Letters, statements, etc.-Continued Hughes, Dr. Richard: Correspondence and material relative to the hearing. Page 162-165,171-175 McMurtry, Walter M., Jr., president, Inner-City Improvement Prepared statement.. Revised forms for the 8(a) program_. McSpadden, Stephen R., counsel, Commerce, Consumer, and Monetary Affairs Subcommittee: Material relative to the hearing.. 68-75 50-62 94-95, 98-105,107-109 Madison, William F., Director, Office of Small and Disadvantaged Prepared statement. 187-189 192-230 Patrick, Charles, executive director, National Association of Minority Correspondence sent to Federal agencies requesting certain 35-39 Material relative to the hearing 6-20 Sewell, Douglas, co-owner, American Office Products: Material relative to the hearing.. 142-158 Tiano, Frank, Chief, Purchase and Contract Section, Veterans' Admin- APPENDIXES 82-84 91-92 Appendix 1.-SBA press release describing new policies for section 8(a) 419 435 MAJOR PROBLEMS WITH SBA'S SECTION 8(a) PROGRAM FOR DISADVANTAGED SMALL BUSINESSES SATURDAY, MARCH 28, 1981 HOUSE OF REPRESENTATIVES, COMMERCE, CONSUMER, AND MONETARY AFFAIRS SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS, Detroit, Mich. The subcommittee met, pursuant to notice, at 9:30 am., at 716 Federal Building and U.S. Courthouse, 231 Lafayette, Detroit, Mich., Hon. John Conyers, Jr. (acting chairman of the subcommittee) presiding. Present: Representatives John Conyers, Jr., and Hal Daub. Also present: Stephen R. McSpadden, counsel; and Jack Shaw. minority professional staff, Committee on Government Operations. OPENING STATEMENT OF ACTING CHAIRMAN CONYERS Mr. CONYERS. This morning we are holding a hearing on the Small Business Administration's operation of the section 8(a) program. The hearing is being conducted by the Subcommittee on Commerce, Consumer, and Monetary Affairs of the House Committee on Government Operations. Congressman Benjamin S. Rosenthal, chairman of the subcommittee, could not be with us for the hearing. I am joined this morning by Congressman Hal Daub (R-Nebr.), a member of the Subcommittee on Commerce, Consumer, and Monetary Affairs. I want to welcome each of you and Congressman Daub to Detroit, and express my appreciation to Congressman Daub for his decision to join us for this important hearing into the operation of the section 8(a) program by the Small Business Administration's (SBA) Detroit district and Chicago regional offices. We are all aware of the problems disadvantaged small businesses are facing in the general economic decline that is taking place in the country, and we know that a minor downturn for mainstream businesses usually means complete failure for many small disadvantaged businesses. In this environment, we recognize the fact that we cannot allow small disadvantaged businesses to be artifically restrained in their attempt to participate equally in the American business community. Much of this awareness is a function of our understanding that small businesses still employ most of the individuals that are employed in this country, and that they remain the most creative element in American industry. (1) When the Congress created the SBA it was reflecting a need for an agency that would provide management, technical, financial, and marketing assistance to small and disadvantaged businesses. Congress creation of the SBA indicated its commitment to the welfare of the small businesses in America. The letter and spirit of congressional procurement legislation clearly indicate that Federal agencies and prime contractors are obligated to improve the level of participation by small and disadvantaged businesses in the economy. Our responsibility is to insure that the assistance required of Federal agencies and the needs of small businesses are brought together in a creative way that will enhance the solvency of the small businesses. Although this hearing will examine the full range of SBA operations, we are particularly concerned with its operation of the section 8(a) program. The section 8(a) program, started more than 12 years ago, attempts to channel many noncompetitive Federal agency procurement contracts to economically and socially disadvantaged small. businesses. The SBA becomes the contractor and acts as an intermediary between the Federal agency involved and the small business. To be eligible for section 8(a) contracts, a disadvantaged firm must apply and be certified for section 8(a) participation by the SBA. Once the firm is certified, SBA is required to provide management, marketing, and financial assistance. This hearing is designed to address that manner in which SBA has gone about fulfilling this congressional mandate. We have invited a variety of Federal and private agencies, who participate in SBA programs, to join us this morning on this important issue. We are interested in their organizations' activities and experiences with the SBA in general, and its section 8(a) program in particular. We want to examine the problems that exist in disadvantaged businesses being certified for 8(a) participation by the SBA. Also, we have an interest in understanding the adequacy and effectiveness of the managerial, technical, financial, and marketing assistance that the SBA provides to these businesses. If there are unwarranted limitations that have been placed on opportunities to apply for 8(a) certification, we would like to be informed of them. An important element in the overall success of this hearing is the advice that our witnesses can offer this committee on what the SBA can do to increase the number of contract opportunities for disadvantaged small businesses and improve the efficiency of the section 8(a) program. Please feel free to comment on any aspect of the operation of the SBA and your participation in its programs. Although this hearing will undoubtedly provoke criticism of the SBA, and possibily of other agencies, we hope that it will result in constructive criticism with ideas and suggestions on how SBA might operate more effectively and be more consistent with congressional mandates. We also want to make it clear that these hearings are done in the most constructive tone possible. I want to emphasize that. We are not here to create harm or controversy or schisms among the Government, the private sector, or anybody else. And with those sentiments, I am very pleased to recognize my colleague from Nebraska, Congressman Daub. Mr. DAUB. I should say for the purpose of this hearing, Mr. Chairman, that although you indicated that you were acknowledging the absence of our committee chairman, I would like to say on behalf of Lyle Williams, the ranking minority member on this subcommittee, that we are delighted to be involved in what we look forward to be very constructive hearings on this particular subject. I am delighted because this subject is an important one for Omaha, Nebr., which is the area that I represent. The fact is I did enjoy the hospitality of Detroit in the summer of 1980 on my way to the Congress. And, again, I am delighted to be in this city which, as I understand it, labors under a very high unemployment level at the present time. It's particularly appropriate that we are examining small business problems in the context of Detroit, and this particular circumstance which is faced by people and by businesses here. I participate in this hearing as a Member of Congress with a unique perspective, for I not only serve on the Government Operations Committee, but I am also a member of the Small Business Committee. If you combine the two, the oversight function and the necessity, I think, to improve the efficacy and impact of section 8(a) programing, I think from my vantage on the Small Business Committee of learning in these early days what kinds of oversight activity might well effect a change for the best in this program. I want to compliment my colleague John Conyers for his leadership in this particular area. It is the first of what will be, I think, a growing number of inquiries and ultimately some positive results will come. I am delighted to be a part of this hearing. I look forward to listening to the testimony of those of you who have taken time to be here today and who are prepared to give us valuable information. I do want to urge us to operate in the strictest conformity with the chairman for the day's admonition that we are here in the spirit of learning about what we can do to improve this program. Mr. CONYERS. Thank you very much. May I note that, Mr. Major Clark, staff director of the House Committee on Small Business is here. That committee is chaired by our colleague, Parren Mitchell of Maryland. If you care to move up front, you can, or you can make your examination from where you are, and, if you feel constrained to make any comment either now or during the hearing, Mr. Clark, please feel free to do so. We also want to welcome everyone here who has joined us as a witness or as a business person, or as a member of our community who is very concerned about this problem. We have received an incredible amount of cooperation. The Government agencies and their representatives have been extremely helpful, as well as many of the organizations which are comprised of small businessmen. We have a number of witnesses, we are going to try to move as expeditiously as we can, yet we do not want to leave anyone out. For that reason we will be having a number of panels. I would like to invite a lady as our first witness to start the hearings off, Ms. Carol Raymond, from the Commerce Department, who serves in the division at Commerce known as the Minority Business Development Agency. Ms. Raymond, good morning and welcome before the subcommittee. We understand you haven't been feeling well lately and that it's a great effort on your part to join us this morning and we thank you for it. We know you do not have a prepared statement but you are familiar with the subject matter, and your concern and interest in small business is very well known, and we welcome you before the subcommittee. STATEMENT OF CAROL RAYMOND, EXECUTIVE DIRECTOR, MINORITY BUSINESS OPPORTUNITY COMMITTEE Ms. RAYMOND. Thank you. I am glad to be here. I don't have prepared testimony but I will answer your questions. I speak for myself as it relates to my involvement with the Small Business Administration. I do not represent the Administration. Mr. CONYERS. Well, let's begin then by asking you to describe your connection with the small business community and just what your experience has been over the years. Ms. RAYMOND. Well, as Executive Director of the Minority Business Opportunity Committee which is a subcommittee of the Federal Executive Board, I have the responsibility to coordinate the minority business enterprise efforts in the Federal sector, and this responsibility is part of my overall responsibility as District Officer for the Minority Business Development Agency (MBOC). So this is a Federal program. I have been in this position for the past 6 years. In this position we work through subcommittees, six subcommittees. One subcommittee happens to be the Procurement Subcommittee, the other, Construction Subcommittee. These are two subcommittees that deal closely with the concerns of the minority business community, and would relate to the same kinds of things that the Small Business Administration would be handling, and the kinds of services or the kinds of help that the Small Business Administration would be offering. My contact is directly with the minority business community and, of course, with the Federal agency heads through the Federal Executive Board. So I have worked very closely with the Small Business Administration. When I came to this position, my office was located in the SBA complex. Now it seems, for some reason or another, the attitude within the SBA office here in Detroit is somewhat negative toward minority business persons and their needs. If it's not negative, it's certainly not sensitive to them. Instead of a cooperative effort they are anything but cooperative in communicating with the minority business community, and in offering the kind of assistance and help we felt or we do feel is important to the minority business person. I was evicted from the office where I was located at the Small Business Administration and have had to find new office space. That happens to be one incident that happened during the time that I was there. Another seemed to be a problem that the Director of the Small Business Administration had with including the MBOC in the effort or in programs that the Small Business Administration is charged with carrying out. In fact, he felt it necessary at one time to even express to the Director of the Federal Executive Board (FEB) that the MBOC program was not a Federal program, it was not to be recognized as a Federal program. So those are basically the kinds of things that we have had to contend with. |