Stopping An “Extinction-Level Event” for Small Businesses

By MSGI Policy Analyst Andrew Lautz

Two hearings on Capitol Hill this week focused on what one expert called “extinction-level events” for small businesses: cyberattacks. Congress is looking to get aggressive in helping small employers and entrepreneurs both respond to and defend against online breaches. Senators and Representatives introduced no less than 4 small business cybersecurity bills in the last 7 days alone.

The House Small Business Committee’s hearing covered online issues at large, but witnesses and Members ended up spending a large part of their time looking for ways to help mitigate the devastating impact of cyberattacks.

Why so much time on just this one aspect of digital entrepreneurship? Consider these takeaways from the hearing:

• Entrepreneurs generally don’t have dedicated information technology (IT) or cybersecurity staff
• The cost and time burden of becoming cyber-secure is often too high for smaller businesses

The Senate, for its part, devoted its entire hearing to cybersecurity. Witnesses from the Small Business Administration (SBA) and the National Institute of Standards and Technology (NIST) discussed ways they’re looking to prepare entrepreneurs and small contractors for 21st-century online threats. Private-sector witnesses challenged Congress to ensure their cybersecurity efforts don’t also impose new burdens on small business owners and staff.

More important than the hearings is what Congress does next. The top-ranking Members of both the House and Senate Small Business Committees are supporting bills that could help.

• Senate Chair Marco Rubio (R-FL), Senator Jeanne Shaheen (D-NH), House Chair Nydia Velazquez (D-NY), and House Ranking Member Steve Chabot (R-OH) have proposed bills that would increase small business access to cyber training through SBA’s Small Business Development Centers
• House Chair Velazquez and Ranking Member Chabot also support legislation that would enhance the ability of small businesses to communicate with the Federal government about cybersecurity and cyberattacks

These bills are worth watching, especially given the importance assigned to cybersecurity at this week’s hearings. As one witness put it, they may make the difference between survival and extinction for small businesses. 

The 1 Glaring Question in Every Congressional Hearing on Infrastructure

By MSGI Policy Analyst Andrew Lautz

There were no less than three hearings on Capitol Hill last week concerning the great white whale of this era, for Congress and the White House: an infrastructure bill. These were not the first hearings of the 116th Congress on infrastructure either. Numerous Committees have spent hours discussing how to invest the trillions of dollars needed to update the nation’s roads, highways, bridges, and tunnels. 

This week’s hearings were held by Committees with different focus areas, underscoring just how many aspects of the American economy would be impacted by an infrastructure package:

1. The House Small Business Committee held a hearing on how to include small businesses and contractors in an infrastructure bill
2. The Senate Environment and Public Works Committee considered how to balance the need for fast permitting of Federal projects with the need to protect the environment
3. It was the House Ways and Means Committee, though, that pondered the central question hanging over these and all other infrastructure hearings: how to pay for it?

There is still quite a gap between Republican and Democratic Congressional leaders over just how to pay for an infrastructure bill that could cost over $1 trillion, without putting more debt on the nation’s credit card.

Republicans, who control the Senate and White House, are wary of proposals to increase the Federal gas tax. House Transportation Committee Ranking Member Sam Graves (R-MO) is proposing a new kind of tax, on Vehicle Miles Travelled (VMT). Graves has yet to get his party on board, though, and there are privacy concerns about how to actually track and collect a VMT tax.

Some prominent Democrats, like House Transportation Committee Chair Peter DeFazio (D-OR), are behind a gas tax hike, but he doesn’t have consensus in his party either. Ways and Means Committee Chair Richard Neal (D-MA) has not committed to any one idea to raise money for an infrastructure bill, but where he falls on the issue could end up being a major signal to other House Democrats.

It seems that President Trump, the Republican-led Senate, and the Democratic-led House all agree that infrastructure spending is a necessity, not an option, for the 116th Congress. Until a consensus develops on how to pay for infrastructure, though, there will be more questions about what emerges from this Congress than answers.

The $1.4-Trillion Heartbeat: Women Entrepreneurs Tackle Challenges at Roundtable

By Andrew Lautz, WIPP Government Relations

There are 10 million women business owners in the U.S. generating over $1.4 trillion in annual sales. Women Impacting Public Policy (WIPP) brought some of those women business owners together with Members of Congress last week to discuss the challenges women entrepreneurs face in 2019.

The event, hosted by WIPP in conjunction with the Congressional Small Business Caucus, attracted attendees from on and off Capitol Hill for a lively morning discussion about capital access, workforce development, and Federal contracting for women business owners, called the “heartbeat” of the American economy by one attendee.

One common theme among leaders who spoke was the institutional obstacles, past and present, standing between women business owners and their full potential. Congresswoman Chellie Pingree of Maine, Co-Chair of the Small Business Caucus, discussed the difficulties she had obtaining a business loan from her local banks. “What does your husband think about this?” was a common question Pingree was asked when she started her business 30 years ago. Even today, only a miniscule amount of venture capital dollars go to women, according to National Women’s Business Council (NWBC) Chair Liz Sara.

Penn Parking President Lisa Renshaw shared her inspiring story—taking over her first property at age 21, sleeping in a parking garage for 3.5 years, and growing her business to over 200 employees and 45 locations. It’s a fine example of the resilience of the innovators and entrepreneurs in attendance, even in the face of tremendous adversity. Renshaw hasn’t forgotten about her humble beginnings, though—she talked at length about training her workforce for the jobs that will dominate the 21st century American economy.

WIPP President and CEO Candace Waterman shared why Federal contracting parity is so important for women entrepreneurs. The Federal government sets a goal of having 5% of all contract dollars per year go to women-owned small businesses (WOSBs), but has only succeeded once. As the government shifts towards larger and larger contract vehicles, agencies must keep their eye on the 5% goal, Waterman said.

The women entrepreneurs most of whom were WIPP members, took part in the roundtable with Small Business Caucus Co-Chairs Pingree (D-ME) and Scott Tipton (R-CO), along with Congressman Steve Chabot (R-OH). The top takeaway? Congress and the Federal government have more work to do to ensure women entrepreneurs can access much-needed capital, develop a skilled workforce, and achieve parity in Federal contracting. The good news? WIPP, Penn Parking, NWBC, and Members of Congress are on the case.

Who Is the FAR Council and Why Are They So Slow?

By Ann Sullivan

A letter from the Chair and Ranking Member of the House Small Business Committee recently came to my attention urging the Federal Acquisition Regulation (FAR) Council to adopt changes made by law in 2013. And I thought Congress was slow. 

Who is this Council? According to the law, the FAR Council membership consists of: the Administrator for Federal Procurement Policy and — (A) the Secretary of Defense, (B) the Administrator of National Aeronautics and Space; and (C) the Administrator of General Services. Now, admittedly these are busy people. Maybe they just don’t have time. However, upon further investigation, these very busy people have representatives for various sections of the FAR. They are called FAR Teams.

For example, in 2007, the Federal Acquisition Regulatory Council established a Federal Acquisition Regulation (FAR) Small Business Team. The purpose of this Team is to focus on small business issues and to coordinate with the Small Business Administration (SBA) on concurrent SBA and FAR rulemaking. So, even with a team devoted to small business, there is still a backlog on adoption of small business changes dating back as long as six years. 

As background, the government implemented the FAR in 1984, looking to create a single, governmentwide procurement regulation. Any amendments proposed and announced by the Department of Defense (DOD), the General Services Administration (GSA), and the National Air and Space Administration (NASA) need the concurrence of the FAR Council established at the same time. The FAR is massive and has 53 sections. Just in case you were wondering, the small business portion is contained in FAR Part 19.

The process of changing a law or putting in place a new one is lengthy. The FAR Council uses the same process as any other agency to amend the FAR, which includes: the publication of a proposed rule in the Federal Register; the opportunity for interested persons to submit comments on the proposed rule; publication of a final rule that includes a “concise general statement” of the “basis and purpose” of the rule; and a 30-day waiting period after the final rule is published in the Federal Register before the rule can take effect. Other agencies get involved in this process as well, such as a review from the Office of Management and Budget (OMB) or the Office of Information and Regulatory Affairs (OIRA), for example. Then, finally, it goes to the FAR Council for adoption. In my experience, a speedy regulatory process is six to nine months. Years can slip away as everyone involved in the process concludes their work. 

A look at the FAR Council website reveals 12 pages of open cases, some of which involve the small business changes the House Committee letter is seeking. The good news is that the force of law does not necessarily have to depend on this years-long process. Sometimes the FAR “conforms” to regulations issued by the agency, such as changes to the Small Business Act. Contracting officers do not always have to wait on FAR Council actions before implementing a change in the law because agency rules generally have the force of law; however, they do not realize this. For example, this certainly happened with respect to WIPP’s push to implement sole source for the WOSB procurement program. A contracting officer told women contractors that the FAR had to be amended before they would consider issuing sole sources. 

Agencies can also be compelled to take action in certain circumstances if they have “unreasonably delayed.” That was certainly the case with the WOSB procurement program (unless passage of a law in 2000 and implementation 11 years later does not seem unreasonably delayed).

So, why is the FAR Council so slow? Because the process to amend the FAR goes through an extra level of interagency review. Even though Congress passed a law and agencies produced a rule to implement the law, the FAR amendment process basically goes through the review process all over again. I don’t know about you, but it seems like this process could be streamlined. Of course, I am looking at this through private sector eyes, not the eyes of a federal agency. Given this Administration’s focus on streamlining federal processes, it seems to me that this might be a good place to start.