▶ 0:17:22Good morning everyone. I now call the committee on small business to order. Without objection, the chair is authorized to declare recess of the committee at any time. I now recognize myself for an opening statement. Small businesses are the economic engine of America. They make up 99% in this country and provide over half of all jobs. Yet, when it comes to contracting with the federal government, small businesses are too often shut out. The facts speak for themselves.
▶ 0:17:50Less than 30% of federal contractors are small businesses. And while the total dollar value of federal contracts going to small business firms has gone up, the number of small businesses winning those contracts has gone down, meaning fewer local employers, fewer innovative solutions, and less competition for taxpayer dollars. The reasons are not hard for us to see.
▶ 0:18:14The federal procurement system is riddled with barriers, including ownorous compliance costs, agency rules that favor the biggest firms, and solicitations written in dense legal and technical jargon that all discourage small businesses from even applying. Compliance alone is crushing. Over the past four years, Washington piled on nearly $2 trillion in new regulatory costs and $359 million new hours in paperwork.
▶ 0:18:43For small businesses, that translates to about $15,000 per employee per year, over 20% more than what the larger firms pay. For small businesses working with the government, the burden has doubled. Not only do they have to comply with 100,000 pages of federal regulations, they also have to navigate more than 2,000 pages of the federal acquisition regulations and the defense supplement.
▶ 0:19:09These rules and requirements add up and some of the small firms decide it's simply not worth their time or money to bid on federal contracts. This means America continues to lose out on the innovative, cost-effective solutions small business are known for and taxpayers pay the price. On top of that, practices like contract bundling that combine multiple smaller contracts into one larger solicitation effectively sideline small businesses that could have delivered those services directly.
▶ 0:19:40Instead of competing as prime contractors, they're pushed into subcontractor roles. That is not leveling the playing field. One of the most common complaints I hear from small business owners is about the language itself. Federal contracts are written in a way that is nearly impossible to understand without a lawyer or consultant. In fact, a Naval Postgraduate School study reviewed more than 1 million Department of Defense solicitations and found that fewer than 3% were written in plain English.
▶ 0:20:08Most required at least a college education to understand. Even seasoned small business contractors told researchers they couldn't tell what the government was really asking for. I think that's totally unacceptable. If a business owner can't even figure out what product or service the government wants to buy, how can they fairly compete to provide it? That's why I introduced the bipartisan plain language contracting act. This bill requires federal agencies to write solicitations clearly and concisely.
▶ 0:20:38The best part is it doesn't cost taxpayers a single dime, but lowers the barriers to entry and increases competition. When contracts are written in plain language, small businesses can make faster and more informed decisions. They don't need to hire expensive lawyers just to submit a bid. And more competition means better value for the government and for the taxpayer. The House has already passed this bill with strong bipartisan support. And now I call on my colleagues in the Senate to take up this common sense legislation.
▶ 0:21:05Together with the Trump administration's deregulatory agenda of cutting red tape, reducing paperwork, and simplifying the federal acquisition regulations, this legislation will make federal contracting accessible again to America's small businesses. The bottom line is simple. Government contracts shouldn't should be written so that everyone can understand them.
▶ 0:21:26If we remove unnecessary barriers and insist on fairness and transparency, we can unleash the full potential of America's small businesses, strengthen our industrial base, and deliver better results for taxpayers. I look forward to hearing from our witnesses today about their experiences and their ideas on how we can keep leveling the playing field for small business contractors. I now recognize my good friend, Ranking Member Sineros, for his opening remarks. Thank you, Mr.
▶ 0:21:54Chairman, and I want to thank our witnesses uh for being here with us today. The federal government obligated 755 billion in contracts in fiscal year 24, 183 billion of which was awarded to small business government contractors. These dollars highlight the critical role small businesses play in supporting federal agency missions, but they do not paint a complete picture or reflect the health of the industrial base.
▶ 0:22:21Over the past decade, as the dollars have gone up, the number of small vendors in the government's ecosystem has been cut in half. The government has a recruiting and retention problem when it comes to small business. We must address both issues. Too few too few are signing up and too many getting out. Today's hearing is especially timely as the government is rewriting its procurement rules. We can almost all agree that the government acquisition process has become too cumbersome, too burdensome, and needs to be simplified.
▶ 0:22:52During my time at DoD, I saw a system that does not produce the best outcomes with many projects not being delivered on time or on budget. Well thoughtout reforms that will make the process quicker, smarter, and deliver the best results would be welcomed. Unfortunately, I do not believe we are seeing that now, and we have reasons to be concerned. Previous efforts have shown what happens when reforms are imposed without small business involvement.
▶ 0:23:19For example, category management practices have saved taxpayer dollars, a goal we all share. Yet, many believe they directly contributed to the shrinking of the industrial base. The administration recently mandated required use of certain contracting vehicles, but requiring the use of certain contracting vehicles may create barriers to entry and barriers to competition for small businesses.
▶ 0:23:44We need the administration to provide clarity on how this will be implemented and how will impact small federal I am worried that the lack of transparency from this administration and the lack of involvement from the SBA means we may end up in a situation a decade from now needing to hold an urgent hearing on how to reverse the decline of the industrial base. This committee cannot allow small businesses to become an afterthought. We need to ensure that they are heard and their concerns are addressed.
▶ 0:24:15Small businesses are the ones driving innovation and bringing in talent and solutions that deliver real value to the government customer. Their success is a win-win for them and for the government. In the past seven months, SBA has testified once before our committee. I expressed my frustration at the time that we do not have the opportunity to hear from the decision makers and discuss these issues directly. I hope we will again soon.
▶ 0:24:43When I asked the administrator about the FAR changes and specifically the rule of tool in the hearing, it was unclear if the SBA had been involved. This is a troubling pattern. Rather than advocate for small business government contractors, the SBA has been AWOL. The SBA did not take any action as service disabled veterans saw their VA contracts canled and many small businesses took hits from Doge.
▶ 0:25:11There was no action from the SBA to support womenowned small businesses as it got kicked off contracts due to the administration's misguided DEI claims. The SBA did however lower the goals for contracts awarded to some small businesses like those on our panel and has targeted the 8A program in an attempt to decrease use of these critical business development tools.
▶ 0:25:35The SBA is also gutting the office whose job it is to maximize small business prime and subcontracts across the government. I will close by adding that I hope today we can counter some of the attacks we hear on small business programs. They're not handouts that small firms could not otherwise compete if we did not have these in place. Nothing could be further from the truth. Small businesses don't need handouts, nor do they want them.
▶ 0:26:03They want a level playing field with a fair shot to compete. I look forward to hearing from each of our witnesses about how we can help them do that. Thank you very much. I yield back. The gentleman yields. I now recognize the full committee chairman, Roger Williams, for his opening remarks. Thank you, Mr. Chair. And I can barely see all of you. My chair is sitting so low. I'm really not 5'6. I promise. Feels good over here. Anyway, thank you, Mr. Chairman.
▶ 0:26:27um uh and uh everybody for being here today for holding this hearing on the uh issues small businesses face when competing for valuable federal contracts. I look forward to hearing about our witness's experience navigating a cumbersome federal procurement process. It can be difficult for small businesses to compete when agencies make it unnecessarily difficult to even understand what a product or service is being asked for.
▶ 0:26:49This discussion comes at a critical time in this country as our nation continues to prioritize economic growth under President Trump and we must uh uh ensure that small businesses have a fair and meaningful opportunity to compete for and win federal contracts. One of the simplest ways to empower small business in the government contracting is to ensure contract solicitations are written in plain language. uh when the government clearly uh and concisely communicates its needs, small businesses can uh prepare proposals that meet the agency's demands.
▶ 0:27:18This not only improves competition by removing unnecessary barrier, but also reduces the cost of hiring compliance attorneys. And moreover, we must streamline the procurement process to reduce administrative overhead. Small businesses often find themselves overwhelmed by redundant forms, under sububmission procedures, and rapidly shifting deadlines. By simplifying and standardizing these procedures, we're ultimately deliver greater value to taxpayers and more innovative solutions for government agencies.
▶ 0:27:45Small businesses shouldn't be at the disadvantage just because they don't have the same resources that large firms have to hire massive teams of lawyers. In a truly competitive market, very qualified businesses, every qualified businesses, big or small, should have a fair and transparent shot at competing for success. I look forward to working with my colleagues and hearing from today's witnesses on how plain language and streamlining the procurement process can ensure the best products and services are selected. With that, Mr. Chairman, I yield back.
▶ 0:28:15Thank you, Mr. Chairman. To summarize, the chairman endorses the plain language act is what I think I heard. Thank you, Mr. Chairman. Yes, sir. I will. And this big seat's pretty nice over here, Mr. Chairman. Thank you very much. Uh, I will now introduce our witnesses. Our first witness here today is my constituent, Mr. Rao Anamalu. Mr. Namalu is the president and chief executive officer of ASR International Corporation on Long Island in New York. Mr.
▶ 0:28:39Anamalu founded ASR International in 1986 and has over 40 years of experience in aviation manufacturing, engineering, and program management for major aircraft programs like the A10, F-14, and F-18. Mr. Mr. Namlu was awarded the 2010 Ellis Island Medal of Honor, which recognizes recipients for outstanding contributions to their communities, the nation, and the world. Mr. Namlu earned a master's in industrial engineering and masters in business administration from Illinois Institute of Technology.
▶ 0:29:10He is also a graduate of the owner, president management program at Harvard Business School. Thank you for joining us today, Our next witness here today is Mr. Michael Ramos. Mr. Ramos is the president of Raymond Global in Conjurs, Georgia. Prior to becoming president at Raymond, he was the executive vice president and federal lead. In those roles, in these roles, he led Raymond's engagement and presence in the federal market. Additionally, Mr.
▶ 0:29:36Ramos serves as a board member for Raymond Global and oversees their continuous improvement initiatives. Mr. Ramos formerly served as a director of analysis for DBNA and as a senior assoc associate of Booze Allen Hamilton. Mr. Ramos received a bachelor's of science in chemical engineering from the Massachusetts inst in Institute of Technology and her masterers of science in chemistry from Tus University. We appreciate you being here today.
▶ 0:30:03I now recognize my friend Miss Scolton to briefly introduce her constituent who is the LA last witness appearing here today. Thank you so much, Mr. Chair. I'm so uh pleased that we were able to get this really important hearing uh rescheduled and I am so proud to introduce Sue Telier uh owner of Jetco Federal and a constituent of mine in Michigan's third congressional district. Jetco is a packaging storage and distribution company headquartered in Grand Rapids, Michigan.
▶ 0:30:30It began in 2007 and won its first federal contract in 2009. It is an SBA WBENC certified woman-owned small business. Woo. Prior to founding Jetco, Sue ran supplier diversity and business outreach for the Michigan Department of Management and Budget. In this role, she trained more than 4,300 small and underrepresented companies, teaching them how to bid on and win state government contracts.
▶ 0:30:57Sue volunteers time to support the defense industrial base and is an advocate for small and woman-owned small businesses. She serves as the first vice chair of the board for women impacting public policy, whip. She's also the immediate past chair of the women in defense national council and the immediate past president of the Michigan chapter of women in defense. She is a longtime member of the national defense industrial association and participates in their logistics, small business and manufacturing divisions.
▶ 0:31:26Sue is heavily involved in the small business community in Michigan and we are all the better for it. She was recently appointed by Governor Whitmer to begin her third term on the Michigan Strategic Fund Board, uh, which has broad authority to promote economic development and create jobs. Sue has also served as board chair for the Small Business Association of Michigan, the largest statewide small business advocacy organization in the country. She's a graduate of Michigan State University and Wayne State University. Welcome, Sue. Thank you.
▶ 0:31:55Uh before recognizing the witnesses, I like to remind them their oral testimony is limited to five minutes. If you see the red light turn on, that means your five minutes is up. We won't necessarily play the music like they do in the Emmys and the Grammys, but that means wrap it up and we'll get into more detail afterwards. Yeah, definitely don't want that. Not good for America. Uh I now recognize Mr. Anamalu for his five-minute opening remarks. The floor is yours, sir. Am I at the right place here too?
▶ 0:32:27Good morning to you ladies and Thank you for this illustrious committee for giving me this opportunity after 38 years of gruelling work in the small business arena.
▶ 0:32:43Our chairman congressman Lort gave me the opportunity to speak in front of you our experiences good and bad some are very good some are to be improved I I won't call them as negative but I almost echo what you both chairman spoke they are realities of life we face we don't have 55 lawyers to fight with the government or others to get up
▶ 0:33:13there. We want to do the right work for you and want to be a very productive company to serve the nation. We have been doing like this. We have got the exemplary in 60% of all the federal contracts we have run in the last 38 years.
▶ 0:33:32Sir, Congress, Congresswoman McCarthy has recognized us in 2003 for the 911 area services that this company has supported, honored us in the same building. Only one small business was recognized by Congress. I am terribly, you know, humbled by that experience. So, we doubled up our work.
▶ 0:33:59We invested more ourself and we worked night and day from Long Island and throughout the nation supporting the country's efforts both in navy 38 years we worked for navy we worked for air force Scott air force base during the Iraq war and we worked for army eagle program the big programs and we have been pioneer in many areas and the creativity And the
▶ 0:34:29innovative tactics we have engaged or employed have been copied by Chinese. I don't want to tell this loud but we got patents. We have process patents. I see also somewhere else those process patents. They were first generated in USA.
▶ 0:34:48So I just want you to know the level of effort that was put in and the kind of contribution we were able to make as a high technology knowledgebased company in this country. Now to this advantage I want to suggest the contracting officers still gravitate towards big business which congressman Lort has already mentioned.
▶ 0:35:15They go and give massive contracts to big businesses, very small contracts to small businesses with LPTA rating. That is lowest cost technically acceptable. You must recognize that should be abolished from our scene. Lowest cost. Yeah, we will bid lowest cost. True. But technically they say it is acceptable. It is in their perception.
▶ 0:35:44they are not getting the quality of the product. This must be understood by this committee and the contracting officers. Very important. The similar things we could have done in a big way for as the big business has been awarded and those contracts go to gravitate to big businesses.
▶ 0:36:07I request our chairman also brought up you need team of 30 lawyers and 20 CPAs to fight the battle. We don't have to fight the battle. We fight intellectually. We still win. Don't think we don't win. We still win some contracts. We win against the big We won against Rockwell International at Hill Air Force Base on the Minute Man missile first contract.
▶ 0:36:37We won against certain big companies. I don't want to mention it on our own without any thing. And we got exceptional rating on those things. Now 60% of our contracts are exceptional ratings. To that we propel This is on the contractual side. There are many improvements they can do from contracting side.
▶ 0:37:03One of the preliminary things I would like to suggest is SCA justification. They just randomly throw on the contractors, you know, hey, this is a service contract act. Do it your way. Many people vary in their, you know, assumptions of the SCA contract.
▶ 0:37:23I think government should fix the norms, give the correct SCA code and then we all will be on the level playing field working together the way the contracting officer wants when will we learn the contracting officer will do the right thing right thing most of them do please don't mistake me but many have to be trained that's my request on the contracting side the other thing I would like to bring up is banking
▶ 0:37:53side. We all need funding. No question. As you are doing more work and more work, there is a funding needs are there. However, they only tie you in as long as you can provide your house as the collateral or your building as the collateral or the other things. I want them also to think with us. Join the people that are serving the nation.
▶ 0:38:21understand the business, develop themselves, train themselves into it. Thank Thank you for your testimony, sir. We're going to get into a lot of these back and forth. This committee is going to very interested. I'll be only one one second, sir. And they should be trained with the small business people. We are willing to train at no cost to the bankers. They are called relationship managers. And they are never trained.
▶ 0:38:47They are just released on us like birds and they come and land on us. I request you to do that. Finally, there are other attributes that are involved. We will discuss when you are asking us the Thank you very much, sir. The gentleman's time is expired. I now recognize Mr. Ramos for his fiveminute opening remarks. Thank you, sir. Chairman Loa, ranking member Cisneros and members of the subcommittee. Thank you for the opportunity to testify today. My name is Michael Ramos and I'm the president of Raymond Global.
▶ 0:39:17What began in 1992 as a small roof consulting uh practice in greater Atlanta started by my father has steadily grown into a family-owned fullervice architecture and engineering firm. Beyond my role at Raymond, I also serve as the chair of the GovCon Small Business Coalition, a group of small and midsize contractors that advocate for policies that support business growth and strengthening the defense industrial base. For its first decade, our company focused largely on K12 schools and municipal projects.
▶ 0:39:45In 2005, we expanded beyond a oneperson consultancy and have since averaged nearly 20% year-over-year growth. By the end of this year, 2025, we expect to employ 120 professionals with expertise in architecture, interior design, structural engineering, mechanical, electrical, plumbing services, civil engineering, and building envelope services.
▶ 0:40:05The SBA's ADA program and our certification as a uh service disabled veteranowned small v business business provided crucial development support and opportunities that helped us build up performance and diversify into broader markets including the federal market. Although we have since graduated from these programs, Raymond continues to work extensively with the DoD and actively participates in the SBA's mentor protege program. This hearing comes at an especially pivotal moment with significant changes underway in the federal acquisition landscape.
▶ 0:40:35It is imperative for small businesses to remain at the center of innovation and competitiveness. I would like to highlight several pressing issues that are impacting firms like mine and the broader small business community. First, cyber security is critical to national security, but the roll out of DoD CMMC 2.0 0 has been costly and uncertain and those burdens fall hardest on the smallest firms with limited resources.
▶ 0:40:59At my company, compliance with a level two certification will cost approximately a half million which is not a one-time cost. The acquisition process federal solicitations are often too unclear, inconsistent, and overly complex. This frequently leads to protests that small businesses can least afford. Recently, we pursued a federal pro procurement. This was awarded three times, protested twice, and ultimately cancelled for small firms.
▶ 0:41:26That means months and sometimes years of loss opportunity and valuable resources. The mentor protege program. This program has been transformative for my company and our growth. However, the rapid expansion of joint ventures has tilted the competitive landscape. Increasingly, contract scoring criteria favors mental protege joint ventures, leaving independent small businesses with fewer opportunities to prime. New SBA rules published at the end of last year.
▶ 0:41:53A recent SBA rec rule requires small businesses sold after January 2026 to reertify their size status within 30 days. What this means is they are now ineligible for future task orders under their existing contracts. This will result in reduced company valuations and shareholder equity, discourage in investments, and will have a chilling effect on the mergers and acquisition market. left as is, the impact on a small business's ability to sell will be severe.
▶ 0:42:24The contracting cliff right now, firms are classified as either small or large. There is no middle ground. This binary system forces companies that grow just beyond the small business threshold to compete directly with billiondoll primes. A structure transition program for midsize firms is urgently needed. The FAR rewrite. As GSA and OM undertake the monumental and necessary task of rewriting the FAR, it's critical that reforms do not strip away small business protections.
▶ 0:42:52Streamlining regulations that should be should not be synonymous with eliminating safeguards, which is why the rule of two should be codified into law. Protecting this foundation will preserve small business competitions and enable small contractors to intercompete and remain vital participants in the defense industrial base. And finally, inflation and size standards. Rising construction costs have inflated revenues without reflecting true, excuse me, true growth.
▶ 0:43:19SBA size standards based on outdated 2017 data don't reflect current market conditions. That misalignment threatens competitiveness for many small businesses. These challenges add up. Rising com uh compliance costs, inefficient inefficient acquisition processes, structural imbalances in programs, and poorly calibrated regulations all weaken competition. And when competition suffers, so does innovation. And so does our defense industrial base.
▶ 0:43:47Small businesses bring agility, economic strength, and the ability to respond quickly to evolving needs. But to keep playing that role, we need a contracting environment that works for us, not against us. Thank you again for the chance to share my perspective and I'm h happy to answer any questions. Thank you, Mr. Ramos. I now recognize Miss Tier for her five-minute opening Good morning, Chairman Loa, Ranking Member Cisneros and members of the subcommittee. As mentioned by my fantastic congresswoman, my name is Sue Schweim Tellar.
▶ 0:44:15I am the president of Jetco Federal, an SBA certified woman-owned small business. I also serve as vice chair of the board for women impacting public policy, a national nonpart nonpartisan organization advocating on behalf of womenowned small businesses. Thank you for the invitation today. It's a tremendous honor. Jetco Federal is a prime contractor. Um we are freakishly obsessed with efficient warehouses.
▶ 0:44:40Our government and industry partners rely on my team to design, produce, and deliver complex packaging solutions, perform storage and distribution services, and transport into secure facilities. Jeeoff Federal won our first DoD contract in 2009, and we have continuously increased our role in supporting the missions of the Defense Logistics Agency, the Army, and the Navy. 80% of our work right now supports the Defense Industrial Base in some capacity, usually very much behind the scenes.
▶ 0:45:08We joke that we are the the least interesting, maybe boring part of the manufacturing cycle, yet we play a critical role in protecting DoD parts for storage and distribution. My employees are incredibly proud to support the war fighter, and I am clearly comfortable putting my Midwestern humility aside to say that we have really earned a strong reputation as a reliable partner for our DoD The committee's focus today is timely and important.
▶ 0:45:37The number of small business federal contractors is shrinking. Since 2010, the number of small businesses winning federal contracts has decreased by 50% even as contract spending has increased. This results in a more stratified federal contractor pool. Our conversation today, as all of you have mentioned in your opening remarks, it really should focus on strong small business strength and the importance of opportunities for us. Um, we're job providers in all of your districts, significant job providers.
▶ 0:46:04It's equally important though that we talk about good government and expansive market research. The rule of two and small and socioeconomic set aside programs are not acts of charity. Instead, they ensure that government benefits from the innovation, competition, flexibility, and values small businesses bring. Shrinking the pool of qualified contractors will leave agencies increasingly reliant on a narrower group of large incumbents, directly reducing the government's leverage. It is not good business or good government to have a stratified contractor pool.
▶ 0:46:35There is no benefit to pushing small business small companies out of federal contracting. As a small business leader, I factor risk into my business decisions. This includes how I use my time, how I manage um in my customer base and how I price my solutions. I must have some degree of confidence that I have a chance at winning an opportunity to justify pursuing it. Otherwise, I'm wasting precious time and resources for my small but mighty team.
▶ 0:47:02Any threat or even a potential threat to the rule of two increases risk for small businesses in federal contracting. The rule of two has historically been a bedrock protection for us. Its erosion results in a less welcoming environment, reducing opportunities for small innovative firms and instead accelerating consolidation. The FAR rewrite presents a pivotal opportunity to address these challenges.
▶ 0:47:25Retaining and codifying the rule of two, making it a true shall requirement applied consistently across vehicles is essential to keeping small firms engaged in the federal marketplace. The transformation of FARART 10 and the new direction for market research is also concerning. The drastic streamline proposed effectively trims market research down to three very limited situations. More prescriptive triggers such as those related to bundling, consolidation, and small business outreach have been removed.
▶ 0:47:55References to small business consultation and set aside considerations have been stripped. For experienced contractors like Jetco, this increases risk. There's no longer a mandated pause to engage small business advocates, notify incumbents, or explore set aside potential. Instead, agencies may proceed quickly, potentially overlooking small business opportunities.
▶ 0:48:18Under pressure to move fast, agencies may default to If there's one thing I hope you take away from my words today, it is that small businesses are not just beneficiaries of federal contracts. They are essential partners to agencies. We bring innovation, agility, and cost savings while providing the government and taxpayers with options to meet mission needs quickly and effectively. The innovation we deliver strengthens America's competitive edge in the global marketplace.
▶ 0:48:46Protecting and expanding our role in federal procurement is both sound policy and strategic imperative. And if we continue to face unpredictability and competition challenges, you should not be surprised when fewer of us remain engaged in federal contracting. Again, I appreciate the opportunity to testify today, and I look forward to answering any questions. Thank you. Thank you. I thank to each of you for your awesome five-minute opening statements. Now, here comes the fun part. We're going to move to the member questions under the five-minute rule.
▶ 0:49:15I recognize myself for 5 minutes. Uh Mr. Amamo, it's great to see you uh here in DC. Uh the more Long Islanders in in DC, the better I say. Uh I think the last time we saw each other was uh at your workplace when you visited when you allowed me to visit about a year ago. Um your testimony, sir, reite the American dream and what you've done in this great country. Yes.
▶ 0:49:36Uh, you came here, you studied at top universities, and went on to build a company that's delivered critical services to our military, enhanced our national security, kept our troops safe. All right. From Long Island. Um, I was hoping that you can share with the committee what you think, sir, has made that dream possible. Uh, two two inspiring things.
▶ 0:49:58I found when I came here first a good study intellectual penetration into the American area arena will allow you to grow properly bring our families together nicely and also I have an interest to serve our community. I achieved all those dreams on my own in a modest way not in a big way but modest way. I brought my family well.
▶ 0:50:27My children went to top schools and I am able to serve the community by doing real hard intellectual work. And that's what elevated us. To add to that, Congress also somewhat recognized me right when we did the best things for the Hill Air Force Base and the Iraq war. And since then we propelled further.
▶ 0:50:5238 years serving in Navy and also winning their contracts against big business with all the odds is what we are fighting. If you can level the playing field slightly, I can tell you the intellectual stamina we are offering will be exponentially greater. The AI contribution we are doing as a company will be enormous.
▶ 0:51:19The cost reduction to the US government will be tremendous. We want to achieve those things. We want to feel satisfied when we go home in the night that I achieved something for my nation, for my people, for my house. We love it. Here on the committee, we want to harness dedication, innovation, perseverance. That is what we believe to be the American dream. I think that's a Democrat and Republican principle here.
▶ 0:51:48We want to help unleash that uh everywhere in every corner of America. We're here to today and we alluded to this in your opening testimony. You're going to tell us some of the tough things you've been through and how sometimes government has made things a little more difficult for you. Can you tell us, sir, a little bit about the application process for some of these contracts and some of the roadblocks you've suffered through uh throughout your many decades experience trying to earn those contracts.
▶ 0:52:13In 38 when we see a contract coming with 2,000 even before we read we we hey this is earmarked for somebody there is a bad word we use in our lingo in the company hey that is set for somebody else somebody is there you know so we don't even try to bid it that should not be our feeling when we are willing to spend our valuable time night and day
▶ 0:52:44and there are many contracts that come all the service intellectual contracts. I request the contracting officers to try and level field with simple language as your suggestions are coming from both the chairman. If you do it 50% of the more bids will be there, more competition and we can beat big business. To my left here is the federal acquisition regulation.
▶ 0:53:142,000 pages Yes, sir. Sorry we hurt some trees to do this, but I think the point is well worth it to demonstrate to the audience here, folks watching from home that these regulations in our view are ownorous. That when a hardworking dedicated principal business like you has to apply for a contract, you have to consult these pages. Yes, sir. My question I only have about 30 seconds Yes, sir.
▶ 0:53:38My my final question is what would the plain language and contracting act do for you an effort to simplify the language in these contract applications? What would a simpler application process mean for your company sir? All that they have to do is define what type of people they want us to use SCA very important.
▶ 0:53:59Then tell us hey this is what we are expecting as a ultimate objective from your productivity or from from our cidals you know what we give to the government and that's all we need. Thank you. My time has expired. I hope that we can get a second round and maybe some more questions in. I want to talk to some of you folks in a second round. Um, but I'm going to yield and um and recognize Mr. Siniseros for five Thank you, Mr. Chairman, and uh thank you again all for being here today.
▶ 0:54:29And uh I'm going to start with Miss Tellier. Um as I said in my opening remarks, we should welcome reforms that simplify the government's procurement process, but there are concerns that this administration is making changes that will drive small businesses out of the industrial base. This is highlighted by the potential elimination of the rule of two that both you mentioned as well as Mr. Ramos mentioned. Um what happens to small businesses and the industrial base if the rule of two goes away?
▶ 0:55:00So we have to have some degree of confidence as small business owners or leaders or business developers that we have a shot at winning. The rule of two gives us confidence in that. um changes to the rule of two that would only apply to certain sizes of solicitations doesn't help with that. My contract portfolio is not conducive to me only going after $249,000 opportunities because they're under the SAT.
▶ 0:55:27I need to have confidence that I can compete well on on solicitations well over that. Market research really allows contracting professionals to understand whether two or more small companies can compete effectively. um it decimates us. There are there are small businesses that will that will leave federal contracting if they don't have that confidence. Mr. Ramos, love to hear your comments on I do think the that if we remove the rule of two, that'll be damaging to the defense industrial base. I think that's pretty critical to understand.
▶ 0:55:56If you remove that rule and you do not codify it, you have this scenario where not only will they leave, but you will just create massive entrenchment of the existing larger small businesses, but also it's a to a certain degree it's a land grab by the larger companies that are in the market. And it is an opportunity right now to actually codify it and make sure that small businesses are protected for larger contracts and uh when they're qualified.
▶ 0:56:23a lot of sorts of thoughts are to make sure that's happening and there's opportunities for rule two to be applied All right, Mr. Chairman, I request unanimous consent to insert for the record these letters and statements of of support for the rule two. Without objection. Thank you very much.
▶ 0:56:41Um, Miss Tier, some claim that small businesses only small businessonly competitions or SBA programs like AAA or the womenowned small business program are not based on merit and award contracts to businesses that otherwise could not compete on price or quality. Can you lay out why these comments are misguided and tell us, you know, or why they're a misguided view of federal contracting and how these programs actually level the pro playing field? Yes, Congressman.
▶ 0:57:11I think I can even do that without swearing, although it takes a little bit of restraint on my part, candidly. Um the I've never won a contract because I'm a WASBY. I've won the opportunity to compete on a contract because I'm a WASBY, but every contract I've won, it's because I have strong CPARS. I can do the work well, and I've proven that with my write up and my pricing. My small business owner peers are the same way.
▶ 0:57:34Um if and candidly um Mike's made some comments so far about about how this affects the defense industrial base. When we look at whether or not government benefits from small businesses fleeing or from the socioeconomic set aides not being deployed if if we don't bid the agility leaves, the innovation leaves. I have a contract with NSWC Corona. Um, and the crate that I'm producing for munitions has a 1/8 inch tolerance.
▶ 0:58:04I guarantee you none of my large competitors would bother with that, but I care deeply about it. You get you lose the passion in that, too. Mr. Ramos, you your testimony, you mentioned um that Raymond is an 8A program graduate. Yes, sir. What are some of the positives outcomes for your firm resulting from your participation in the ADA program?
▶ 0:58:31We actually entered the federal marketplace and specifically Department of Defense because we are an ADA firm and we were able to get certified. Uh that is how we entered into federal contracting. We saw an opportunity where we knew we could perform the work but we needed a way as Sue was saying to have an an avenue where we could be competitive with entrenched players. the way procurements are done today. It is all about past performance. It's not what I can do. It's what I've done for that specific agency.
▶ 0:59:00AA has been incredibly helpful as well as uh servicesable veteran owned small business in order to allow us that opportunity to have a shot at competing. Highly qualified firm, but you know, you've got to have uh someone open the door for you, so to speak. I I think we've heard from these witnesses today the importance of the ADA program as well as the rule of two. I just hope the SBA administration is listening today and will follow up and support these programs into the future. Thank you very much. I yield back. Gentleman yields.
▶ 0:59:30I now recognize the gentleman from Pennsylvania, my good friend, small business owner, Mr. Muer, for 5 minutes. Thank you very much, Mr. Chairman, and it's very nice having you all here. Thanks for your your testimony. It's uh quite important. It's important to us. It's extremely important to you. Uh so we we appreciate your your detail and your specifics. I was in business for well over 20 years and engaged in some uh federal contracting. So I know what it's like. So that was a few years back.
▶ 1:00:00Sometimes things get a little bit more u regulatory o o over time. But it's always difficult, right? And we grew as a small business into a somewhat larger business. Uh but it was difficult, right?
▶ 1:00:14It was a lot of lot of gambits, a lot of traps, a lot of a lot of paperwork, a lot of visits to the different uh agency that you needed to uh win the contract from and all that, but what's un what I'd like to focus on what was unfair, what for for particularly for small business because we're all small business advocates. Uh what was unfair and and I'll start with you uh Mr. Anumulu.
▶ 1:00:40uh what was unfair and specifically what would you like to see us correct I will give you two three examples for verification purpose and Mr. Ramos, I'm going to come to you with the same question. Two, three example. If there is a job for say eight people, still give it to the big business because the big business has done that before and they have performed well. Okay. So, it's a bit a little bit lazy.
▶ 1:01:07They're not looking to when you say you I don't want to use that is your terminology which I will endorse it. I'll accept you because just giving it to a big business. I don't want to name names. I can give you five names. They just give it to big business the contracting officer visit your site. They don't sir. Very rarely and so are banks by the by don't leave them out. They don't care as long as you are paying their bills. That that's very important.
▶ 1:01:37Access to capital and that's largely are the committee and believe me we are in They have to be trained s they're good people but they're not trained. As a former business person, I want to try to make a difference from this. So, anything that you can provide us, we will get in the hands of those whom need to see it and where the corrections could be made. That's our role. O o o o o o o o o o o o o o o o o o o o o over oversight, not unfortunately implementation, although we can help force that. Mr. Rama, same question.
▶ 1:02:04I would say the entrance interest of the industry are a huge historical challenge. Uh getting into federal contracting can be the biggest win. If you win your first contract, that gives you a shot at maybe prolonging it long term. And that's what I would say historically. But I would say right now the biggest issue might be CMMC. This will be an incredible barrier, an incredibly costly bet uh barrier for small businesses to enter. Even we're not talking about five person companies.
▶ 1:02:34We could be talking about 100 person company. That is a huge cost to bear just for the opportunity to compete on a Okay. And you you did mention in your testimony how service disabled veteranowned small business was crucial to your company's early growth. Just expand on that a little bit. Yes. So as a social e basically a socioeconomic category certain contracts are set aside for SDVOSB firms to actually compete.
▶ 1:03:00And so if you look at the Department of Veterans Affairs as a veteranowned company, uh we were allowed access to a number of different projects that we could bid on individually or umbrella contracts. And because the competition pool is a little more limited, uh there's a better opportunity to actually win some of those contracts even. And that's not to say that it's an unfair advantage. I do think it's important to prioritize our veterans.
▶ 1:03:25And most importantly, uh, all of the firms that are going after those contracts are highly qualified and still very competitive. You if if you're sitting in my seat, what what are you what are you working on later today, tomorrow to improve the situation within contractors, uh, federal particularly defense for small business?
▶ 1:03:44I do think there is an opportunity to simplify procurements and potentially on the flip side on the backside if we are going to do a government efficiency model and we're going to reduce workforce uh there's absolutely a need to change the process so that we're efficient enough to still carry out the mission. Okay, great. Mier, same question. I lost track of the question. I'm so The question was you're you're sitting in our seat and you're and this you're focused on this and you want to make some some differences. Uh what what are the top one or two or three things you focus on?
▶ 1:04:14Codify the rule of two. Make it a show. All right. Very good. Uh I'm about to run out of time, so I'm I'm afraid if I hand it over to you, Mr. An anu Mulo, we may go over time, but I'm going to risk that. Go ahead. Few things. We may have to hold off. My apologies, sir. Um I yield back, Mr. Chairman. Uh we'll give some deference to the gentleman. If in 30 seconds you can answer Mr.
▶ 1:04:42Muer's questions, what would you do if you are a member of Congress to help small businesses? I I will if I'm there, you know, I would certainly take notes of who are the players and where to correct them. I can give you two three examples so that that can be made as a universal thing. Plus I would add one small thing sir.
▶ 1:05:06A team of banker contracting officer and the small business person should be put and trained for say 3 days. Thank you. I'm going to join the chairman on the next visit to your place out of Long You must sir. I am in Long Island University. Just to add I didn't take their permission. I'm trusty there. I can talk to the president and the chairman. Sir, it is open. I can teach them. I am willing to teach that.
▶ 1:05:35Our time is after 38 years. You should allow me to do that. The gentleman's time has expired. Thank you. I now recognize a gentleman from uh California, former small business owner, Mr. Tran, for five minutes, but if he needs six, we'll give him that instead. Thank you, uh, chairman and ranking member for convening today's uh, very important hearing. And to the witnesses, I appreciate you traveling to be with us and sharing, uh, your testimony.
▶ 1:06:00Uh, Miss Teu, in April of this year, the Department of Health and Human Services fired almost their entire Office of Small and Disadvantaged Business Utilization, also known as ODSBU staff, uh, leaving only the executive director, despite requirements in the Small Business Act that the office have a minimum of 13 personnel.
▶ 1:06:22We have heard that the state department has fired almost all of their staff as well and there are draft proposals for reductions at other agencies or changes that would weaken uh ODS boos authorities or independents. Can you discuss the role uh of this of OD's booze and how your firm has worked with them? Absolutely. Um I I would um the acronyms are fun sometimes, aren't they? Leave it to the government.
▶ 1:06:48They really um the while I haven't worked with HHS directly because so much of my work was is within the defense industrial base. I can speak heavily about the level of professionalism and the level of helpfulness that I've gotten from especially uh DA and um uh Army Ozu offices the um the the help that they give in guiding in the presolicitation or during the solicitation process like the the opportunity process is very helpful.
▶ 1:07:18Um, but I think a lot of people forget how much help they provide postawward. Um, last week, um, oh my gosh, I'm blanking on her name, which I'm mortified by. The head of the Ozoo office for, um, DA distribution helped me get paid. Um, DA was behind about 60 days on a contract that was valued at So, I had already obviously incurred all of those costs.
▶ 1:07:44They helped pull the trigger to get to to get the contracting personnel to make sure that the items were received. On a post-awward basis, they're helpful. On a pre-awward basis, they're helpful. They make sure they're guiding us. I I actually think they need more money, not less. Thank you. And uh if the other two witnesses has any dealings with it, I would love to hear your testimony. Okay.
▶ 1:08:06Um, Miss Teu, in your testimony, you state that you must have a level of confidence that you can win an award to invest the time and resources to develop uh a proposal and bid. If a small business did not know their competitors were also small businesses and understood that they might be competing with much larger corporation, how does that change the calculus around whether a small business bids on that contract?
▶ 1:08:33the bid decision is is heavily influenced by whether or not we perceive that we have a probability for a win, not a guarantee of a win. These these aren't um guarantees in any capacity. It's just the level playing field. If I don't if I feel like an opportunity is wired for someone else, including a large business, I'm not going to waste the time bidding. It's it's somewhere between 8 and 40 hours of my time, and that doesn't include the time of my employees to put together a complex proposal response. And I'm good at it. I'm quick at it.
▶ 1:09:01Um, so there's companies that are newer to the space that would that would have a lot more of a time investment to do it well. It's not worth the time. Thank you, Mr. Ramos. Anything to add? I wholeheartedly agree with those comments. Uh, it is critical that uh the government does understand there is a true business cost to putting together a procurement response. Uh, we do have to play a little bit of a numbers game, but at the end of the day, if I'm going up against large or unrestricted sized companies, it's a huge deterrent for me to pursue those opportunities.
▶ 1:09:31And as members of this committee, we are very concerned about small businesses, entrepreneurs, and the commi the communities where your firm uh pays taxes and create jobs. But small business policies are a win-win for small businesses and the government. Can you any one of you talk about the benefits of uh our of your government customers when we have a robust small business industrial base? Yes, please.
▶ 1:10:03We have created several hundreds of jobs throughout the communities. Our business model is create jobs in the community that has awarded us the contract. For example, if I got in San Diego, people in San Diego are hired by us, positioned by them, and we pay them the wages that we derive from that contract.
▶ 1:10:31In other words, we are building the local communities. That has been our business model for 38 years. Very successful. Same thing we did everywhere in the nation, not in one place. We are a nationwide company with nationwide contracts trying to help the local community with big wages.
▶ 1:10:52Whatever we bid if I bid with 3% 2% margins rest of it is going to my employees and this is not done by big business overheads are 80%. they pay to I mean lesser I mean I don't want to comment that way but their overheads are bigger than us and I I thank you all for for your your testimony. I think I'm running out of time here but congratulations on the success of your business and you can count on this committee to help support you. Thank you Mr. Chairman.
▶ 1:11:22I yield back. The gentleman yields. Next up in the batting order is the gentleman from Texas small business owner the full committee chairman Chairman Williams for five minutes. Thank you Mr. Chairman and thank all of you for your testimony. It's a good hearing and we appreciate you being here. Uh on this committee, we have repeatedly heard that government contracts and solicitations are often overly complex, making them difficult for many businesses to respond to successfully. We've seen the pile there at the chairman's desk.
▶ 1:11:50As Chairman Lot has stated, less than one less than 3% of the contracts of the Department of Defense were written in plain language. So, Mr. Ramos, to you, what steps has your firm taken to understand and respond to overly complex solicitations? Uh, and if contract solution states were written in plain language, would would you uh would this encourage small businesses like yours to compete more for government contracts? Uh, yes, sir. We almost have a full in-house lawyer at this point. Uh, that is required.
▶ 1:12:17Uh, we engage with our general counsel who is a third party at today uh on a very regular basis on a number of issues related to federal contracting. Uh, that has been critical. That has also included training for our personnel so that we can become better experts. But this is an art at figuring out federal contracts. And I will say that if you figure out that art, you have an entrenched competitive advantage in order to go continue going after contracts.
▶ 1:12:44So if we can simplify the language, then more small businesses will have an opportunity to compete. Lawyers and accountants can get expensive, can't they? Just a little. uh regulations and red tape and government contracting can be a major strain on small businesses as we've heard all day this morning but forcing men to redirect their limited resources towards the cost of compliance rather than growing and expanding their businesses. So Mr.
▶ 1:13:07Anamula how do these burdensome regulations and complicated impact your business and your bottom substantially sir. So we try to avoid them to the extent we can and improvise ourself to see if we can bid in. We did some bids like that. We did partial success. However, the strain we have to go through is horrendous but we did it sir.
▶ 1:13:35We have won against big businesses. But that is not the solution. That is what is survival. We are doing survival techniques you know which I learned at Mhm. But we have to prepare ourselves to be trained fully to work with plain language contracting like you mentioned in your opening speech. Okay. And uh Congressman Lot also mentioned they should be simplified.
▶ 1:14:04They can be it is very easy to simplify sir. I don't know why they don't do it because it's the government. They don't understand simple but we do and I appreciate your testimony. Thank you sir. Uh the Biden Harris administration shackled business with an additional $1.8 trillion in regulations and 350 million additional pay manh hours we'll call them uh for compliance. That's just unbelievable. And thankfully the Trump administration's already been able to eliminate over 75 billion in costly regulations. So Mr.
▶ 1:14:33Ramos to you, how do regulatory costs impact your business and staffing decisions as you move as you go to work every day? Actually just yesterday we were having our Q3 management team meeting and hiring is something we talk about at all these and hiring is based on profitability, strategic growth and direction of the company and I will tell you regulations like CMMC have absolutely impacted how we are handling our business and not for the better. This is a tremendous constraint. is one example of the regulations that you're citing.
▶ 1:15:04And if we can work towards actually simplifying some of these regulations like the administration is aiming to do, then we are all for it. We project fewer regulations equals better It's more fun to be on offense than Yes, sir. When you're offense, it it translates to productivity and profits and more jobs. Yes, sir. We appreciate your testimony, Mr. Chairman, and I yield my time back. The gentleman yields.
▶ 1:15:29I now recognize Miss Sculton, my good friend from Michigan and the former ranking member of this committee for five minutes. Wonderful. Uh though I've moved on to a different ranking position, uh I'm I'm I'm still honored to be a part of this fine committee. Um when the government contracts directly with small businesses, there are some things they can do only when the small business is a subcontractor.
▶ 1:15:54One of the ways Congress has encouraged fair treatment uh and proper utilization of small businesses that some contract with larger primes is to include include certain criterias in the prime contractor's past performance ratings. The most important of these criteria I bet everyone would agree is did the contractor make timely payments and whether they met their subcontracting goals. Uh Miss Tier, my first question is for you. How important are those accountability mechanisms for small business uh subcontractors?
▶ 1:16:24It's critical. I the example that I used with Congressman Tran. Um we have to get paid. I can't I can't wait 90 days to to receive almost a4 million dollars from the government. I also can't do that with with the prime contractors. Um the example that I use, by the way, is a little atypical. My my government agencies usually pay me in a more timely manner than the prime contractors do.
▶ 1:16:48Um, it it would also be helpful if we had an understanding of of how those ratings affected our customers who were prime contractors. So, if I'm a sub under somebody and I have the option of subbing under two different companies, I'm I'm probably going to take the one that on a dashboard would reflect they cared about me enough to pay me. Yeah. Thank you. Very helpful. Uh, question two. Currently, federal law requires that contracts under certain under a certain amount be automatically set aside for a small businessonly competition.
▶ 1:17:18And yet, a surprising amount of spending under that threshold is not awarded to small firms. The reason for which is still unclear. It's something we are trying to get to the bottom of. Some have pointed to things like software licenses and other products or services that can't be purchased via a small business. I have submitted an amendment to the NDAA that can get to the bottom of this issue and ensure that this spending is making its way to the small business as intended by federal law.
▶ 1:17:47Very pleased that it made it uh into the final round. Miss Tillier, again coming to you, can you talk a little bit about how small businesses utilize contracts under the SAT and why it's important to ensure that those opportunities are going to small businesses as intended? Absolutely. Um, the simplified acquisition threshold allows me to to to kind of fill my pipeline that is outside of my larger contracts.
▶ 1:18:12Um, so the BPAS or Idiqs that I have that are larger um are wonderful for predictability and stability, but the stuff under the simplified acquisition threshold allows me to grow too. So if it's a $240,000 opportunity, I I want I I I would like that to go to small businesses. I've been I've been at this a while, right? So, as a company who's 18 years old now, I can still remember what the early days of trying to win my first contracts were like, and those were all under the SAT.
▶ 1:18:40And so, for companies that are just emerging into the federal marketplace, and we want them to stay, and we want them to grow, and we want their innovations, and we want their engagement, we have to make sure that they feel welcome, and those understat contracts really allow them to do that. Thank you. You know, this is not about uh giving a disadvantageous priority to the underdog. It is about making sure that our more nimble small businesses can actually compete in this space, which is what we want.
▶ 1:19:05The competition uh ensures we're getting the best quality product and the lowest uh potential price. Uh it's it's good for business. It's good for national security. I see that you maybe wanted to weigh in or had some additional thoughts. I'd love to I'd love to hear. I was going to toss it down that way. Well, I appreciate it. I'm just very engaged. But uh using the 240k example, I would challenge any large business how they're going to manage their overheads so that it's actually cost-effective and best cost for the government. Yeah. Thank you. Thank you.
▶ 1:19:34Um my last question in my last minute and we'll stick with you, Miss Tillier. Uh in your testimony, you mentioned that a small fraction of the dollars counted towards the womenowned small business goal are through WASBY contracts. Instead, the majority of those contracts are open competitions with WASBY competing against other small businesses or sometimes large businesses and winning that work. I thought that was a really important point that was worth revisiting.
▶ 1:19:59What can we do to ensure agencies are using these tools as intended and bringing in more womenowned small businesses to compete for contracts, not necessarily automatically be granted them? That's that's a great question. I think there's a a an educational component both on the the side of industry and the side of government. Contracting professionals have a huge administrative burden. Um and each of the socioeconomic programs are different. Um the WASBY program is the only one that's snakes limited. Um there's they they each have their quirks.
▶ 1:20:27Making sure that contracting professionals understand that they can and when they can set contracts aside keeps us competing. It keeps us in the pool. and then you know making sure that industry is educated well so that they can beat their large counterparts which I like to do. Thank you. We appreciate it so much and thank you for your comments too sir. I yield back. Uh the gentle lady yields. I now recognize my new friend uh Dr. Morrison from Minnesota for 5 minutes.
▶ 1:20:51Thank you Chairman Loda and ranking member Cisneros for holding this hearing and thanks to our witnesses for being here to take time to testify. This has been a really interesting and illuminating conversation. I'm grateful for your testimony. Contracting with uh federal agencies is an important avenue to help small businesses grow. Unfortunately, um as we've heard, the number of small businesses participating in government contracting has decreased over the past decade.
▶ 1:21:15And I worry about how this administration's random termination of contracts and abrupt firing of federal employees will impact small businesses decision to enter into government contracts. These once secure sources of revenue may now seem too risky for some small businesses. The Trump administration has proposed cutting the Small Business Administration's contracting office budget by almost a third.
▶ 1:21:38This includes reducing the number of SBA's procurement center representatives who are critical to ensuring the contracts are written in ways that enable small businesses to compete for them. Without SBA performing this critical role, agencies are likely to make contracts that are too large for small businesses uh or have more requirements than small businesses can meet, essentially making them inaccessible to small businesses.
▶ 1:22:01Uh, Miss Tier, would could you describe how SBA employees have assisted your small business over the years and how cutting members of SBA's contracting office, such as procurement center representatives, could impact small Yeah, it's a it's a great question. Thank you for asking it. The um procurement center representatives um often are behind the scenes, unknown advocates to to those of us who are small business contractors.
▶ 1:22:26um they are ensuring that subcontracting plans are adhered to and they are ensuring competition is maximized um practically within agencies. Um the SBA office of government contracting has has done a lot with a little for quite a few years. Any further cuts it affects certification programs.
▶ 1:22:48It affects the ability to to retain the PCR staff that that directly affects small businesses even if many small businesses don't know they're being protected and advocated for by those PCRs. Thank you. I I share those concerns. Um I'm also worried about other ways that federal agencies are making it harder for small businesses to compete for contracts. For example, when federal agencies consolidate multiple contracts into a single larger contract, that puts the contract out of reach for small business. So this one is again for Miss Tellier and Mr.
▶ 1:23:18Ramos too. Uh both of your testimonies highlight recent changes on to how the government conducts market research before a contract can be consolidated. Can you elaborate on the impact on small businesses when billions in contracts are consolidated every year? Mr. Ramos, we could begin with you. That's a fantastic question. Uh bundling probably has some place in driving better efficiency in government contracting. But if you are bundling that volume of contract that puts it completely out of reach of small business.
▶ 1:23:48I would say the opportunity if you if we want to consolidate contracts there are a lot of zombie contracts in existence and the market research should be a little bit more thorough so that those don't come into existence. They cost us money in order to actually secure. No awards actually happen under those contracts and so that would be the more preferred in my opinion on if we're taking a consolidation approach. Thank you, Miss Tier. I I would I would agree with his comments.
▶ 1:24:18Contract uh uh category management or bundling just generally is um uh the it goes to the perception. I don't if I if as a small business I don't think I can compete to win. I'm not going to spend 75 grand trying to get on a best-in-class vehicle that I'm not going to get spend on. I haven't heard it called a zombie before, but I love that word now and I'm going to keep using that. So, thank you. It's apt. Yeah. I do think the market research goes a little bit further on that, too.
▶ 1:24:41Being able to to have um that market research involve engaging with small businesses would allow that input to come into it to avoid the consolidation in the first place. Yeah. If a small business's contract is consolidated, what resources or assistance are available for that business from the SBA or the contracting agency? I I mean I would start with Yazdoo office within the agency and then I would rely heavily on the PCR for that region as well. Um and if that didn't work, I would call Congresswoman Good idea.
▶ 1:25:12Thank you so much for your testimony and I yield back. The gentle lady yields. Um after consulting with the uh ranking member, we will now move to our second round of questions under the five-minute rule. And I now recognize myself for five minutes. Mr. Rom, I was uh quite impressed by your resume and including a couple of the degrees you have. Thank you. Chemical engineering degree from MIT. Yes, sir. And a master's of science of chemistry from TUS. Pretty impressive. Thank you.
▶ 1:25:39When one Googles that uh one reads that a earning a chemical engineering degree at MIT is widely considered one of the toughest academic paths in higher education. Um yet even with that strong academic background you said in a previous round of questioning you had to hire a lawyer in order to go through these massive um government applications to consult with 2,000 pages in the FAR.
▶ 1:26:05And even a guy who graduated from MIT in a degree that I don't understand at all uh has to do those things. So the point is how can a regular American go through these processes if the MIT chemical engineering grad has to outsource and bring on an attorney to go through that? So, can you share with me some of the frustrations, experiences or whatnot that you've been through as an MIT grad who's got a chemical engineering degree and going through some of these ownorous government contracts?
▶ 1:26:34What burden has it placed upon you personally? Well, the first thing is if if an average person wants to do that, they can do it, but they quit their day job. This has to be the only thing that they do and they're not running a company, they're not performing on contracts, they have to spend all of their time doing something like this. A lawyer is necessary. And so with some of the frustrations uh we see a tremendous amount of variability as well. It's not just that you have one thousandpage contract or something like that.
▶ 1:27:02The next one that may come from the next office over may be completely different for the same level of services or the same types of services being provided. This is a problem because now you may have brought in your lawyer, you may have brought in some friends or colleagues that are former contracting officers in order to try and get through it. uh you now have the same problem the next day. It continually repeats itself. And and I want to be very transparent in this.
▶ 1:27:29Yes, this committee wants to make life easier on small businesses. That's, you know, part of our it's in our wheelhouse. It's not just out of charity and benevolence or just being good guys that we want to make things easier on you. It's out of wanting to have more applications. And we have more applications, government gets a better price, arguably a better product that could be more on time and a higher quality. Selfishly, government should want to make it easier on applicants to be a part of the process. We shouldn't want to drown you in paperwork.
▶ 1:27:59We shouldn't want you to have to give up your specialty to now become a government applicant specialist. So, um, tell me a little more about how, um, you've had to, uh, outsource that and affects your ability to focus on what is most important for your business. Well, one of the first things you have to remember is if we have less that we have to do in a procurement, that means we can respond to more, which means we can actually take shots on goal at innovating. We can't do that today.
▶ 1:28:28We have to focus solely on the evaluation criteria, which is incredibly rigid. And so having to outsource this, we hire a general counsel. There's a tremendous amount of cost that comes with just having lawyers. we have to actually go to our partners that are typically uh bigger businesses or maybe teaming partners on those. Uh those are things that we might be able to get just because we're a good firm and we've got good connections in order to rely on those resources.
▶ 1:28:55Or we might have to hire a complete thirdparty consultant not only to write that proposal but also have a consultant to help us actually navigate the federal landscape and actually doing business development outside of the procurement process so we could be positioned just to have a shot at those procurements. Miss Tier, do you have a similar experience that the the bipartisan plain language and contracting act is meant to address these issues for all small businesses either anecdotally or whatnot? Do you have a similar experience as Mr. Ramos? I I think we all do.
▶ 1:29:23Candidly, I think we all have an understanding that when when we're comparing a commercial opportunity that's four pages with a uh 158 page solicitation, that's there's that the riskreward um ratio comes into play there. Um, if we can simplify that certainly helps. I would I would I would offer that it might not be the most important barrier to entry for small companies, but it is certainly one. Thank you. I'm going to yield the rest of my time back and recognize my friend from California, Mr.
▶ 1:29:53Cinazeros, for 5 It it works a lot better if I turn on the mic and have it in front of me. Um, Miss Tier, um, I just kind of want to follow up on a previous question that you got, right? Previous efforts have sought to consolidate contracts through initiatives such as category management, consolidating efforts that put contracts out of reach for many small businesses, including some that have previously performed the work.
▶ 1:30:22Can you elaborate more on the cost and requirements for small businesses to get on certain contracting vehicles before you can Absolutely. the um any of the multiple award vehicles have a pretty intensive either application process or proposal process. Um if if you do that in-house that can take somewhere between 20 and 100 hours of time in a small business that's unfortunately sometimes the owner of the company and to Mr.
▶ 1:30:48Ramos's point that's innovation leaving and there's a focus on just submitting the process. there's an opportunity cost to my time. Um, once I get on that vehicle, now that I know the word zombie contract, which I'm smitten with clearly, once I get on that vehicle, I might never get spent. Um, there might not be opportunities that come out through it. Um, but I'm still responding to task orders on that. If if I get on that vehicle, I'm still responding to task orders on it. It's it's an intense outlay of time and money at the beginning and then it just Mr.
▶ 1:31:18Ramos, I I would maybe amplify the comment. We we were gonna when we have our umbrella contracts, we go after task orders. I've had years where we've hit over a hundred task orders we've had to respond to on contracts that we already own and that we've already won in addition to trying to secure new work on other federal procurements or even in the non-federal realm. And so I mean there is a huge cost outlay in order to do this. All right.
▶ 1:31:43Um you miss tellier Doge cuts led to prime contract terminating subcontracts uh with smaller firms including those by womenowned small businesses, veteranowned businesses, minority owned What was the impact of these terminations for small businesses? What have you heard from your other small It it's been quite devastating. Thank you so much for that question. It really hasn't come up there.
▶ 1:32:09Having contracts canled midcycle means that there are people that lost their jobs. Those contracts had employees associated with them. The the performance of the the work statement um required bodies, required inputs. Some of those inputs had had fixed costs that were already sunk into them. So, small business contractors, some of them closed. Um some of those contracts were substantial and they they they couldn't survive.
▶ 1:32:34But what it did for the rest of the contracting community is inject unpredictability and unpredictability for a small business is just inherent risk. So I I didn't get doed. I you know the the the verb do I didn't get it. Um but it still injected unpredictability in into my decisions as a federal No I I think that's what we heard from many small businesses right is that they didn't know what was going to come next.
▶ 1:32:57they do know and and it doesn't matter whether it was the small businesses I would say the school districts everybody the local you go we just want to know what's going to happen right just tell us what's going to happen is unpredictability does not help us at all and and if I could just throw one last question in there and I'll open this up to the panel but uh what advice would you give to a small business either just starting out or an existing commercial firm that is interested in contracting
▶ 1:33:28with the federal government for the first time. Um, what advice would you give them? This is a very expensive endeavor. So, make sure you have your cash flow lined up. The entry level regulations that you're going to have to meet in order to enter into the federal marketplace is almost uh insurmountable for small companies, even established commercial companies. This is this is a very big I would like to give in. No, I'll get you, sir.
▶ 1:33:56I'll get you, I would weigh in very quickly that there are some fabulous resources that you fund for small businesses who are entering. The apex accelerators and the um small business development centers are a great starting point as well, but it is expensive. Thank you. And sir, my only request is if they want to start off, be prepared to spend 24 by7 on this project in a committed way. Otherwise, there will be two losers.
▶ 1:34:23one is the person who started the business and also the government. All right. With that, I yield back my The gentleman yields. Uh and we're going to adjourn in a minute, but I want to thank our witnesses for traveling to Washington to for being a part. Mr. Ladimer, do you No, thank you. Okay. Uh I do want to thank our witnesses for traveling to Washington. Uh this is insightful.
▶ 1:34:51We spent about an hour and 20 minutes together uh having a good dialogue. We've read your bios. We read your testimony, but the dialogue that we were able to have afterwards is productive for this committee that does a lot of decent bipartisan work. Yeah, we have some differences about some of the things on the fringes, but for the most part, we agree on a lot. Uh and your testimony helps illuminate uh some of the things that we're most focused on. So, I I definitely want to thank you for uh being a part of that.
▶ 1:35:15Um, and without objection, members have five legislative days to submit additional materials and written questions for the witnesses to the chair. Uh, which will be forwarded then to the witnesses. And I would ask the witnesses if you get that correspondence to please reply promptly. If there's no further business, without objection, the committee stands adjourned.