, 2017, January 17, 2018 and April 18, 2018. Hearings
on SBA's entrepreneurial development program were held on March
30, 2017, July 19, 2017, September 14, 2017 and November 8,
2017. A Committee hearing on SBA's disaster loan program was
held on April 26, 2017. Hearings were held on SBA's Office of
International Trade on May 23, 2017 and June 21, 2017.
The Committee held a hearing on April 5, 2017 on overall
SBA programs and priorities at which SBA Administrator Linda
McMahon testified. Committee Members expressed their hope that
longstanding SBA deficiencies will be remedied. Chairman Chabot
said the SBA loan programs, which provide crucial access to
capital, need vigilant oversight and better metrics to measure
success. Administrator McMahon agreed, and added those metrics
must measure outcomes, not output. She noted that in October
2016, SBA hired a new Chief Information Officer to improve
SBA's problem-plagued information technology system, which has
been criticized by GAO and SBA's Inspector General. The
Administrator also said she wants to improve SBA's disaster
relief program so the agency is ready for the next major
disaster. Members expressed concern about the number of
Standard Operating Procedures (SOPs) that are in place at SBA,
and asked the Administrator to carefully review them and
determine whether all are still needed or can be streamlined.
The Administrator said SBA's Chief Financial Officer and Chief
Operating Officer are currently reviewing SOPs with an eye
toward streamlining them. On November 2, 2017, the Subcommittee
on Investigations, Oversight, and Regulations held a hearing to
examine the SBA's SOP procedures and hear testimony from Joseph
Loddo, SBA's Chief Operating Officer, to better understand
SBA's responsibilities with SOPs.
During the 114th Congress, the Committee held six weeks of
oversight hearings on the overall management of SBA programs.
The hearings covered the Government Accountability Office's
(GAO) comprehensive report on the overall mismanagement of the
SBA, which was released on October 28, 2015. The report found
serious, ongoing deficiencies spanning the entire agency, from
information technology and security to staff management to
fraud in lending and contracting programs. The Committee
continued its rigorous and bipartisan oversight of the SBA and
its programs during the 115th Congress.
At a hearing on the effectiveness and readiness of SBA's
disaster loan program on April 26, 2017, the Committee heard
testimony from William Shear, Director, Financial Markets and
Community Investment, GAO, on dissemination of information on
the SBA's Disaster Loan Program. Mr. Shear testified that SBA
has not effectively presented information on disaster loans in
a way that helps users easily find it, has not consistently
described key features and requirements of the loan process in
print and online, or clearly defined the financial terminology
used in its loan applications.
On June 14, 2017, the Committee held a hearing on SBA's
Fiscal 2014 Voluntary Early Retirement Authority (VERA) and
Voluntary Separation Incentive Payment (VSIP) programs, which
failed to restructure the agency. Committee Members heard from
SBA Acting Inspector General Hanibal ``Mike'' Ware and SBA
Chief Operating Officer Joseph Loddo regarding the Inspector
General's report that SBA's restructure attempt not only did
not measure or determine agency skill gaps or workplace
competency, it failed to decrease the average age of the
agency's workforce; failed to develop specific goals for cost
savings; and wasted over $2 million. Following that hearing, on
June 26, 2017, Chairman Chabot sent a letter to Linda McMahon,
Administrator, Small Business Administration, requesting a copy
of the agency's final reform plan, which was due to the Office
of Management and Budget by June 30, 2017, and full details on
the steps it is taking to follow up on the hearing.
At a hearing on July 12, 2017, the Committee continued its
oversight of SBA's information technology systems. Over the
years, SBA has had serious challenges in implementing
information technology systems. The SBA's Chief Information
Officer since October, 2016, Maria Roat, testified that SBA
moved aggressively to assess SBA's IT system and establish
modernization targets, such as moving e-mail to the cloud,
updating software, evaluating IT purchase requisitions, and
ensuring that SBA complies with the Federal Information
Technology Acquisition Reform Act.
A hearing by the Subcommittee on Investigations, Oversight,
and Regulations on November 2, 2017 examined agency Standard
Operating Procedures (SOP). Committee Members heard testimony
from Joseph Loddo, Chief Operating Officer, Small Business
Administration, regarding how and when SOPs are developed and
whether SOPs are a form of rulemaking that should go through
notice and comment as set forth in the Administrative Procedure
Act. The SOP process is not transparent and does not require
agencies to consider public or Congressional comments on a
proposed rule. In addition, rulemaking through SOPs can lead to
arbitrary and biased decision making.
HEARINGS ON FEDERAL PROCUREMENT
During the 115th Congress, the Committee continued to
examine federal procurement rules as they affect small
businesses. The hearings covered topics such as problems with
the HUBZone program, federal contracting change orders and
agency compliance with federal statutes and rules. For example,
on March 2, 2017, the Subcommittee on Contracting and Workforce
held a hearing on ideas to strengthen and improve the problem-
plagued HUBZone program. A bipartisan roundtable was held on
June 27, 2017 to examine the barriers that veteran-owned small
businesses encounter in contracting with the federal
government. On May 4, 2017, the Subcommittee on Contracting and
Workforce held a hearing on improvements to the Small Business
Innovation Research (SBIR) and Small Business Technology
Transfer (STIR) Programs.
The Committee used information gleaned from the hearings to
inform legislation on federal contracting. For example, during
the April 5, 2017 hearing at which SBA Administrator Linda
McMahon testified, Members expressed the hope that the
Administrator would help to ensure that the agency complies
with federal statutes and rules governing the purchase of goods
and services from small businesses.
On March 2, 2017, the Committee held an oversight hearing
on SBA's HUBZone program. The program has been plagued by fraud
and abuse for a number of years. As the program approached its
20 year anniversary, Committee Members learned more about its
challenges with certification and reporting. In a series of
separate investigations, the Government Accountability Office
and the SBA Office of Inspector General found problems that
left the program vulnerable to fraud and abuse. For example,
the OIG identified significant weaknesses in procurement data
that undermine the reliability of reported goal reporting to
Congress. GAO has reported that HUBZone firms had made
fraudulent or inaccurate representations to get into or remain
in the HUBZone program. Other witnesses testified that in order
to reach its full potential, the program must be modernized. On
September 13, 2017, the Committee held a hearing on the HUBZone
program to explore possible legislative solutions to strengthen
the program. Witnesses testified that improvements to the
program provided by H.R. 3294, the HUBZone Unification and
Business Stability Act, bipartisan legislation sponsored by
Ranking Member Nydia Velazquez and cosponsored by Chairman
Steve Chabot, that would bring needed stability and certainty
to the program. In addition, H.R. 3294 would require SBA to
establish performance metrics by which to measure the program's
effectiveness. H.R. 3294 was included in the conference report
on H.R. 2810, the National Defense Authorization Act for Fiscal
Year 2019, which became Public Law No. 115-91.
The Subcommittee on Contracting and Workforce probed the
operation of the Small Business Innovation and Research (SBIR)
and Small Business Technology Transfer (STTR) programs. On May
4, 2017, the Subcommittee held a joint hearing with the House
Science, Space and Technology's Subcommittee on Research and
Innovation. At the hearing, Committee Members explored whether
participating agencies were complying with statutory efforts to
eliminate waste, fraud, and abuse in the program.
On June 15, 2017, the Committee reported, as amended, H.R.
2763, the Small Business Innovation Research and Small Business
Technology Transfer Improvements Act, bipartisan legislation to
update and improve the popular SBIR and STIR programs. H.R.
2763 was introduced by Representative Steve Knight and
Representative Stephanie Murphy. Specifically, H.R. 2763 would
reinforce the requirement that the SBA provide a comprehensive
annual report of the programs to Congress. In addition, the
bill would hold the Department of Defense accountable for
stimulating small business technological innovation. The
Committee's vote was 19-0.
On May 25, 2017, the Subcommittees on Contracting and
Workforce and Investigations, Oversight, and Regulations held a
joint hearing on the effect of federal contracting change
orders on small business contractors and solutions to ease the
financial burden. Subcommittee Members are concerned that these
changes cause serious delays to the project schedules, and
agencies may be engaging in unfair or abusive negotiations with
construction contractors. Members heard from witnesses that
small businesses do not have the time or resources to litigate
their claims, and often must settle for lesser amounts rather
than face thousands of dollars in legal fees, with some forced
out of business as a result. H.R. 2594, the Small Business
Payment for Performance Act, bipartisan legislation introduced
by Rep. Brian Fitzpatrick and Rep. Stephanie Murphy, would
guard against abuse of the federal contracting process by
federal agencies. Specifically, the bill would require federal
agencies to make interim partial payments to contractors,
allowing them to pay their bills without being delayed until
the end of the project. H.R. 2594 was reported favorably, as
amended, by the Committee to the House on June 15, 2017. The
Committee's vote was 21-0. Additionally, H.R. 4754 was
introduced by Representative Don Bacon, a former Member of the
Small Business Committee, on January 30, 2018. The bill injects
transparency into the agency change order process by providing
small construction contractors with agency change order
information prior to submitting a bid on a solicitation for a
small business construction project. On May 8, 2018, the House
passed H.R. 4754, under Suspension of the Rules, by voice vote.
H.R. 4754 was included in H.R. 5515, the National Defense
Authorization Act for Fiscal Year 2019. H.R. 5515 passed the
House on May 24, 2018 by a vote of 351-66 (Roll Call No. 230),
and the Senate, as amended, on June 18, 2018 by a vote of 85-10
(Roll Call Number 128). The conference report for H.R. 5515
passed the House on July 26, 2018 (Roll Call No. 379), the
Senate on August 1, 2018 by a vote of 871-10 (Roll No. 181),
was signed by the President on August 13, 2018, and became
Public Law Number 115-232).
On July 13, 2017, the Subcommittees on Contracting and
Workforce and Economic Growth, Tax, and Capital Access held a
joint oversight hearing titled, ``The Puerto Rico Oversight,
Management, and Economic Stability Act: State of Small Business
Contracting.'' The purpose of the hearing was to review the
findings of a report released by the Government Accountability
Act on the Puerto Rico Oversight, Management, and Economic
Stability Act (PROMESA) on government contracting for small
businesses in Puerto Rico. The hearing's witnesses, Mr. William
Shear, Director, Financial Markets and Community Investment,
Government Accountability Office, and Mr. Robb N. Wong,
Associate Administrator, Office of Government Contracting and
Community Development, United States Small Business
Administration, discussed trends in the SBA's contracting
programs that were presented in GAO's report. Mr. Shear said
stakeholders identified challenges that small businesses in
Puerto Rico face, including a lack of knowledge about
contracting, difficulty meeting procurement requirements, and
difficulty accessing bonding, financing and capital. Mr. Wong
said SBA would continue to improve the implementation of its
contracting programs through improved application and
certification processes. H.R. 5178, introduced by Ranking
Member Nydia Velazquez on March 6, 2018, sought to incentivize
agencies to contract with Puerto Rico small businesses and also
to incentivize potential mentors to choose Puerto Rico small
businesses as proteges. The Committee met in open session on
March 14, 2018 and ordered H.R. 5178 reported favorably to the
House by voice vote. H.R. 5178 was included in H.R. 5515, the
National Defense Authorization Act for Fiscal Year 2109, which
passed the House on May 24, 2018 (Roll Call No. 230) and the
Senate, as amended, on June 18, 2018 by a vote of 85-10 (Roll
No. 128). The Conference Report for H.R. 5515 passed the House
on July 26, 2018 by a vote of 359-54 (Roll Call No. 379), the
Senate on August 1, 2018 by a vote of 87-10 (Roll No. 181), was
signed by the President on August 13, 2018 and became Public
Law Number 115-232.
The Subcommittee on Contracting and Workforce held a
hearing on October 25, 2017 on the Government Accountability
Office's (GAO) report audit of the SBA's Office of Small and
Disadvantaged Business Utilization (OSDBU). GAO's audit
revealed that many federal agencies did not comply with the
statutory functions of the OSBDU. Continued noncompliance with
the requirements can inhibit the OSBDU's effectiveness in its
statutory purpose: advocating on behalf of small businesses
that contract with the federal government. On November 30th,
2017, the Committee sent a series of letters to each agency
OSDBU identified by the GAO audit to be noncompliant with their
statutory functions. A total of 14 letters were sent,
requesting each agency respond before December 31, 2017. The
Committee will continue to work with GAO and SBA to ensure that
federal agencies are fully complying with statutory
requirements.
On January 17, 2018, the Subcommittee on Agriculture,
Energy, and Trade convened a hearing on small business
resources within the Department of Energy. Subcommittee Members
heard testimony from Charles Smith, Director of the
Department's Office of Small and Disadvantaged Business
Utilization. Director Smith discussed DOE's federal contracting
process, the Office of Small and Disadvantaged Business
Utilization's (OSDBU) resources available to existing or
potential federal contractors, and the Department's current
prime small business contracting goals. Subcommittee Chairman
Rod Blum, concerned that DOE is currently well under its small
business subcategory contracting goals, questioned Director
Smith about the OSDBU's plan to address this deficiency. He
requested that the Director provide that plan to the Committee
within 60 days.
On Thursday, April 26, 2018, the Subcommittee on
Contracting and Workforce convened a hearing examining the
challenges to growth and success for businesses as they grow
out of their small size status. As the divide between small and
large contractors continues to widen, successfully navigating
the middle market becomes an increasingly challenging prospect
for advanced small and mid-size firms. Businesses that outgrow
their small size often fail once they reach the open federal
market, become acquired into the supply chain of a larger
competitor, or are forced to impede their own growth in order
to remain small. None of these outcomes promote the health of
the industrial base and undermine the Small Business
Administration's small business program goals. H.R. 6330,
bipartisan legislation introduced by Representative Steve
Knight and Representative Yvette Clarke, sought to allow small
businesses additional time to build their competitiveness and
infrastructure against large prime contractors by modifying the
formula employed by the Small Business Administration to
calculate the size of a firm. The Committee met in open session
on July 18, 2018 and ordered H.R. 6330 reported favorably, as
amended, to the House by voice vote.
As part of its ongoing effort to identify waste, fraud, and
abuse, the Subcommittee on Contracting and Workforce held a
hearing on May 17, 2018 to review the United States Department
of Defense (DOD) Inspector General's (IG) Report on small
business subcontracting. The audit found that the Army's
contracting activities did not always comply with the Small
Business Act. Specifically, Army officials did not ensure that
prime contractors provided small businesses with adequate
subcontracting opportunities in almost half of the
subcontracting opportunities that the IG reviewed. As a result,
small businesses may have been denied subcontracting
opportunities that prime contractors were required to provide.
The Subcommittee and the Committee will continue to review
contracting activities to ensure that the IG's management
recommendations for the Deputy Assistant Secretary of the Army
for Procurement are implemented.
On June 13, 2018 the Committee on Small Business held a
hearing examining the impact of category management on the
small business industrial base. Category management is a
federal spending management initiative currently being
implemented by the Office of Management and Budget, which
expands upon previous attempts at contract consolidation. The
purpose of category management, as originally developed, was to
track and analyze market research data to better capture what
the federal government was buying and how it was spending in
order to increase efficiencies and achieve cost savings. Used
in this manner, category management can be a valuable tool to
the federal governn1ent. However, category management has been
taken a step further by mandating a targeted increase in
spending through ``best-in-class'' contract vehicles and a
decrease in individual contracts. This has the potential
consequence of funneling contract dollars and awards towards
specific, few contract vehicles which have only a handful of
vendors, both large and small, operating on each vehicle. This
federal spending approach may have deleterious impacts on small
businesses who do not operate on these ``best-in-class''
vehicles, particularly for emerging small businesses, by
reducing the number of available opportunities for small
businesses and by; making it increasingly difficult to compete
for government contracts. H.R. 6382, bipartisan legislation
introduced by Representative Alma Adams and Chairman Steve
Chabot requested the Small Business Administration report on
the total dollars awarded through ``best-in-class'' vehicles,
specifically identifying the total dollars awarded through
these designated vehicles to small business concerns, socially
and economically disadvantaged small business concerns, women-
owned small businesses, HUBZone small businesses, and service-
disabled veteran-owned small businesses.
On July 17, 2018, the Subcommittee on Investigations,
Oversight, and Regulations held a joint hearing with the House
Veterans' Affairs Committee's Subcommittee on Oversight and
Investigations to examine the progress of the Department of
Veterans Affairs (VA) and the Small Business Administration
(SBA) in harmonizing definitions related to service-disabled
veteran-owned small businesses (SDVOSBs). The hearing also
examined SBA's readiness to assume the remaining verification
functions from the VA's Center for Verification and Evaluation
and the benefits of extending verification of SDVOSBs
government-wide. Tom Leney, Executive Director of the Office of
Small and Disadvantaged Business Utilization with the United
States Department of Veterans' Affairs, Robb Wong, Associate
Administrator of the Office of Government Contracting and
Business Development with the United States Small Business
Administration, and Davy Leghorn, Assistant Director of the
National Veterans Employment and Education Division of The
American Legion, testified on removing barriers to small
business participation in federal contracting.
HEARINGS ON SBA FINANCIAL ASSISTANCE PROGRAMS
Because small business owners repeatedly tell the Committee
that access to capital is a problem, the Committee continued
its focus on SBA's capital access programs. The Subcommittee on
Economic Growth, Tax and Capital Access held the first in a
series of hearings on March 9, 2017 on SBA's 7(a) loan program
and the state of small business lending. On April 5, 2017, the
Committee held a hearing on overall SBA programs at which SBA
Administrator Linda McMahon testified. The Administrator
addressed the 7(a) loan program authorization cap, the default
rate for the various loan programs, and metrics for program
evaluation.
At a March 9, 2017 hearing on the SBA's 7(a) Loan Program,
Committee Members addressed SBA's history of lax lender
oversight. Tony Wilkinson, President and Chief Executive Office
of the National Association of Government Guaranteed Lenders in
Washington, DC, testified that it is important that the SBA's
Office of Credit Risk Management receive the appropriate amount
of funding and the appropriate number of staff to properly
perform vital lender oversight. The Committee held a hearing on
January 17, 2018 on ways to strengthen SBA's 7(a) Loan Program.
At the hearing, Members heard testimony from stakeholder groups
on H.R. 4743, the Small Business 7(a) Lending Oversight Reform
Act, legislation that would bolster SBA's lender oversight and
improve the program's integrity for small businesses and
taxpayers.
On April 26, 2017, the full Committee held an oversight
hearing on the operation of the SBA's disaster loan program.
Witnesses discussed the steps needed to better ensure the
program is ready to respond to the next disaster, and said SBA
has made a number of key improvements to help it respond more
efficiently and effectively. However, strong internal controls,
updated technology and training are needed. In addition,
William Shear, Director, Financial Markets and Community
Investment, Government Accountability Office, testified that he
is concerned whether SBA's reserve corps is sufficiently
trained. Hannibal ``Mike'' Ware, Inspector General, Small
Business Administration, said SBA may not be able to
effectively process disaster loan applications quickly and
without errors, increasing opportunities for dishonest
applicants to commit fraud.
On May 3, 2017, the full Committee held a hearing on how
business accelerators help entrepreneurs, startups, and small
businesses grow and create jobs. The hearing gave Members of
the Committee the opportunity to hear from organizations that
are directly involved in providing private sector resources to
small businesses. On May 17, 2017, the full Committee held a
hearing to review the SBA's 7(a) Loan Program and its ability
to help creditworthy small businesses obtain capital. This
hearing offered Members of the Committee the opportunity to
hear about whether the 7(a) program adequately meets the needs
of entrepreneurs and whether current lender oversight is
sufficient to guard against abuse and fraud.
On June 29, 2017, the Subcommittee on Economic Growth, Tax
and Capital Access held an oversight hearing on the SBA's
Certified Development Company/504 Loan Program. Members heard
from key witnesses representing the National Association of
Federally-Insured Credit Unions, the National Association of
Development Companies and the Business Finance Group. The panel
discussed their experiences with the program. Subcommittee
Chairman Dave Brat said that as small businesses face an
uncertain lending environment, SBA's CDC/504 program helps to
bridge a critical funding gap. Witnesses pointed out that the
program helps financial institutions to attract and to serve
small business borrowers who need financing for plant and major
equipment expansion, and its effect is felt across the economy.
They also noted that the program requires no subsidy from
taxpayers to operate.
The Consolidated Appropriations Act of 2017, Public Law No.
115-31, directed the Government Accountability Office (GAO) to
conduct a study and report to the Senate and House
Appropriations Committee and Senate Committee on Small Business
and Entrepreneurship and House Committee on Small Business
regarding the ``credit elsewhere'' requirements for the SBA's
7(a) loan program. The law also requires GAO to include an
analysis of the criteria currently used to identify whether
businesses are unable to obtain credit elsewhere. GAO is now
working on this directive.
The Government Accountability Office issued a report,
requested by Chairman Chabot, on the effect of financial
regulations on access to capital on February 27, 2018. The
report was released in concert with a full Committee hearing on
that date. At the hearing, Michael Clements, Acting Director of
Financial Markets and Community Investment for the Government
Accountability Office, testified about a number of financial
regulations that are burdensome for community banks and credit
unions, and discussed the tools that are available to
regulators to reduce burdens on small financial regulations.
Continuing its oversight over SBA's 7(a) loan program, on
April 18, 2018, the Committee held a hearing on a report
initiated and issued by the Small Business Administration on
the SBA's 7(a) program loans to the poultry industry. The
report found that the 7(a) loans to poultry growers it analyzed
did not meet regulatory and SBA requirements for eligibility.
The large chicken companies, called integrators, exercised such
control over the growers through contracts, operating
procedures and other mandates that growers ceased to be
independent businesses and ultimately became affiliates of the
integrators. The Committee will continue its oversight of this
loan program and the corrective action that SBA plans to take.
On July 24, 2018, the Subcommittee on Economic Growth, Tax,
and Capital Access and the Subcommittee on Agriculture, Energy
and Trade held a joint hearing to examine the role of venture
capital in helping small businesses to access capital and
identify organizations that provide resources to small
businesses in rural America.
Committee Members held a hearing on September 5, 2018 to
review SBA disaster response. The Committee heard testimony
from James Rivera, Associate Administrator, Office of Disaster
Assistance, on the agency's actions during 2017 and the outlook
for disaster response moving forward.
HEARINGS ON SBA ENTREPRENEURIAL DEVELOPMENT PROGRAMS
SBA entrepreneurial development programs were addressed in
a hearing on the Committee's budget views and estimates for
Fiscal Year 2018 on February 1, 2017. They were also discussed
in a full Committee hearing on SBA programs and management on
April 5, 2017 at which SBA Administrator Linda McMahon
testified. In that hearing, Chairman Chabot said that the
training and technical assistance programs that reach small
businesses through local Small Business Development Centers
(SBDCs) need to keep pace with our rapidly changing times and
ensure that they are not duplicative or being abused.
On March 30, 2017, the Subcommittee on Contracting and
Workforce held a comprehensive hearing on SBA's entrepreneurial
development programs. Witnesses from SCORE; Small Business
Development Centers Association; the Association of Women's
Business Centers; and the National Veterans Employment and
Education Division of the American Legion testified. At the
hearing, Members probed topics such as how SBA resource
partners can work together to coordinate entrepreneurial
assistance, reduce duplication and eliminate waste; ways those
partners can fill critical gaps in assistance; and how to
improve training for small businesses to grow and create jobs.
In addition, on September 14, 2017, the Subcommittee on
Health and Technology held a hearing on how SBA's
entrepreneurial development programs are evolving with
technology. Witnesses with the SCORE Association; America's
SBDC; and Women's Business Centers; and a Veteran's Business
Outreach Center testified that although entrepreneurs prefer
in-person experiences to webinars or website videos, they
agreed that it is important to offer clients opportunities to
train and learn online. In addition, they noted that small
businesses must adopt technology to remain competitive in the
marketplace.
PART D
OVERSIGHT ACTIVITIES
OVERSIGHT PLAN FOR THE 115TH CONGRESS
Clause 2(d) of Rule X of the Rules of the House of
Representatives for the 115th Congress requires each standing
committee, in the first session of Congress, to adopt an
oversight plan for the two-year period of the Congress and
submit the plan to the Committee on Oversight and Reform,
Committee on House Administration and Committee on
Appropriations.
Subpart A contains the Oversight Plan of the Committee on
Small Business for the One Hundred and Fifteenth Congress,
which the Committee considered and adopted on February 1, 2017.
Subpart B contains a summary of actions taken to implement that
plan.
SUBPART A
Authorization and Oversight Plan of the Committee on Small Business for
the One Hundred Fifteenth Congress
Mr. Chabot, from the Committee on Small Business, submitted
to the Committee on Oversight and Government Reform, the
Committee on House Administration and the Committee on
Appropriations the following.
REPORT
Rule X, cl. 2(d)(1) of the Rules of the House requires each
standing Committee to adopt an authorization and oversight plan
for the two-year period of the Congress and to submit the plan
to the Committees on Government Reform and House Administration
not later than February 15 of the first session of the
Congress. Under Rule X, the Committee has oversight authority
to investigate and examine any matter affecting small business.
This Report reflects that broad oversight jurisdiction.
Pursuant to Rule X, cl. 2(d)(1)(F), this Plan also includes
proposals to cut or eliminate programs that are inefficient,
duplicative, outdated, or more appropriately administered by
State or local governments.
House Rule X, cl. 2(d)(2) requires that committee oversight
plans include a list of programs or agencies within each
committee's jurisdiction with lapsed authorizations that
received funding in the prior fiscal year, or a program or
agency with a permanent authorization which has not been
subject to review by the Committee in the prior three
Congresses. The Committee has found no Small Business
Administration (SBA) programs that fit these parameters. Rule
X, cl. 2(d)(2) also requires a description of the programs or
agencies to be authorized in the current Congress or the next
Congress, and any oversight to support the authorization of
those programs or agencies, and recommendations for moving such
programs or agencies from mandatory funding to discretionary
appropriations where appropriate. The Committee may consider
reforms and improvements to various SBA programs as noted
throughout this Authorization and Oversight Plan, including the
need for SBA to create appropriate metrics to measure efficacy.
Oversight of Federal Capital Access Programs
The Committee will conduct hearings and investigations of
SBA and other federal agencies that provide capital to
America's entrepreneurs that may include any or all of the
following, as well as matters brought to the attention of the
Committee subsequent to the filing of this Report:
Effectiveness of the capital access programs
to generate jobs in the fastest growing small
businesses.
Whether lenders are meeting their goals to
lend to small businesses and create jobs.
Risk to the taxpayers of the capital access
programs.
Adequacy of SBA oversight of its lending
partners to ensure that federal taxpayers are properly
protected.
Capabilities of the SBA information
technology to manage the loan portfolio.
Whether SBA rules, regulations and guidance
result in transparent and reasoned decision making with
respect to capital access programs.
Assessment of credit-scoring algorithms as a
replacement for individual credit assessment by SBA and
its lending partners.
The exercise of discretion by SBA to create
pilot programs and the risk they pose to the taxpayer
and whether such authority should be curtailed or
eliminated.
Whether SBA disaster loan program and its
oversight ensures that small businesses are able to
revive and rebuild communities without unduly placing
the federal taxpayer at risk.
Efficacy and duplication of federal capital
access programs offered by the Department of
Agriculture to small businesses in rural areas.
Utilization by small businesses of export
capital programs at the Export-Import Bank and the
Overseas Private Investment Corporation.
Continued examination of the Small Business
Lending Fund and State Small Business Credit Initiative
established by Pub. L. No. 111-240, the Small Business
Jobs Act of 2010, in creating jobs and providing
capital to small businesses.
Impact of the Dodd-Frank Wall Street Reform
and Consumer Protection Act, Pub. L. No. 111-203, on
small business access to capital.
Implementation of crowdfunding and other
provisions of the Jumpstart Our Business Startups Act,
Pub. L. No. 112-106.
In performing oversight, the Committee will focus on risky
aspects of financial assistance programs including, but not
limited to, commercial real estate refinancing, premier
certified lenders, participating security small business
investment companies, small business lending companies, express
lenders, and loan programs utilizing simplified lending
applications.
Oversight of SBA and Other Federal Entrepreneurial Development Programs
The Committee will conduct hearings and investigations into
the SBA programs that provide training and advice to small
businesses that may include any or all of the following, as
well as matters brought to the attention of the Committee
subsequent to the filing of this Report:
Examining effectiveness of SBA
entrepreneurial development programs, including
programs for veterans, in creating jobs at startups and
traditional firms.
Determining whether certain programs should
be eliminated as a result of their ineffectiveness or
duplication of programs provided by other agencies or
by the private sector.
Suggesting methods for enhancing
coordination among federal agencies in providing
assistance to entrepreneurs, including, but not limited
to, businesses located in rural areas and those seeking
to provide goods and services in the federal
procurement marketplace.
Enhancing the efficacy and utilization of
the Manufacturing Extension Partnership at the
Department of Commerce, including developments in
renewable energy.
Recommending improvements in assistance to
small businesses in rural areas, including those
involved in agriculture, forestry, and energy
production.
Oversight of Federal Government Contracting Matters
The Committee will conduct hearings and investigations into
the federal procurement system that may include any or all of
the following, as well as matters brought to the attention of
the Committee subsequent to the filing of this Report:
Whether fraud or other problems exist in the
federal government contracting programs overseen by the
SBA including the 8(a), HUBZone, service-disabled
veteran, women owned contracting, and Small Business
Innovation Research programs.
Effectiveness of SBA contracting programs to
increase participation by small businesses in federal
procurement.
Effectiveness of federal agency protections
against contract bundling and consolidation.
The accuracy and utility of SBA size
standards and federal procurement databases.
Operation and effectiveness of federal
agency assistance provided to small businesses
interested in federal procurement, including that
provided by the SBA, Offices of Small and Disadvantaged
Business Utilization and Procurement Technical
Assistance Centers.
Development of federal acquisition policies
and whether small businesses have sufficiently
effective voice in development of such policies.
Cost-effectiveness of outsourcing government
work to private enterprise rather than expanding the
government to provide the good or service internally
(i.e., government insourcing).
Implementation and efficacy of changes made
in small business federal procurement programs arising
from the enactment of the National Defense
Authorization Acts for FYs 2012-2016.
Examination of the Small Business Innovation
Research Program as modified by the National Defense
Authorization Act for FY 2012, Pub. L. No. 112-81,
including, but not limited to, increased efforts at
commercializing federally-funded technology.
In performing oversight, the Committee will focus its
efforts on uncovering abuse and misuse of the small business
designation to obtain federal government contracts.
Oversight of SBA Management
The Committee will conduct the hearings and investigations
into the management of the SBA that may include any or all of
the following, as well as matters brought to the attention of
the Committee subsequent to the filing of this Report:
The appropriate mission of the SBA.
Whether agency employees in the field are
empowered to assist small businesses.
Duplication of offices and missions at SBA
headquarters.
Effectiveness of personnel management to
ensure that employees are rewarded for assisting small
businesses.
Capabilities of SBA employees to provide
proper assistance to small business owners.
Agency personnel capabilities to properly
manage loan defaults to maximize recovery of
collateral.
Whether SBA improperly utilizes statutory
authority to create untested initiatives and the
procedures by which the agency develops such programs.
In carrying out this oversight, the Committee will focus
particularly on streamlining and reorganizing of the agency's
operations to provide maximum assistance to small business
owners. Offices that primarily provide assistance or advice to
headquarters staff that do not promote the interests of small
businesses or protect the federal government as a guarantor of
loans will be recommended for cuts or elimination. For some
potential offices that the Committee will examine, refer to the
section titled ``Reductions in Programs and Spending.''
Oversight of Federal Regulatory and Paperwork Burdens
The Committee will conduct hearings and investigations into
unnecessary, burdensome, and duplicative federal rules,
reporting and recordkeeping requirements affecting small
businesses that may include any or all of the following, as
well as matters brought to the attention of the Committee
subsequent to the filing of this Report:
Consumer Financial Protection Bureau.
Consumer Safety Products Commission.--
Department of Agriculture.
Department of Commerce.
Department of Energy, particularly the
Office of Energy Efficiency and Renewable Energy.
Department of Health and Human Services,
particularly the Centers for Medicare and Medicaid
Services and Food and Drug Administration.
Department of Interior, particularly the
Bureau of Land Management and Fish and Wildlife
Service.
Department of Homeland Security,
particularly the Transportation Security
Administration.
Department of Labor, particularly the
Occupational Safety and Health Administration and the
Wage and Hour Division.
Department of Transportation, particularly
the Federal Aviation Administration and Federal Motor
Carrier Safety Administration.
Department of the Treasury, particularly the
Internal Revenue Service.
Environmental Protection Agency.
Federal Communications Commission.
Federal Financial Institutions Examination
Council and its constituent agencies.
Office of Management and Budget,
particularly the Office of Federal Procurement Policy.
Securities and Exchange Commission.
The Committee will identify specific rules and regulations
already issued or at the proposed rule stage to assess the
impact on small businesses. In addition, the Committee will
examine agency compliance with the Regulatory Flexibility Act
and Paperwork Reduction Act. The Committee will pay close
attention to the effect that regulations have on startups.
Oversight of the regulatory process also will, to the extent
relevant, examine the work of the Office of Information and
Regulatory Affairs at the Office of Management and Budget.
Special attention will be paid to the work performed by the
Chief Counsel for Advocacy at the Small Business Administration
to ensure that Office is fulfilling its mission to advocate
vigorously on behalf of America's small business owners in
regulatory matters at federal agencies. Finally, this oversight
will entail an examination of compliance by federal agencies
with amendments to Executive Order 12,866 and memoranda on
regulatory flexibility and regulatory compliance issued by the
President on January 18, 2011 and still in effect as of the
approval of this Oversight Plan.
Oversight of Federal Tax Policy
The Committee will conduct hearings and investigations into
the federal tax code, its impact on small business, and
Internal Revenue Service's (IRS) collection of taxes that may
include any or all of the following, as well as matters brought
to the attention of the Committee subsequent to the filing of
this Report:
Identification of tax code provisions and
proposed rules that hinder the ability of small
businesses to create jobs and recommendations for
modifying those provisions to boost small business job
growth.
Examination of the structure of the tax code
in order to simplify compliance for small businesses.
Assessment of the recordkeeping and
reporting requirements associated with tax compliance
and suggestions for reducing such burdens on small
businesses.
Evaluation of the estate tax provisions to
determine whether they inhibit the ability of
successive generations to maintain successful job
creating enterprises.
Efficiencies at the IRS that improve the
interaction between the government and small business
owners.
Inefficiencies at the IRS that force small
businesses to divert capital from job growth to tax
compliance.
Oversight of Health Care Policy
The Committee will conduct hearings and investigations into
federal health care policy (such as Medicare and Medicaid) and
the continued implementation of the Patient Protection and
Affordable Care Act that may include any or all of the
following, as well as matters brought to the attention of the
Committee subsequent to the filing of this Report:
The cost of the Patient Protection and
Affordable Care Act to small businesses, including the
self-employed.
The availability of health insurance in the
federal marketplaces established by the Patient
Protection and Affordable Care Act.
The impact of the Patient Protection and
Affordable Care Act, Medicare and Medicaid on the
ability of physicians, pharmacists, and allied health
care providers to offer the best care possible to
patients.
The impact of state tort and insurance laws
on the cost of medical care.
Examination of increases in efficiencies
that will improve the provision of health care while
reducing costs to small businesses that offer their
workers health insurance.
Oversight of Energy Policy
The Committee will conduct hearings and investigations into
energy policy to reduce the cost of energy and increase energy
independence that may include any or all of the following, as
well as matters brought to the attention of the Committee
subsequent to the filing of this Report:
Innovations developed by small businesses
that create greater energy independence.
Federal regulatory policies that increase
dependence on foreign sources of energy.
Policies needed to incentivize production of
energy in the United States.
Examination of commercialization of research
in renewable energy.
Federal regulations or policies that
increase energy costs for small businesses.
The primary thrust of the Committee's efforts will focus on
efforts to use the innovation of America's entrepreneurs to
fuel the drive for greater energy independence, including the
development of renewable energy products.
Oversight of Trade and Intellectual Property Policy
The Committee will conduct hearings and investigations into
international trade and intellectual property policies of
America and its trading partners that may include any or all of
the following, as well as matters brought to the attention of
the Committee subsequent to the filing of this Report:
Impact of free trade agreements to increase
exports by American small businesses.
Oversight of SBA's Office of International
Trade and the agency's efforts to promote small
business exports.
Examination of the impact of illicit actions
by foreign entities on small businesses and whether the
federal government is doing enough to protect their
interests.
Whether the federal government is doing
enough to protect the intellectual property rights of
small businesses by foreign competitors.
The impact of federal intellectual property
policies, particularly patents and copyrights, to
protect the innovations of American entrepreneurs.
Efforts to increase exports by small
businesses.
Whether the United States Trade
Representative and Department of Commerce sufficiently
protect the interests of small businesses in the
negotiation of free trade agreements.
Whether the United States Trade
Representative takes positions at the World Trade
Organization that sufficiently promote the interests of
American small businesses.
The focus of oversight will emphasize the best mechanisms
to promote and protect advanced technology innovations of small
businesses.
Reductions in Programs and Spending
In addition to the programs and policies already cited, the
Committee will examine any and all offices and programs that
fall within the Committee's legislative jurisdiction to find
areas that could lead to reduction in the federal deficit. Some
programs and offices may include:
State Small Business Credit Initiative
operated by Department of Treasury.
Express Loan Program overseen by SBA.
Emergingg Leaders Initiative started by SBA.
Clusters Program initiated by the SBA.
Innovation and Impact Fund Pilot Programs
operated by the SBA.
SBA Office of Policy.
SBA Regional Administrators.
Office of Advocacy Regional Advocates.
SBA Deputy District Directors.
SBA Office of International Trade.
SBA Office of Native American Affairs.
In particular, the Committee will assess whether
reorganization and reassignment of employees to more critical
functions at the SBA, such as positions in the Office of
Government Contracting and Business Development will provide a
more effective agency at helping small businesses to generate
growth.
Programmatic Duplication
The Committee notes that Sec. 18 of the Small Business Act
prohibits duplication of any effort by the Small Business
Administration if a program is already offered by another
federal agency unless the Small Business Administration
expressly authorizes the duplication. The Committee will
continue to monitor the Small Business Administration for
programs that duplicate the efforts of other federal agencies.
SUBPART B
Implementation of the Oversight Plan of the Committee on Small Business
for the One Hundred and Fifteenth Congress
The Committee began 2017 with oversight hearings on a
number of Small Business Administration (SBA) programs. The
Committee focused on small business access to capital;
opportunities for federal government contracting; assistance
with trade and exporting; entrepreneurial development; and
investment and innovation programs. In addition, the Committee
held a wide ranging hearing on SBA programs and management on
April 5, 2017 at which SBA Administrator Linda McMahon
testified.
On November 7, 2017, the Subcommittee on Agriculture,
Energy and Trade held a hearing to further study the SBA's
Small Business Investment Company (SBIC) Program. Members of
the Subcommittee heard from a representative of the Small
Business Investor Alliance, two SBIC program participants, and
a former SBA official who headed the Office of Investment and
Innovation. To follow up on that hearing, on December 17, 2017,
Subcommittee Chairman Blum sent a letter to Joseph Shepard,
Associate Administrator, Office of Investment and Innovation,
SBA, requesting information on the SBIC licensing process.
On October 30, 2017, SBA released its FY 2018-2022
Strategic Plan.\4\ The plan was described by SBA as the
principal document within the agency's performance management
framework, designed to be followed through to all levels of the
organization.\5\ According to the plan, the agency's four
priority goals are to: 1) increase the number of loans by 5% to
small businesses in socially and economically disadvantaged
urban and rural areas; 2) maximize the percent of federal
contracts set aside for small businesses by exceeding the 23%
goal; 3) increase by 10% the number of unique 8(a) small
business contracts awarded; 4) increase the average number of
disaster loan applications processed from three to six
applications per loan specialist. The Committee will closely
follow SBA's progress on these goals.
---------------------------------------------------------------------------
\4\United States Small Business Administration, FY 2018-2022
Strategic Plan, October 30, 2017.
\5\Id. at 6.
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Sec. A. Oversight of SBA Management
The Committee continues to oversee the management of the
Small Business Administration through hearings and meetings
with agency officials and industry representatives. The
hearings held by the Committee and its subcommittees are
detailed in Parts A, B, and C, supra, and will not be repeated
here.
In the Committee's views and estimates on the Budget for
Fiscal Year 2018, the Committee expressed concern about the
ongoing management challenges within the agency, and urged SBA
to implement the open management recommendations made in the
GAO's 2015-2016 report requested by the Committee. GAO found
extensive deficiencies in SBA's management, including problems
with operating procedures, staff management, information
technology and cyber security. The Committee will continue its
close monitoring of SBA's operation and management.
During the May 5, 2017 hearing, at which SBA Administrator
Linda McMahon testified, Chairman Chabot noted that Members had
a lot of unanswered questions from the 114th Congress about how
the agency will address longstanding deficiencies in
management, information technology and program oversight.
Administrator McMahon pledged that SBA would work with the
Committee to make the agency more effective and efficient in
assisting small businesses by improving capital access,
counseling, and government contracting programs. She also said
the SBA will ensure that it provides the services that small
businesses actually need to grow and create jobs.
Over the years, the SBA has struggled with the
implementation of information technology. In fact, a
comprehensive GAO report released in September 2015 noted that
senior SBA leaders had not prioritized long-term organizational
transformation in information technology, and that this deficit
posed a risk to the agency. On July 12, 2017, the Committee
held an oversight hearing on the Small Business
Administration's Office of the Chief Information Officer
(OCIO). At the hearing, the Committee examined whether the OCIO
is operating efficiently and effectively. In particular,
Committee Members expressed concern that the high turnover rate
in the CIO position (eight CIOs since 2005) has undermined the
SBA's ability to make lasting improvements. The Committee also
discussed the need for continued oversight of SBA's technology
investments and improved information security controls, which
recent SBA Inspector General reports have highlighted.
For example, on November 28, 2017, the SBA's Office of
Inspector General released its report on the implementation of
the Federal Information Technology Acquisition Reform Act
(FITARA).\6\ The IG concluded that although SBA has made
progress in implementing the objectives of FITARA, it needs to
consistently establish baseline performance baselines for its
IT investments and update system development guidance to
reflect current project implementation methodologies.\7\ In
addition, SBA should fully deploy a strategy for implementing
enterprise architecture and implement an IT workforce planning
process.\8\ The IG's report recommended six steps that SBA
should take to improve implementation of FITARA. They are: (1)
ensure that SBA's IT oversight body tracks baselines; (2)
regularly measure and report IT project performance against
baselines; (3) update system development policies and
procedures; (4) incorporate IT architecture review into the
acquisition process; (5) implement IT architecture guides; and
(6) develop IT workforce competencies.\9\ SBA management agreed
with the findings and recommendations and complied with
recommendations 1 and 2. Although the IG considers its
recommendations closed, SBA must routinely ensure that the
steps recommended are accomplished.
---------------------------------------------------------------------------
\6\Office of Inspector General, U.S. Small Business Administration,
Review of SBA's Implementation of the Federal Information Technology
Reform Act (FITARA), Report Number 18-06, Nov. 28, 2017. SBA identified
FITARA as ``integral to meeting its strategic goal of implementing and
maintaining modern, secure, and reliable information technology systems
and services.'' Id. at Executive Summary.
\7\Id.
\8\Id.
\9\Id.
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On June 14, 2017, the Committee held a hearing on the SBA's
failed FY 2014 Voluntary Early Retirement Authority (VERA) and
Voluntary Separation Incentive Payment (VSIP) program, which
resulted in the SBA misspending $2.1 million. Although these
failures occurred under a previous Administration, the
Committee wants to ensure that the past is not repeated. To
follow up, on June 26, 2017, Chairman Chabot sent a letter to
SBA Administrator Linda McMahon requesting a copy of the SBA's
final Agency Reform Plan and a briefing on the plan.
For some time, the Committee has been concerned that SBA
imposes binding rules on its regulated entities through
Standard Operating Procedures (SOP). SOPs are not promulgated
according to the Administrative Procedure Act, which sets forth
basic steps an agency must take when proposing and finalizing
agency regulations. The SOP process is not transparent, and SBA
does not seek input from Congress, stakeholders or regulated
entities during the process. Because rulemaking through SOPs
can lead to arbitrary and biased decisionmaking, on November 2,
2017, the Committee held a hearing on this topic and heard
testimony from Joseph Loddo, Chief Operating Officer of the
Small Business Administration. Mr. Loddo pledged to brief
Committee Members regarding SBA's SOP process and to increase
the transparency of the agency's SOPs.
Sec. B. Oversight of Federal Capital Access Programs
Although the economy is improving, small businesses are
still struggling to obtain needed capital to expand and create
jobs. In its Budget Views and Estimates for Fiscal Year 2018,
the Committee outlined its concerns with, and proposals for,
improving the SBA programs devoted to small business financing,
including the 7(a) Loan Program; the Certified Development
Company Loan Program; the Microloan Program; the Small Business
Investment Company Program; and the Disaster Loan Program.
The Committee and its subcommittees held numerous hearings
on capital access programs, described in Parts B and C supra,
on capital access issues. Those descriptions will not be
repeated here.
The Committee has worked with the House and Senate
Committees on Appropriations to ensure that the SBA has
sufficient funds available to meet the demand for 7(a) loans.
House Small Business Committee Members will continue to closely
monitor the operation of the 7(a) loan program to ensure that
it is working effectively and has adequate resources to assist
small businesses.
After the disclosures in 2016 that Wells Fargo, a leading
7(a) loan program and 504 loan program participant, had engaged
in ``improper sales practices,'' the Committee sent letters to
Wells Fargo and the SBA requesting information on whether small
businesses were affected. The Committee requested briefings
from Wells Fargo and is continuing to investigate the extent to
which small businesses may have been affected.
The Committee has continued its close examination of the
Disaster Loan Program to ensure that SBA is prepared for the
next major disaster. Committee Members will continue to monitor
the program and SBA's dissemination of disaster loan
information to ensure it has the capability to process disaster
aid in a timely and efficient manner. Following Hurricane
Harvey in August 2017, Chairman Chabot sent a letter to SBA
Administrator Linda McMahon emphasizing that the SBA must
continue improving its loan process times while guarding
against program fraud and abuse. Chairman Chabot reiterated
that he stands with SBA to ensure that it has the tools needed
to aid small businesses and homeowners in Texas and Louisiana
affected by the disaster.
Building on the Committee's interest in the effect of
financial regulations on small businesses, Chairman Chabot
requested a GAO study of the impact of financial regulations on
community banks and credit unions. Many small banks and credit
unions serve small businesses, and the Committee is interested
in the effect of these regulations on their ability to serve
entrepreneurs. In addition, Chairman Chabot asked GAO to study
the burden of regulations on community banks and credit unions.
GAO's report was issued in February 2018.
On July 10, 2017, Chairman Chabot sent a letter to Richard
Cordray, Director of the Consumer Financial Protection Bureau
(CFPB), expressing concern about two ongoing CFPB rulemaking
matters which may significantly affect small businesses: (1)
CFPB's request for information on the implementation of Section
1071 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act, Pub. L. No. 111-203; and (2) the manner in
which CFPB conducted the Small Business Regulatory Enforcement
Fairness Act (SBREFA) panels on CFPB's rule on Payday, Vehicle
Title and Certain High Cost Installment Loans. Chairman Chabot
also requested that CFPB provide a briefing to Committee staff
on these matters.
In an effort to explore ideas that would unlock vital
capital for small businesses, Chairman Chabot and Ranking
Member Velazquez held a bipartisan roundtable on September 28,
2017. The purpose of the roundtable was to learn more about
Goldman Sachs' 10,000 Small Businesses Initiative, which helps
entrepreneurs create jobs and economic opportunity by providing
greater access to education, capital and business support
services.
The Committee continued its oversight of the Small Business
Administration's Microloan Program. On October 12, 2017, the
Small Business Subcommittees on Oversight, Investigations, and
Regulations and Economic Growth, Tax, and Capital Access held a
joint hearing to probe whether the SBA has made progress on the
recommendations that the SBA Office of the Inspector General
(OIG) issued for the SBA Office of Capital Access (OCA) in its
2009 audit of the Program. On September 28, 2017, the SBA OIG
released a new audit of SBA's Microloan Program. At the
hearing, the Committee heard testimony from the SBA OIG that
although SBA agreed with the six recommendations in the OIG's
2009 audit, SBA has not adequately implemented all of them.
According to the 2017 IG audit, SBA used site visits to verify
the data reported by program intermediaries. However, SBA did
not have a site visit plan or summary data from its visits.
Committee Members queried the witnesses to ensure that going
forward, SBA will have a site visit plan, conduct site visits
and compile data summarizing the visits. After the IG's most
recent audit in 2017, SBA again said it agreed with all of the
IG's recommendations, and SBA pledged to implement them. The
Committee will continue its rigorous oversight of this program
and of SBA's OCA.
January 9, 2018, Chairman Chabot introduced H.R. 4743, the
Small Business 7(a) Lending Oversight Reform Act, which was
cosponsored by Ranking Member Velazquez. H.R. 4743 is
bipartisan, bicameral legislation that would improve the
oversight of SBA's 7(a) Loan Program by: (1) codifying the
Office of Credit Risk Management and its duties; (2) requiring
SBA to detail its oversight budget in a transparent manner; and
(3) requiring SBA to perform a full risk analysis of the 7(a)
program annually. The bill would also strengthen SBA's Credit
Elsewhere Test by clarifying the factors that SBA must consider
in determining whether the test has been met. On January 14,
2018, the Committee held a hearing on H.R. 4743 to obtain
testimony from key stakeholders on the proposed changes to the
7(a) Program. Representatives of stakeholder groups testified
that the changes in H.R. 4743 would clarify and bolster the
test, bolster the 7(a) program and ensure its integrity and
protect taxpayer dollars.
At the request of Chairman Chabot, the Government
Accountability Office (GAO) studied how regulations affect the
community banks and credit unions that deliver needed capital
to small businesses. GAO's report, which was released in
connection with a hearing by the full Committee on February 28,
2018, found that regulations for reporting mortgage statistics,
reviewing transactions for potentially illicit activity, and
disclosing mortgage terms were most burdensome.\10\
Institutions said these regulations were time consuming and
costly to comply with because they are complex and require
individual reports or mandated actions within specific time
frames. GAO said that Congress intended that regulators
consider the cumulative effect of all federal financial
regulations when reviewing and assessing regulations. The
Consumer Financial Protection Bureau (CPFB) has formed an
internal group to review regulations it administers, but the
agency has not announced the scope of regulations included, the
timing and frequency of reviews, and the extent it will
coordinate with other regulators.\11\ The Committee plans to
continue its oversight of these important issues.
---------------------------------------------------------------------------
\10\GAO, Community Banks and Credit Unions: Regulators Could Take
Additional Steps to Address Compliance Burdens 1 (GA0-18-213) (2018).
\11\Id.
---------------------------------------------------------------------------
In March 2018, the Office of the Small Business
Administration's (SBA) Inspector General (OIG) released a
report revealing that SBA has made an increasing number of 7(a)
program loans to large poultry operators. On April 18, 2018,
Chairman Chabot called the SBA's Inspector General before the
Committee to testify on the report. The IG explained in his
testimony that the restrictive contracts under which the
poultry growers operate mean that they are considered
affiliates of the large poultry operators, rather than
independent small businesses. Committee Members heard how SBA
intends to implement the OIG's recommendations to ensure that
future 7(a) loans meet the statutory, regulatory, and SBA
requirements for eligibility.
Sec. C. Oversight of SBA and Other Entrepreneurial Development Programs
Almost one quarter of the SBA's budget is devoted to
providing outreach and technical assistance to small
businesses, which is accomplished through SBA entrepreneurial
development programs. In the Committee's budget views and
estimates for Fiscal Year 2018, the Committee assessed the
effectiveness of these programs, and recommended that SBA
eliminate the programs that are duplicative or mirror those
that are provided by other federal agencies or the private
sector. In 2017 and 2018, the Committee and its subcommittees
continued this oversight, conducting numerous hearings on SBA's
entrepreneurial development programs.
On April 5, 2017, SBA Administrator Linda McMahon testified
before the full Committee on her vision and plan for the
agency. Chairman Chabot noted that the Committee takes its
oversight role seriously and works in a bipartisan manner on
oversight. Ranking Member Velazquez spoke about the importance
of SBA management being efficient and effective. Administrator
McMahon said that she has been meeting with SBA officials and
learning more about each component of the agency. She said she
is not satisfied that SBA has the proper metrics in place and
may be measuring output rather than outcomes.
The Committee believes that SBA's entrepreneurial
development programs should be available to more entrepreneurs
and that technology can help to propel their growth. On
September 14, 2017, the Subcommittee on Health and Technology
held a hearing to examine how the counseling and training
programs have evolved. Because of the market's increasing
reliance on technology, the Committee wants to ensure that the
programs not only incorporate technology training in their
programs, but also employ technology to increase services to
more clients. Today, small businesses must adopt technology to
stay competitive in the global marketplace.
On October 12, 2017, the Subcommittee on Health and
Technology held a hearing on promoting women's entrepreneurial
success. More women entrepreneurs are starting businesses, and
some data shows that women are starting businesses twice as
fast as men. Gaps still exist in access to capital, however.
More women have difficulty accessing financing that is adequate
to start and grow their companies. The Subcommittees
highlighted the resources that are available to assist women
entrepreneurs, including Women's Business Centers, Small
Business Development Centers, SCORE and the Women's Enterprise
Development Center. Witnesses urged SBA to improve the
marketing of services that are available to women.
Sec. D. Oversight of Federal Government Contracting Matters
One of SBA's primary missions is to ensure that small
businesses receive a ``fair proportion of the total purchases
and contracts for property and services for the Government in
each category . . .'' 15 U.S.C. Sec. 644(a). Congress has
established a number of programs designed to increase federal
government contracting opportunities for small firms. In
addition, taxpayers benefit from a competitive market, because
greater competition generally results in lower prices for goods
and services. The Committee held a number of hearings on issues
related to federal government contracting. Those hearings are
described in Parts B and C, supra, and will not be repeated
here.
On March 7, 2017, Chairman Chabot sent a letter to GAO
Comptroller General Gene Dodaro requesting a GAO review of the
effect of change orders in federal procurement contracts.
Because the increasing frequency of federal agencies changing
contracts after they are executed, small businesses have been
forced to absorb the extra costs, sometimes driving them out of
business. Chairman Chabot, Chairman Mac Thornberry, Chairman of
the House Committee on Armed Services, and Representative Steve
Knight asked GAO to investigate the timeframe for Department of
Defense Weapon Systems Awards. GAO will examine whether the
timeframe has increased in recent years, and the factors
affecting the length of time needed to award contracts.
The Committee is also interested in the extent to which
federal agencies with procurement powers have complied with
requirements relating to the duties and qualifications of
directors of the Offices of Small and Disadvantaged Business
Utilization. Chairman Chabot and Ranking Member Velazquez
requested that GAO determine compliance with these requirements
and the extent that staffing levels had on that compliance. The
study was published in August of 2017 and the Committee held a
hearing on October 25, 2017 examining the results of the
report. Additionally, the Committee sent a total of 14 letters
to agencies the GAO found to be noncompliant, requesting
additional information from these agencies explaining their
noncompliance.
Committee Members continue to closely follow the process
that federal agencies use to assign North American Industrial
Classification System (NAICS) codes to federal procurement
contracts. In 2017, Chairman Chabot and Ranking Member
Velazquez asked GAO to report on agency policies for assigning
NAICS codes and whether those policies comply with laws,
regulations and internal control standards. In addition, GAO
will report on SBA's policies for hearing appeals of
contracting officer designation of NAICs codes. The study
published on December 5, 2017, did not indicate wrongdoing with
the assignment of NAICS codes and found that the SBA's Office
of Hearings and Appeals dismissed or denied the majority of
appeals.
Chairman Chabot and Chairman Lamar Smith, Chairman of the
House Committee on Science, Space, and Technology, requested in
2017 that GAO review and issue a report on the Small Business
Innovation Research (SBIR) Program. That work is currently
underway. On August 22, 2017, Chairman Chabot, House Energy and
Commerce Committee Chairman Greg Walden, and Energy and
Commerce Subcommittee on Oversight and Investigations Chairman
Tim Murphy sent a letter to The Honorable Scott Pruitt,
Administrator of the Environmental Protection Agency, and
requested information on EPA's reporting of SBIR program data
to the SBA.
Committee Members expressed concern about federal
government-initiated, unilateral contract modifications, or
contracting change orders, and their negative effect on small
construction contractors. On March 3, 2017, Chairman Chabot,
Ranking Member Velazquez, Rep. Steve Knight and Rep. Stephanie
Murphy wrote a letter to the Comptroller General of the United
States, Gene Dodaro, to request a GAO study on the use of
change orders in federal construction contracts and their
effect on small businesses. In particular, GAO was asked to
address the statutory and regulatory framework that applies to
change orders; time frames that apply to the issuance and
settlement of change orders; agency guidelines for issuing and
paying for change orders; and evidence of change order
``bundling.'' In addition, on August 2, 2017, Chairman Chabot
sent a letter to Comptroller General Dodaro asking to become a
co-requestor for the GAO study on the effects of the United
States Supreme Court's decision in Kingdomware Technologies v.
United States. That study was requested by House Veterans'
Affairs Committee Subcommittee on Oversight and Investigations
Chairman David Roe, M.D.
Following up on the GAO's work in 2013 and 2017 on federal
contracting with the Department of Veterans Affairs,\12\ on May
25, 2017, the Small Business Subcommittees on Contracting and
Workforce and Investigations, Oversight, and Regulations held a
hearing to broadly examine this issue. The Subcommittees heard
testimony from witnesses who explained the delays and increased
financial burden caused by change orders, and discussed
potential legislative changes that could offset some of the
associated financial risk.
---------------------------------------------------------------------------
\12\GAO, VA Construction: Additional Actions Needed to Decrease
Delays and Lower Costs of Major Medical-Facility Projects (GAO-13-302)
(2013); GAO, VA Construction: Actions to Address Cost Increases and
Schedule Delays at Denver and Other VA Major Medical-Facility Projects
(GAO-15-564T) (2015).
---------------------------------------------------------------------------
Members of the Committee continue to be concerned about the
health of the industrial base, the low number of small business
suppliers to the federal government, and other issues related
to small businesses who wish to compete for federal procurement
contracts. Chairman Chabot and Ranking Member Velazquez
testified in support of the Committee's small business
procurement legislation before the House Committee on Armed
Services on April 27, 2017, and expressed appreciation to House
Armed Services Committee Chairman Mac Thornberry for the Armed
Services Committee's longstanding collaboration with the Small
Business Committee. Chairman Chabot requested that the
Committee's bipartisan small business provisions be included in
H.R. 2810, the National Defense Authorization Act (NDAA) for
Fiscal Year 2018. Chairman Chabot also stressed the importance
of the Committee's small business government contracting
reforms and economic development provisions to keeping
procurement costs competitive.
The Armed Services Committee included the Committee's small
business provisions in H.R. 2810. The bill passed the Committee
on Armed Services on June 29, 2017, the House as amended on
July 14, 2017 by a vote of 344-81 (Roll Call No. 378) and the
Senate as amended on September 18, 2017 by a vote of 89-8 (Roll
No. 199). The House passed the FY 2018 NDAA conference report
on November 14, 2017 by a vote of 356-70 (Roll Call No. 631).
The Senate passed the conference report on November 16, 2017 by
voice vote. The conference report was signed by the President
on December 12, 2017 and became Public Law No. 115-91.
In 2018, Chairman Chabot and Ranking Member Velazquez again
expressed appreciation to House Armed Services Committee
Chairman Mac Thornberry for his committee's longstanding
collaboration with the Small Business Committee, and asked the
Armed Services Committee to include 13 bipartisan Committee
small business bills in H.R. 5515, the National Defense
Authorization Act (NDAA) for Fiscal Year 2019. On April 11,
2018, Chairman Chabot and Ranking Member Velazquez testified
before the House Armed Services Committee in support of the
Small Business Committee's provisions. Chairman Chabot asked
Armed Services Committee to include the bills on the SBIR/STTR
programs, small business federal contracting, cybersecurity,
and access to capital, as they are critical to ensuring a
robust industrial base.
On June 28, 2017, Committee Members held a bipartisan
roundtable with service-disabled veteran-owned small business
owners, government contracting experts and stakeholder groups
to examine how to better assist veteran-owned small businesses
obtain federal contracts. The participants exchanged ideas on
how veteran-owned small businesses can succeed following the
United States Supreme Court decision in Kingdomware
Technologies, Inc. v. United States, which requires the U.S.
Department of Veterans Affairs to put veterans first in all
procurement actions, upholding the ``rule of two.''
The Committee continued its oversight of SBA programs in
Puerto Rico. The Puerto Rico Oversight, Management, and
Economic Stability Act (PROMESA) required the Government
Accountability Office to study the application and utilization
of the Small Business Administration's federal contracting
preference programs in Puerto Rico. GAO's report was released
on June 29, 2017 (GAO-17-550). On July 13, 2017, the
Subcommittees on Contracting and Workforce and Economic Growth,
Tax, and Capital Access held a joint hearing to discuss the
report's findings, which found that for 2006 through 2016, a
higher percentage of federal contracting obligations were
awarded to small businesses within Puerto Rico compared to the
percentage of small businesses nationwide. Stakeholders
indicated that some contracting challenges may be exacerbated
by Puerto Rico's geography and economic conditions.
Over the years, government watchdogs, including GAO and
SBA's Inspector General, have found numerous problems with
SBA's HUBZone Program. The Committee is committed to addressing
them. The Subcommittee on Contracting and Workforce held a
hearing on March 2, 2017 on ways to strengthen and modernize
the program. On August 19, 2017, Ranking Member Velazquez and
Chairman Chabot introduced H.R. 3294, the HUBZone Unification
and Stability Act, comprehensive and bipartisan legislation
mandating that SBA institute HUBZone program performance
metrics; verify certification; and increase program oversight.
At a September 13, 2017 hearing, the full Committee and a panel
of expert witnesses considered these and other changes to the
HUBZone program. H.R. 3294 was included in H.R. 2810, the FY
2018 National Defense Authorization Act, which passed the House
as amended on July 14, 2017, by a vote of 344-81 (Roll Call No.
378) and the Senate as amended on September 18, 2017 by a vote
of 89-8 (Roll No. 199). On November 14, 2017, the House passed
the FY 2018 NDAA conference report by a vote of 356-70 (Roll
No. 631) and the Senate on November 16, 2017 by voice vote.
The Committee heard from advanced and mid-tier small
businesses that have grown out of their size standards and are
no longer considered small, but are not large enough to compete
with larger businesses. Some studies have shown that these
companies may have limited opportunities. On November 14, 2017,
the Committee held a bipartisan roundtable for Members to learn
more about the unique challenges that these businesses face.
On January 18, 2018, the Subcommittee on Agriculture,
Energy, and Trade held a hearing titled ``Engaging Energy:
Small Business Resources at the Department of Energy.''
Subcommittee Members queried Charles Smith, Director of the
Department of Energy's (DOE) Office of Small and Disadvantaged
Business Utilization (OSDBU) on meeting small business
contracting goals and the programs that DOE offers to small
businesses. Mr. Smith said he will focus on DOE's
underperformance in subcategory contracting goals, and
improving small business participation in its programs.
Committee Members requested a briefing from the Office of
Management and Budget on its views about H.R. 5337, the
Accelerated Payments for Small Businesses Act of 2018. Chairman
Chabot, Ranking Member Velazquez, Subcommittee Chairman Steve
Knight and Subcommittee Ranking Member Stephanie Murphy wrote
to OMB Director Mick Mulvaney in December 2017 expressing
concerns about OMB Memorandums M-11-32 and M-12-16, which
directed federal agencies to accelerate payments to small prime
contracts and other-than-small businesses with a goal of
payment within 15 days.
The Small Business Subcommittee on Investigations,
Oversight, and Regulations and the Veterans' Affairs
Subcommittee on Oversight and Investigations held a joint
hearing on July 17, 2018 to examine the progress of the
Department of Veterans Affairs (VA) and the Small Business
Administration (SBA) in harmonizing definitions related to
service-disabled veteran-owned small businesses (SDVOSBs). The
hearing also examined SBA's readiness to assume the remaining
verification functions from the VA's Center for Verification
and Evaluation and the benefits of extending verification of
SDVOSBs government-wide.
Continuing the Committee's oversight activities regarding
protection of subcontracting opportunities for small
businesses, Committee members on August 16, 2018, joined by the
Chairman and Ranking Member of the Senate Committee on Small
Business and Entrepreneurship, requested the GAO study what
agency oversight activities and protocols are undertaken to
ensure prime contractor compliance with subcontracting plan
requirements in section 8(d) of the Small Business Act and
examine how effectively agencies are utilizing statutory
penalties that may be levied against noncompliant prime
contractors.
Additionally, members of the Committee joined by members of
the House Armed Services Committee sent a letter to the Office
of Federal Procurement Policy on September 13, 2018, requesting
information regarding a severe delay in enacting critical small
business provisions of Public Law 112-239, specifically,
section 1651--revisions to the limitations on subcontracting.
Sec. E. Oversight of Federal Regulatory and Paperwork Burdens
Under Cl.1(q) of the Rules of House of Representatives, the
Committee has jurisdiction over the protection of small
businesses and regulatory flexibility. The Committee's past
work on the Regulatory Flexibility Act, Pub. L. No. 96-354, and
its subsequent legislation to amend the Act, H.R. 33, the Small
Business Regulatory Flexibility Improvements Act of 2017, which
was included in H.R. 5, the Regulatory Accountability Act,
which passed the House on January 11, 2017, underscore the
importance that the Committee places on strengthening
requirements that federal agencies tailor their regulations to
reduce economic burdens on small businesses.
The Committee continues to take an active role in
overseeing how federal government agencies develop their
regulations to ensure that these rules do not impose undue
burdens on small firms. The Committee remains concerned about
the effect on small businesses of proposed and final rules
issued by federal agencies. The Committee's interactive web
tool, Reg Watch, regularly lists the details of proposed
federal rules that may affect small businesses so small
business owners can review and comment on them.
The Committee and its subcommittees held several hearings
on the burdens of federal regulations and paperwork
requirements on small businesses. These hearings are detailed
in Parts A and B, supra, and will not be repeated here. In
addition, Chairman Chabot was an original cosponsor of H.J.
Res. 37, the Congressional Review Act resolution that nullified
the rule finalized by the Department of Defense, the General
Services Administration, and the National Aeronautics and Space
Administration on August 25, 2016. That rule revised the
Federal Acquisition Regulation to implement Executive Order
13673 concerning contractor compliance with labor laws (also
known as the ``Blacklisting Rule''). H.J. Res. 37 passed the
House on February 2, 2017, the Senate on March 6, 2017, and was
signed into law on March 27, 2017 (Pub. L. No. 115-11).
The confusing and costly federal permitting process was the
subject of a full Committee hearing on September 6, 2017.
Committee Members heard testimony from small business owners
about the challenges of navigating through a complex system of
federal laws and regulations, which requires a significant time
and expense. Members also examined how the process of federal
permitting requirements could be streamlined.
On November 27, 2017, the Committee held a hearing on
federal regulations that burden the small trucking industry.
This hearing followed a hearing the Committee held during the
112th Congress titled, ``Do Not Enter: How Proposed Hours of
Service Are a Dead End for Small Businesses.'' At the hearing,
Committee Members heard from small trucking company
representatives about how the proposed regulations will
adversely affect them, restricting drivers, increasing time off
the road, and resulting in lost earnings and lost efficiencies.
During the Second Session of the 115th Congress, the
Committee continued its hearings on burdensome federal
regulations. For example, on February 27, 2018, the
Subcommittee on Economic Growth, Tax, and Capital Access
convened a hearing to explore occupational licensing
requirements that impede small businesses from opening or
expanding.
On March 7, 2018, the Committee held a hearing on the
effects of Congress and the President's regulatory reform and
rollback efforts on small businesses. At the hearing, Committee
Members heard from small business representatives detailing how
federal regulations continue to be a problem for small
businesses and highlighted regulatory reform actions that
Congress can take to continue to reduce the burden.
On June 21, 2018, the Subcommittee on Agriculture, Energy,
and Trade convened a hearing to explore how federal regulations
affect small farmers and ways to provide regulatory relief to
the industry. Committee Members heard from small farmers
specific regulations that are problematic for their industry
and proposed steps Congress could take to address these
regulatory burdens.
During the 115th Congress, the Committee held several
hearings on the burden of paperwork on small business owners.
With some limited exceptions, the Paperwork Reduction Act
requires all executive departments and independent regulatory
agencies to obtain approval from the Office of Management and
Budget in advance of collecting information from or imposing a
reporting or recordkeeping requirement on 10 or more persons.
On March 27, 2017, the Committee examined the Paperwork
Reduction Act's effectiveness in reducing the paperwork burden
on small businesses and issues that may warrant further
scrutiny or legislative action. Building on its first hearing,
on October 11, 2017, the Committee held the second in a series
of oversight hearings on the Paperwork Reduction Act. At the
hearing, the Committee heard testimony from federal agency
chief information officers on whether the current law has
reduced the paperwork burden on small firms. The witnesses said
that although the paperwork burden continues to increase,
agencies are striving to find ways to reduce burdens on small
businesses. They proposed several reforms, including stronger
enforcement for monetizing costs and setting reduction targets,
and greater use of online reporting.
The Committee has explored the financial regulatory burdens
on small community banks and credit unions. The Government
Accountability Office (GAO) released a report at the
Committee's hearing on February 28, 2018 that examined the
challenge of compliance with financial regulations for the
nation's small community banks and credit unions. In
particular, GAO found that regulations for reporting mortgage
characte1istics were the most burdensome because these
regulations were complex, require individual reports, added
significant time to loan closings, and resulted in the charging
of fees. In addition, some compliance burdens arose from
misunderstanding disclosure regulations, which led to
institutions taking action that were not required.
As part of its ongoing oversight efforts, Chairman Chabot
and Ranking Member Velazquez wrote letters to federal agencies
that have failed to fully comply with the Small Business
Regulatory Enforcement Fairness Act of 1996\13\ (SBRFEA), which
requires agencies to report to Congress annually on small
entity compliance guides that are required for every final rule
that has a significant impact on a substantial number of small
entities under the Regulatory Flexibility Act. Very few federal
agencies have complied with this requirement, and the Committee
plans to ensure agencies comply with this section of the law.
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\13\Small Business Regulatory Enforcement Fairness Act of 1996,
Pub. L. No. 104-121, Sec. 212(a)(1), 110 Stat. 847 (codified at 5
U.S.C. Sec. 631 note).
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Sec. F. Oversight of Federal Tax Policy
The Committee and its subcommittees held several hearings
on federal tax policy. These hearings are described in Part A,
supra, and will not be repeated here. In addition, numerous
meetings were held with industry representatives to gauge the
impact of tax policies on small businesses.
On February 15, 2017, the Committee heard testimony from
small business owners who stated that provisions in the current
tax code which penalize saving and risk-taking present the
biggest barrier to American entrepreneurship. Data provided by
the National Small Business Association reported that the
majority of small businesses, 68 percent, spend more than
$1,000 per year on federal tax compliance.
Following a March 30, 2017 report by the Department of the
Treasury's Tax Inspector General for Tax Administration (TIGTA)
on the Internal Revenue Service's seizures of small business
assets related to presumed structuring under the Bank Secrecy
Act, the Subcommittee on Investigations, Oversight, and
Regulations held a bipartisan roundtable for Committee Members.
The roundtable featured the TIGTA Inspector General and his
staff, as well as small businesses that have been investigated
and targeted by the IRS and had their legally-obtained income
seized and forfeited.
On July 24, 2017, Chairman Chabot sent a letter to Rep.
Peter Roskam, Chairman of the Ways and Means Subcommittee on
Tax Policy, outlining the tax reform priorities of small
business owners. The Chairman's letter followed a hearing by
the Ways and Means subcommittee exploring the ways that tax
reform can help small businesses to grow and create jobs. In
the letter, Chairman Chabot asked that the Ways and Means
Committee consider how tax reform will benefit small businesses
when the Committee is deliberating tax reform.
The Committee has been interested in ideas to help simplify
the tax code, which burdens small businesses with its size and
complexity. On October 4, 2017, the Committee held a hearing to
explore possible solutions for small businesses in H.R. 3717,
the Small Business Owners' Tax Simplification Act. H.R. 3717 is
bipartisan legislation that was introduced by Chairman Chabot
and cosponsored by Ranking Member Velazquez. It would address
many of the tax problems that small business owners face,
including allowing small business owners as well as employees
to participate in pre-tax cafeteria benefit plans; establishing
uniform standards and procedures for electronic signatures;
realigning tax filing thresholds; and clarifying that voluntary
worker training does not affect employer worker classification.
On January 30, 2018, Chairman Chabot testified at the Ways and
Means' Oversight Subcommittee Member Day hearing on Legislation
to Improve Tax Administration on the simplification proposals
contained in H.R. 3717.
In addition, the Committee has raised awareness of the
importance of retirement plans for small businesses, and the
Internal Revenue Service's recent employee retirement plan fee
changes. On April 17, 2018, the Subcommittee on Economic
Growth, Tax, and Capital Access held a hearing to hear directly
from the IRS about these fee changes and provide feedback from
small businesses on their impact.
On July 25, 2018, the Committee heard testimony from
witnesses whose businesses have benefited from the Tax Cuts and
Jobs Act. Members heard testimony directly from small business
owners about the impact the law has had on their operations and
their outlook going forward. Witnesses emphasized the 20
percent deduction, Section 170 expensing, bonus depreciation
and the estate tax amended threshold as provisions that have
helped their businesses.
Sec. G. Oversight of Health Policy
The Committee continued its interest in rural health
issues. On July 20, 2017, the Subcommittees on Health and
Technology and Agriculture, Energy, and Trade held a joint
hearing on telemedicine in rural areas and efforts to increase
health care options for rural patients, providers and insurers.
Committee Members will continue to monitor developments on
these issues.
On December 14, 2017, Chairman Chabot sent a letter to IRS
Acting Commissioner David Kautter requesting information about
the IRS' application of Affordable Care Act employer mandate
penalty payments to small businesses.
Sec. H. Oversight of International Trade Policy and Intellectual
Property
The Committee and its subcommittees held a number of
hearings on international trade policy during the 115th
Congress. The topics and descriptions of these hearings are
detailed in Parts A and B, supra, and will not be repeated
here.
On March 2, 2017, Chairman Chabot sent a letter to Patrick
Kirwan, Director of the U.S. Department of Commerce's Trade
Promotion Coordinating Committee, requesting an overdue
Federal-State Export Strategy report required by the Trade
Facilitation and Enforcement Act.\14\ Chairman Chabot also sent
a letter to Acting SBA Inspector General Hannibal ``Mike''
Ware, requesting an overdue STEP Grant Program report required
by the Trade Facilitation and Enforcement Act.\15\
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\14\Pub. L. No. 114-125, 130 Stat. 177 (2016).
\15\Id.
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As part of its continuing oversight over SBA trade
programs, on May 23, 2017, the Committee held a hearing to
examine the efforts of the SBA's Office of International Trade.
The witness at the hearing was Peter Cazamias, Associate
Administrator, Office of International Trade, SBA. Mr. Cazamias
testified that although there are over 28 million small
businesses in the United States, fewer than 5 percent are
exporters. He acknowledged that there is room for improvement,
which he stated could be addressed in three ways: the need for
information, the need for capital, and the need among small
businesses for overseas promotional services and market access.
Mr. Cazamias assured the Committee that he would be committed
to ensuring that our small business exporters find all the
support they need to expand into international markets.
Many small businesses face significant challenges in
exporting to foreign markets. On April 11, 2018, the Committee
held a hearing on the current state of trade for small
businesses. The Committee heard testimony from small businesses
and experts on the State Trade and Export Grant Program (STEP)
and the federal government's overall efforts to increase small
business exports. The Committee also explored recent trade
policy developments and their impact on small businesses.
The Committee held several hearings on intellectual
property policy. On May 16, 2018, the Committee held a hearing
titled ``Intellectual Property 101: How Small Businesses Can
Utilize Intellectual Property Protections'' to give Committee
Members a basic understanding of the protections a small
business owner might require. A second hearing was held on July
11, 2018 titled ``Innovation Nation: How Small Businesses in
the Digital Technology Industry Use Intellectual Property,''
where Members heard testimony from small businesses in the
digital technology industry that use intellectual property.
Small business owners and experts provided testimony about the
challenges small firms face in protecting their ideas.
Sec. I. Oversight of Workforce Development Policy
One of the problems most frequently mentioned by small
businesses is a lack of available workers. During the 115th
Congress, the Committee held a number of hearings on this
topic, including the Subcommittee on Growth, Tax, and Capital
Access hearing titled ``Examining the Small Business Labor
Market'' on September 7, 2017; the Subcommittee on Agriculture,
Energy, and Trade hearing ``Bridging the Entrepreneurial Gap''
on December 11, 2017; the full Committee hearing ``Job
Creation, Competition, and Small Businesses in the United
States Economy'' on February 14, 2018; and the full Committee
field hearing ``Workforce Development: Closing the Skills Gap''
on February 26, 2018. Members learned more about the education
and training programs that are helping to increase workforce
development and address the skills gap.
The Committee has also heard the concerns of small business
owners that there is a lack of qualified workers for vacant
positions, and that occupational licensing can impede small
business growth and job creation. On March 29, 2018, Chairman
Chabot wrote to Major Clark, III, Acting Chief Counsel for
Advocacy with the Small Business Administration, and asked the
Office of Advocacy to conduct a study of occupational licensing
and its economic effects for small firms.
A persistent complaint among small business owners is the
lack of qualified workers. On May 8, 2018, the Committee held a
hearing titled ``Ready, Willing and Able to Work: How Small
Businesses Empower People with Developmental Disabilities.''
Small business owners and advocates for the developmentally
disabled testified about the role that small businesses play as
employers, and how small business owners can learn more about
opportunities to employ those with developmental disabilities.
The Committee's hearing on June 6, 2018 explored the ``gig
economy'' and the entrepreneurs who are part of it. Members
heard testimony from millennials who explained the role of co-
working, the reality of being a small business owner in the gig
economy, and the impact of the gig economy on small firms.
Workers in the gig economy are another resource for small
businesses that are growing and expanding in today's improving
economy.
On June 14, 2018, the Subcommittee on Economic Growth, Tax,
and Capital Access held a hearing on solutions to the ``skills
gap,'' which has resulted in the inability of many small firms
to expand due to lack of qualified employees. Experts provided
testimony that innovative training programs, partnering with
community colleges, and programs that match job seekers with
available positions have all yielded positive results.
Many Members have expressed concern about the nation's
opioid epidemic and its effect on the small business workforce.
On September 11, 2018, the Committee held a hearing to explore
the epidemic and its related issues. Experts provided testimony
on the extent of the crisis and possible solutions for small
business owners.
On September 26, 2018, the Subcommittee on Contracting and
Workforce held a hearing examining the pilot and mechanic
shortage in the aviation industry in the context of small
businesses. Experts provided testimony that the impact of this
shortage will not only impact small businesses operating within
the aviation sector, such as small flight schools, mechanic and
repair shops, and regional airlines, but will also negatively
affect the U.S. and global economy broadly. Testimony was
provided indicating that reversing this decline is key to
ensuring the air transportation industry can continue to
succeed and meet the growing demands of the modern world.
Sec. J. Reductions in Programs and Spending
On March 1, 2017 and February 14, 2018, the Committee
reported its annual Budget Views and Estimates letters. In
those letters, the Committee expressed its ongoing concerns
that the current federal regulatory framework makes it
difficult for small businesses to comply with regulations.
Rather than promoting economic progress, the federal government
imposes a regulatory regime that makes it difficult for small
firms to compete globally. It can be said that today the
biggest problem facing entrepreneurs is overly burdensome
regulations.
Small businesses are an integral part of local communities,
and their owners, like their neighbors, want clean air and
water, and safe workplaces, products, and foods. Small
businesses want to comply with regulations, but they cannot do
so if the regulations are crafted in a way that makes it
impossible for entrepreneurs to comply. Recognition that small
businesses were disproportionately burdened by one-size-fits-
all regulations and underrepresented in the federal rulemaking
process spurred Congress to enact the Regulatory Flexibility
Act (RFA)\16\ in 1980. The RFA requires agencies to assess the
economic impacts on small businesses when they are designing
new rules and to evaluate alterative approaches that reduce
significant compliance burdens. The law also requires agencies
to review existing rules that affect small businesses to
determine whether they should be continued, changed, or
rescinded. The RFA has been amended twice, in 1996 and 2010, to
increase agency compliance with the law.
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\16\5 U.S.C. Sec. Sec. 601-612.
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Even with the amendments Congress has enacted, agency
compliance has remained inconsistent. Too often, agencies are
exploiting gaps in the law's current requirements or ignoring
their obligations under the law. The Committee has closely
examined agency compliance with the RFA over many Congresses
and concluded that further strengthening of the law is needed
to ensure that federal agencies comply with its requirements
and truly consider the effects of regulations on small
businesses. The Chairman introduced H.R. 33, the Small Business
Regulatory Flexibility Improvements Act, to remedy the
weaknesses in the existing law and strengthen its provisions.
That legislation was included as Title III in H.R. 5, the
Regulatory Accountability Act, which the House passed on
January 11, 2017 by a vote of 238-183. The Committee expects
that no additional funds will be required to implement the
requirements of the Small Business Regulatory Flexibility
Improvements Act because agencies already engage in the kind of
outreach and analysis that is required by the legislation.
The legislation simply clarifies the RFA's existing
requirements and codifies certain agency practices, such as
conduct outreaching to affected small businesses before
proposing a rule and memorializing the input those parties
provide in a report that is published with the proposed rule.
It also requires federal agencies to examine the reasonably
foreseeable indirect effects of significant rules, conduct more
detailed analyses of the possible economic consequences of
significant rules, and evaluate the cumulative economic impact
of rules on small businesses. However, the Committee believes
there is significant overlap between the regulatory analysis
and outreach already done by agencies under executive orders
such as Executive Order (E.O.) 12,866, E.O. 13,563, and E.O.
13,610, and statutes such as the National Environmental Policy
Act which requires agencies estimate the indirect effects of
some regulations.
The Committee's 2017 and 2018 Views and Estimates letter
expressed continuing concern about SBA-created initiatives that
often duplicate SBA's longstanding small business outreach
efforts. Under 7(a)(25) of the Small Business Act, SBA was
granted authority to create pilot programs to ensure
flexibility and meet unexpected needs in a diverse economy.
However, SBA has abused the authority by creating programs that
continue longer than one would expect a pilot program to last.
Often these SBA-created initiatives are not adequately
assessed by SBA prior to or after their implementation. In the
Committee's view, funding for these programs could be
eliminated without hindering outreach to small businesses, and
the funds saved could be reallocated to technology
improvements, hiring appropriate SBA employees to ensure small
businesses gain their fair share of government contracts or
implementing the priorities that Congress has mandated for the
SBA.
REGULATORY REVIEW
Legislative and Oversight Activity Related to Regulations, Orders,
Administrative Actions and Procedures by Federal Agencies Within the
Jurisdiction of the Committee on Small Business\17\
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\17\Under House Rule X, the Committee on Small Business has
jurisdiction over the protection of small business, including
``financial aid, regulatory flexibility, and paperwork reduction'' as
well as jurisdiction over the participation of small businesses in
government contracts. In addition, under Rule X, cl. 3(1), the
Committee has continuing oversight of ``the problems of all types of
small businesses.''
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The Committee continues to closely monitor federal agency
regulations that affect small businesses and their
implementation. A comprehensive review of the Committee's
regulatory oversight is detailed below. The Committee continues
to maintain and regularly update Reg Watch, an online
regulatory tool that explains federal regulations that may
significantly impact small entities, and provides a means by
which small businesses can comment on proposed regulations
directly to the appropriate federal agency.
115th Congress, First Session
1/3/17. Chairman Chabot introduced H.R. 33, the Small
Business Regulatory Flexibility Improvements Act, legislation
to force federal regulators to promulgate less burdensome
regulations that consider their direct and indirect effects on
small businesses. The House passed H. R. 33 on January 11, 2017
as part of Title III of H.R. 5, the Regulatory Accountability
Act by a vote of 238-183.
1/3/17. Chairman Chabot introduced H.R. 79, Helping Angels
Lead Our Startups (HALOs) Act, legislation to clarify the
definition of ``general solicitation'' under federal securities
law and allow angel investor groups to host events to allow
entrepreneurs to demonstrate their work and connect with
potential backers. H.R. 79 passed the House on January 10, 2017
by a vote of 344-73, and was included in H.R. 10, the Financial
CHOICE Act, which passed the House on June 8, 2017 by a vote of
233-186. H.R. 79 was later included in S. 488, the JOBS and
Investor Confidence Act, which passed the Senate on September
11, 2017 by unanimous consent, the House on July 17, 2018 under
suspension of the rules by a vote of 406-4 (Roll Call No. 333).
3/2/17. Chairman Chabot sent a letter to Patrick Kirwan,
Director of the U.S. Department of Commerce Trade Promotion
Coordinating Committee, requesting a report on the Trade
Promotion Coordinating Committee's Federal-State Export
Strategy required by the Trade Facilitation and Enforcement
Act.\18\
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\18\Pub. L. No. 114-125, 130 Stat. 177 (2016).
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3/2/17. Chairman Chabot sent a letter to SBA Acting
Inspector General Hannibal ``Mike'' Ware, requesting a report
on the State Trade and Export Promotion (STEP) Grant Program
required by the Trade Facilitation and Enforcement Act of
2015.\19\ This report should review the STEP grant recipients
and measure the performance, management, and overall
effectiveness of the program.
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\19\Id.
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3/3/17. Chairman Chabot, Ranking Member Velazquez, Rep.
Steve Knight and Rep. Stephanie Murphy sent a letter to GAO
Comptroller General Gene Dodaro requesting that GAO review the
use of change orders in federal government procurement
construction contracts.
3/27/17. Chairman Chabot and Ranking Member Velazquez sent
a letter to SBA Administrator Linda McMahon requesting
information regarding SBA's administrative decision to lift the
cap on HUBZone program participation.
3/29/17. The Committee held a hearing to examine federal
agency compliance with the Paperwork Reduction Act.\20\
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\20\44 U.S.C. Sec. Sec. 3501-21.
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3/29/17. Chairman Chabot and Ranking Member Velazquez
introduced H.R. 1773, the Clarity for America's Small
Contractors Act, which would require additional agency
reporting on small business goals, uniformity in procurement
technology and clarification of the role of small business
advocates.
4/16/17. Chairman Chabot sent a letter to Gene Dodaro.
Comptroller General, Government Accountability Office,
requesting that GAO review and report on the State Trade and
Export Promotion (STEP) Grant Program.
5/23/17. The Committee held a hearing to obtain an update
from Peter Cazamias, Associate Administrator for the SBA Office
of International Trade, on SBA's efforts to administer the
State Trade and Export (STEP) grant program and to better
coordinate federal and state resources for small exporters.
5/23/17. Rep. Brian Fitzpatrick introduced H.R. 2594, the
Small Business Payment for Performance Act, legislation to help
ensure that small business federal contractors are paid in a
timely manner for construction contract change orders.
6/22/17. Chairman Chabot introduced H.R. 3002, which would
require cyber security training for Small Business Development
Center counselors.
7/10/17. Chairman Chabot sent a letter to The Honorable
Richard Cordray, Director of the United States Consumer
Financial Protection Bureau (CFPB), requesting a staff briefing
on two ongoing CFPB rulemaking matters that may significantly
affect small businesses.
7/24/17. Chairman Chabot sent a letter to The Honorable
Peter Roskam, Chairman, Ways and Means Subcommittee on Tax
Policy, expressing appreciation for the Ways and Means
Committee's recent hearing entitled ``How Tax Reform Will Help
America's Small Businesses.'' Chairman Chabot also urged the
Ways and Means Committee to keep small businesses at the
forefront of tax reform deliberations.
8/22/17. Chairman Chabot, Chairman Greg Walden, House
Energy and Commerce Committee, and Chairman Tim Murphy, Energy
and Commerce Subcommittee on Oversight and Investigations, sent
a letter to The Honorable Scott Pruitt, Administrator of the
United States Environmental Protection Agency (EPA), requesting
information on the EPA's reporting of data on Small Business
Innovation Research (SBIR) program to SBA.
8/31/17. After Hurricane Harvey, Chairman Chabot sent a
letter to SBA Administrator Linda McMahon pledging to work with
SBA to reduce its disaster loan processing times and ensure it
has the tools needed to aid small businesses and homeowners in
Texas and Louisiana affected by Hurricane Harvey and Hurricane
Irma.
9/6/17. The full Committee held a hearing on how
streamlining the federal permitting process could cut red tape
for small businesses and expedite economic growth.
9/8/17. Chairman Chabot introduced H.R. 3717, the
bipartisan Small Business Owners' Tax Simplification Act, to
simplify income tax compliance for small businesses.
9/11/17. Chairman Chabot sent a letter to Maureen
Ohlhausen, Acting Chairman, Federal Trade Commission,
expressing concern regarding the Equifax data breach and
requesting documents on small businesses affected.
9/12/17. Chairman Chabot sent a letter to Richard F. Smith,
Chairman and CEO, Equifax, requesting information on small
businesses affected by the Equifax data breach.
9/12/17. Chairman Chabot sent a letter to Rep. Bradley
Byrne, Chairman, House Education and Workforce Subcommittee on
Workforce Protections, and Rep. Tim Walberg, Chairman, House
Education and Workforce Subcommittee on Health, Employment,
Labor and Pensions, regarding the effect of the National Labor
Relations Board's joint employer standard on small firms.
9/8/17. Chairman Chabot sent a letter to The Honorable
Christopher Wray, Director, Federal Bureau of Investigation,
requesting a briefing on the threats that small business owners
face from state actors in cyber attacks.
10/2/17. Following a Committee hearing on May 30, 2017 on
the SBA Office of the Inspector General (OIG) audit of SBA's
Fiscal Year 2014 Voluntary Early Retirement Authority (VERA)
and Voluntary Separation Incentive Payment (VSIP) programs,
Chairman Chabot co-signed a letter by Vice Chairman Blaine
Luetkemeyer to Kathleen McGettigan, Acting Director, United
States Office of Personnel Management (OPM), requesting OPM's
oversight plan for the VERA and VSIP programs.
10/26/17. Chairman Chabot and Ranking Member Velazquez sent
a letter to Rep. Kevin Brady, Chairman, Committee on Ways and
Means, and Rep. Richard Neal, Ranking Member, Committee on Ways
and Means, requesting that the Committee consider H.R. 3717,
Chairman Chabot and Ranking Member Velazquez's legislation to
update the tax code for small businesses, startups and
entrepreneurs.
11/30/17. A recent report by the Government Accountability
Office (GAO) found that many federal agencies have not complied
with the requirements of Sections 15(k)(8) and 15(k)(11) of the
Small Business Act, including that the head of each agency's
Office of Small and Disadvantaged Business Utilization (OSBDU)
be a member of the federal government's Senior Executive
Service. Chairman Chabot sent letters to fourteen agency heads
requesting information on their plans to comply with these
provisions: the Department of Commerce, Department of Labor,
Department of Education, Department of Housing and Urban
Development, Department of State, Department of the Treasury,
Department of Energy, Department of the Interior, Office of
Personnel Management, National Aeronautics and Space
Administration, Social Security Administration, and
Environmental Protection Agency.
11/21/17. Chairman Chabot and Greg Walden, Chairman, House
Energy and Commerce Committee, sent a letter to Scott Pruitt,
Administrator, United States Environmental Protection Agency
(EPA), expressing concern that EPA had not met its full level
of Research and Development funding for the Small Business
Innovation and Research (SBIR) Program as required by the Small
Business Act, and requesting information on how EPA plans to
comply with the Act.
12/6/17. Chairman Chabot and Ranking Member Velazquez sent
a letter to GAO requesting a report on procurement challenges
of small and mid-tier businesses that are growing out of small
business set asides but not yet able to compete in the open
procurement market.
12/11/17. Chairman Chabot and Members of the Ohio
Congressional delegation sent a letter to James Risch,
Chairman, Senate Committee on Small Business and
Entrepreneurship, and Jeanne Shaheen, Ranking Member, Senate
Committee on Small Business and Entrepreneurship, supporting
the confirmation of David C. Tryon, nominee for the position of
Small Business Administration Chief Counsel for Advocacy.
12/14/17. Subcommittee on Agriculture, Energy, and Trade
Chairman Rod Blum sent a letter to Joseph Shepard, Associate
Administrator, Office of Investment and Innovation, SBA,
requesting information on the SBIC Program's licensing process.
12/14/17. Chairman Chabot sent a letter to Internal Revenue
Service (IRS) Acting Commissioner David Kautter requesting
information about the IRS' application of Affordable Care Act
employer mandate penalty payments to small businesses.
12/15/17. Chairman Chabot, Ranking Member Velazquez,
Chairman Knight and Ranking Member Murphy sent a letter to Mick
Mulvaney, Director, Office of Management and Budget, requesting
the extension of accelerated contract payments to small
contractors and subcontractors.
1/8/18. Chairman Chabot introduced H.R. 4743, the Small
Business 7(a) Lending Oversight Reform Act, which would
strengthen oversight and bolster the integrity of the SBA's
7(a) Loan Program for small businesses and taxpayers.
2/28/2018. Chairman Chabot and Ranking Member Velazquez
sent a letter to William Manger, Associate Administrator,
Office of Capital Access, Small Business Administration,
regarding the delay in processing SBA 504 Loan Program
Concentrated Animal Feeding Operation loans due to the National
Environmental Policy Act (NEPA).
2/28/18. The Government Accountability Office (GAO)
released a report, requested by Chairman Chabot, at the
Committee's hearing on February 28, 2018. The report examined
the challenge of compliance with financial regulations for the
nation's small community banks and credit unions. GAO found
that regulations for reporting mortgage characteristics were
the most burdensome because these regulations were complex,
require individual reports, added significant time to loan
closings, and resulted in the charging of fees. In addition,
some compliance burdens arose from misunderstanding disclosure
regulations, which led to institutions taking action that were
not required.
3/5/18. Chairman Chabot sent a letter to Marvin Kramer,
Chairman, National Labor Relations Board, expressing concern
about the Board's action to vacate its decision in the Hy-Brand
Industrial Contractors, Ltd. and Brandt Construction Co. joint
employer standard case.
3/16/18. Chairman Chabot sent a letter to Major L. Clark
III, Acting Chief Counsel, Office of Advocacy, Small Business
Administration, requesting a study of occupational licensing as
a barrier to starting and growing small businesses.
4/11/18. Chairman Chabot and Subcommittee on Economic
Growth, Tax, and Capital Access Chairman Dave Brat sent a
letter to Maureen K. Ohlhausen, Acting Chairman, Federal Trade
Commission, recapping the Committee's hearings on occupational
licensing as a barrier to small business growth and job
creation.
4/11/18. Chairman Chabot and Subcommittee on Economic
Growth, Tax and Capital Access Subcommittee Chairman Dave Brat
sent a letter to R. Alexander Acosta, United States Secretary
of Labor, recapping the Committee's hearings on occupational
licensing as a barrier to small business growth and job
creation.
4/11/18. Chairman Chabot and Subcommittee on Economic
Growth, Tax, and Capital Access Subcommittee Chairman Dave Brat
sent a letter to Major Clark, III, Acting Chief Counsel for
Advocacy, Small Business Administration, requesting a study on
occupational licensing as a barrier to small business growth
and job growth.
4/12/18. Chairman Chabot, Ranking Member Velazquez,
Contracting and Workforce Subcommittee Chairman Knight and
Contracting and Workforce Subcommittee Ranking Member Stephanie
Murphy sent a letter to The Honorable Mick Mulvaney, Director,
Office of Management and Budget, requesting a briefing on OMB's
Memorandums M-11-32 and M-12-16 regarding accelerated payments
for small federal contractors and the need for H.R. 5337, the
Accelerated Payments for Small Businesses Act of 2018.
5/1/18. Chairman Chabot and Ranking Member Velazquez sent
letters to 54 federal agencies requesting compliance with the
Small Business Regulatory Enforcement Fairness Act of 1996
(Pub. L. No. 104-12) as amended by the Fair Minimum Wage Act of
2007 (Pub. L. No. 110-28), which requires agencies to report to
Congress on its compliance with the statute, including the
publication of small entity compliance guides, which explain
the actions a small entity must take to comply with agency
rules.
6/5/18. Representative Brat and Representative Evans sent a
letter to Sunita B. Lough, Project Director, Tax Reform
Implementation Office, Internal Revenue Service, requesting
information on the IRS' Employee Plans Compliance Resolution
System, the Self Correction Program and the Voluntary
Compliance Program, following the Subcommittee on
Investigations, Oversight and Regulations' April 17, 2018
hearing on small business retirement plans and Revenue
Procedure 2018-14.
6/15/18. Chairman Chabot and Ranking Member Velazquez sent
a letter to Gene Dodaro, Comptroller General, Government
Accountability Office, requesting that GAO report on the state
of the Small Business Administration's disaster program and its
performance during Hurricanes Harvey, Irma and Maria.
7/23/18. Chairman Chabot, Ranking Member Velazquez, Bob
Goodlatte, Chairman, House Judiciary Committee, and Jerrold
Nadler, Ranking Member, House Judiciary Committee, sent a
letter to Linda McMahon, Administrator, United Small Business
Administration, requesting her input on H.R. 6389, legislation
to restate the Small Business Act and the Small Business
Investment Act of 1958, and enact a new positive law title of
the United States Code.
7/27/18. Chairman Chabot and Ranking Member Velazquez sent
a letter to Russell Golden, Chairman, Financial Accounting
Standards Board (FASB), requesting a staff briefing on FASB's
Accounting Standards Codification 606, Revenue from Contracts
with Customers.
8/2/18. Chairman Chabot, Ranking Member Velazquez, Chairman
Risch, and Ranking Member Cardin sent a letter to SBA
Administrator McMahon requesting the status of the report
required by the Fiscal Year 2018 National Defense Authorization
Act on the utilization of small businesses in multiple award
federal contracts.
8/16/18. Chairman Chabot, Ranking Member Velazquez,
Chairman Risch and Ranking Member Cardin sent a letter to Gene
Dodaro, Comptroller General, Government Accountability Office,
requesting a study of the actions federal agencies are taking
to determine prime contractors' compliance with subcontracting
plans.
8/10/18. Chairman Chabot sent letters to Gene Dodaro,
Comptroller General, Government Accountability Office, asking
to become a co-requestor on two GAO studies: (1) a study of the
SEA's implementation of the reforms to the Women Owned Small
Business Program in the National Defense Authorization Act of
2015; and (2) a study of the role of Procurement Center
Representatives in the implementation of the Small Business
Administration's federal contracting program.
8/14/18. Chairman Chabot, Representative Rod Blum, and
Representative Trent Kelly sent a letter to R. Alexander
Acosta, Secretary of Labor, and Ms. Loren Sweatt, Deputy
Assistant Secretary of Labor, requesting that the Department
review the scope of its Cranes and Derricks in Construction
regulation.
8/23/18. Chairman Chabot, Representative Blum, and
Representative Brat sent a letter to The Honorable Sonny
Perdue, Secretary, United States Department of Agriculture,
asking the Secretary and his Agriculture and Rural Prosperity
Task Force to work with the Committee to increase rural small
businesses' access to capital.
9/6/18. Chairman Chabot and Ranking Member Velazquez sent
letters to The Honorable Alex Azar II, Secretary, Department of
Health and Human Services; The Honorable Rick Perry, Secretary,
Department of Energy; and The Honorable Ryan Zinke, Secretary,
Department of Interior, requesting agency compliance with the
Small Business Regulatory Enforcement Fairness Act, Pub. L. No.
104-121.
9/13/18. Chairman Chabot, Ranking Member Velazquez and
Representative Mo Brooks sent a letter to Lesley Field, Acting
Administrator, Office of Federal Procurement Policy, Office of
Management and Budget, expressing concern that the changes to
the limits on federal contracting for full or partial small
business set-aside contracts made by the United States Small
Business Administration and Section 1651 of Public Law 112-239,
the National Defense Authorization Act for Fiscal Year 2013,
have not been made.
9/25/18. Chairman Chabot, Chairman Risch, Ranking Member
Velazquez and Ranking Member Cardin sent a letter to SBA
Administrator Linda McMahon requesting that SBA work closely
with the Interagency Working Group on Cooperative Development
to advocate for employee ownership of small businesses.
9/14/18. Chairman Chabot and Ranking Member Velazquez sent
a letter to Gene Dodaro, Comptroller General of the United
States, Government Accountability Office, requesting to join
Senator Claire McCaskill, Ranking Member, Senate Committee on
Homeland Security and Government Affairs, and Senator Tom
Carper's, Ranking Member, Senate Permanent Committee on
Investigations, request that GAO investigate and report on the
Administration's category management initiative.
9/27/18. Chairman Chabot, Chairman Risch, and Ranking
Member Velazquez sent a letter to SBA Administrator Linda
McMahon encouraging SBA to delay the implementation of the new
State Trade Export Program (STEP) policy due to inadequate
notice and the need for clearly delineated guidelines on the
implementation of the policy so small businesses have more time
to review the changes.
10/12/18. Chairman Chabot and Ranking Member Velazquez sent
a letter to The Honorable Joseph Simons, Chairman of the
Federal Trade Commission (FTC), expressing alarm that small
business concerns in the hearings around Competition and
Consumer Protection in America's 21st Century were not being
heard. The Chairman and Ranking Member urged the FTC to invite
more small firms as witnesses to future hearings.
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