MSGI Congressional Hearing Recap - House Small Business Committee Hearing "Jobs! Jobs! Jobs!"

MSGI Congressional Hearing Recap

Committee: Committee on Small Business Subcommittee on Innovation, Entrepreneurship, and
Workforce Development

Hearing Title: Jobs! Jobs! Jobs!

Subcommittee Chair: Representative Jason Crow (D-CO)

Ranking Member: Representative Young Kim (R-CA)

Date: June 30, 2021

Witnesses

Mr. John R. Dearie
President
Center for American Entrepreneurship
Testimony 

Dr. J.D. LaRock
President and Chief Executive Officer
Network for Teaching Entrepreneurship
Testimony 

Ms. Denyse Airheart
Business Pathways Director
Mi Casa Resource Center
Testimony 

Mr. Craig Etkin
President and Chief Executive Officer
Intelligence360
Testimony 

Main Issues Discussed

Reaching Underserved Communities

• Chair Crow (D-CO) Questions: 
• Ms. Airheart, what is the primary barrier that entrepreneurs face when starting a business
• Response: Systemic issues in the community. For example, the Latinx population want to work together, but there is a lack of leadership. We work to shepherd individuals through training, looking at access to capital. Many individuals in underserved areas do not see leaders who look like them. 
• Can you expand on "support ecosystems?” 
• Response: Yes, they can be modeled in different ways, such as peer to peer connection. Ultimately you want to see the stickiness: they can hire locally, invest locally, retain local talent. Support ecosystems build the steppingstones. We are looking for business not to leave distressed communities but reinvest in them. 
• Rep. Phillips (D-MN) Question:
• Only 3 urban areas in the country account for 80% of all venture capital investment: Silicon Valley, New York City, Boston. Mr. Dearie, what role can Congress play to help with distribution of this funding to areas that are starved of it?
• Response: We hear this problem at every roundtable. There is not an equitable distribution of venture capital funding. I suggest the provisions found in the New Business Preservation Act. It creates a program where public funds are matched with private dollars in a 1 to 1 match in heartland states. 
• Dr. LaRock, what specific steps can Congress take to inspire young people for entrepreneurship?
• Response: The foundational concepts of the Next Generation Entrepreneur Corps Act (NextGen). I also think that our education system, including high schools and middle schools, need to start integrating career exploration. There needs to be more funding for youth entrepreneurship. 
• Rep. Newman (D-IL) Question: 
• Mr. Dearie and Dr. LaRock, what are the top 3 issues that Congress can address?
• Response from Mr. Dearie: First, entrepreneurship remains white and male. As a pathway to economic empowerment, we need to place priority in making entrepreneurship more inclusive. Following that, access to capital and access to properly skilled people.
• Response from Dr. LaRock: Focus effort on disparities that exist, we must build in equity. I also believe that mentorship is vital, as well as opportunities in the education system, such as community colleges. 
• Rep. Bordeaux (D-GA) Question:
• Ms. Airheart, are there things that we could be doing to help with minority owned businesses better access programs?
• Response: Yes, we must create awareness of what is available. Funding for programs like the women’s business centers is critical because these programs are accessed by the new builders of the new America. 

Problems with Job Creation

• Ranking Member Kim (R-CA) Question: 
• There has been difficulty finding workers for jobs. Mr. Dearie, can you elaborate how we can increase worker’s skills and help them develop new ones?
• Response from Mr. Dearie: Access to skilled workers is equally as important as access to capital. The U.S. educational system is failing to produce sufficient workers. STEM education is important as is the great underused education system: community colleges. There needs to be more communication between businesses and educators. 
• Response from Dr. LaRock: Career and technical education is important.

Burdens on Entrepreneurs

• Chair Crow (D-CO) Question:
• Ms. Airheart, what barriers should we remove, and what would that look like? 
• Response: Many entrepreneurs must make the choice between going to college or starting a business because of student loan debt. Costs and lack of access to childcare are also incredibly challenging to women. Also, financial education: many people lack the skills and confidence to pursue capital investment.
• Rep. Garbarino (R-NY) Question: 
• Many of the businesses in my district have left because of bad infrastructure, Mr. Dearie, what do we start with?
• Response: Physical infrastructure is very important, but so is childcare. In WW2 we had a national childcare system because women were working, this led to a booming economy. 
• Mr. Etkin, costs of goods are high, what are we hearing about inflation from small businesses
• Response: It has been shocking to see the price differences on lumber and steel. Our timelines are disrupted, but this is a complex issue – not based only on one policy.
• Ranking Member Kim (R-CA) Question:
• How will sharply increasing taxes hinder small businesses from growing or hiring people?
• Response from Mr. Dearie: The broad consensus is that we need to invest more in infrastructure, but the tax issue we hear is on tax complexity rather than marginal rates. People struggle with the constant uncertainty. 
• Response from Mr. Etkin: I get feedback that now is not the time to handcuff business and job creators with taxes. We need to focus on critical infrastructure - when you move outside of that, you put into question the priority of bringing back jobs.
• Dr. LaRock, what price pressures would you like to see eliminated?
• Response: The proliferation of regulation. More than taxes, regulatory burdens, and administrative burdens. 

SBA Role in Reversing the Decline of Entrepreneurship

• Rep. Bordeaux (D-GA) Question:
• Mr. Dearie, can you elaborate on why the decline in entrepreneurship is happening?
• Response: The research shows the decline on new businesses is pervasive- happening in all 50 states, all but 50 metro areas, all industry sectors. We don’t understand why this is happening. 
• Chair Crow (D-CO) Question:
• Mr. Dearie, how is access to SBA capital better for entrepreneurs than access to traditional/commercial lenders? 
• Response: Banks are not the ideal source of capital for startups. Banks don’t want to damage the balance sheets. SBA bridges the gap between venture capital and angel investment type of funding and banks by assuming some of the risk.

MSGI Congressional Hearing Recap - House Small Business Committee Hearing "CMMC Implementation: What It Means for Small Businesses"

 MSGI Congressional Hearing Recap

Committee: House Small Business Committee, Subcommittee on Oversight, Investigations, and Regulations

Hearing Title: CMMC Implementation: What It Means for Small Businesses

Subcommittee Chair: Representative Dean Phillips (D-MN)

Ranking Member: Representative Beth Van Duyne (R-TX)

Date: June 24, 2021

Witnesses

Mr. Jonathan T. Williams
Partner
PilieroMazza PLLC
Testimony

Mr. Scott Singer
President
CyberNINES
Testimony 

Ms. Tina Wilson
Chief Executive Officer
T47 International, Inc.
Testimony 

Mr. Michael Dunbar
President
Ryzhka International LLC
*Testifying on behalf of the HUBZone Contractors National Council
Testimony 

Main Issues Discussed

Cost of CMMC Implementation

• Chair Phillips (D-MN) Questions:
• Mr. Williams, the cost of CMMC can be burdensome, how can we strike a balance with cost and protecting cybersecurity?
• Response: Keep as many small businesses as possible at Level 1. The businesses will have adequate protections but will avoid the costs of Level 3. We need a controlled approach where small businesses don’t have to take on Level 3 information.
• Are there funding streams to help small businesses?
• Response: I am not aware of any, but it is a great idea. Smaller firms cannot afford the investment up front. Existing mentor protégé programs work very well, mentors can help with CMMC.  
• Ms. Wilson, what is your experience with CMMC?
• Response: I learned about it when attending an industry day, I understand how it works in a broader perspective. T-47, my business, must secure a specialist because CMMC is very complex.  

Overlapping Requirements

• Ranking Member Van Duyne (R-TX) Question:
• Mr. Dunbar, do you believe the CMMC duplicates any standards that are already present?
• Response: Yes, it is built on an existing standard. The reason behind CMMC is there was no third-party assessment. Why create an existing standard? Why not add on the third-party assessment to an existing standard?
• Rep. Evans (D-PA) Question:
• Ms. Wilson, can you mention just a few other certifications you have to comply with?
• Response: We have invested in the ISO certifications, SBA’s annual 8(a) certification, WOSB certification, defense counterintelligence security certification. The CMMC process has been the most challenging because there is no transparency.

Lack of Transparent Information on CMMC

• Ranking Member Van Duyne (R-TX) Questions:
• Mr. Dunbar, where do you get the information on CMMC? How can we make it easier?
• Response: We get the information from LinkedIn. There is no consistent message or method coming from the Department of Defense (DOD). Even the CMMC FAQ page is not streamlined. 
• Is there a role for the SBA?
• Response: There should be a role for the SBA. I think the DOD has sidelined them in the same way that small businesses have been ignored.
• Mr. Singer, what is the penalty if a business doesn’t comply?
• Response: You are out of business with the DOD.
• Can you point to one or two things that would make understanding this easier for small businesses?
• Response from Mr. Singer: The prime contractors need to step up and play a bigger role, they have the resources and the teams to do so. There needs to be more support for the whole supply chain.
• Response from Ms. Wilson: To ensure that everyone has the same information there needs to be a concerted effort across all industries. 
• Response from Mr. Williams: Regarding the flow down of information, the prime contractor has a lot of power. The challenge is that the questions are not being answered on the main issues. 
• Response from Mr. Dunbar: A lot of small businesses work from home now. Small businesses will be subject to home inspections, the risk of this is incalculable. Small businesses need the ability to protect themselves. 
• Rep. Evans (D-PA) Question: 
• Mr. Dunbar, what is your recommendation to businesses just learning about CMMC?
• Response: I don’t have an answer. We are trying to find the information, which has not been clear.
• Response from Mr. Singer: It is important for companies to find reputable partners to help them through the process. I think Level 3 businesses, such as small manufactures, are just now starting to understand this. Businesses that qualify as Level 1's may not understand that CMMC will affect them yet.

Determining Levels for Small Businesses 

• Rep Evans (D-PA) Question: 
• Mr. Wilson, what would be the ideal way for small businesses to be taken care of?
• Response: Offer up costs to pay for Level 1 and Level 2 certifications. This way, DOD has some level of comfort. The other businesses can go out and secure other levels if needed. 
• Rep. Meuser (R-PA) Questions: 
• Mr. Dunbar, what is the DOD’s feedback on if Level 1 is satisfactory? What do they say about you, and suppliers like you, regarding Level 1?
• Response: Part of the problem is that we aren’t hearing a lot. We don’t know if we will we need to keep chasing technology as we go along. 
• What is the cost difference from Level 1 to Level 3?
• Response: 10 to 20-fold cost difference.
• How much more secure is Level 1 to Level 3?
• Response: From where I am currently, I am secure. 
• Rep. Hagedorn (R-MN) Question:
• Mr. Dunbar, wouldn’t it make more sense if the government imposed reasonable standards?
• Response: I agree, the key word is the definition of reasonable, DOD believes that these numbers are reasonable. My company has 6 people, this is not reasonable. 
• Chair Phillips (D-MN) Question:
• Mr. Singer, how likely is full CMMC implementation by 2026 when there is such a lack of assessors?
• Response: It will be very difficult to get there with the current progress of 100 provisional assessors and 2 C3PAOs. The timeline is very stretched, we need more than 8,000 assessment team members to make this happen. There needs to be flexibility for the third-party assessors. Not everyone needs to be at Level 3. There needs to be an understanding of risk to the supply chain. 
• Mr. Williams, how concerned are you that the CMMC initiative will be adopted by civilian agencies and become a baseline?
• Response: It is certainly a possibility. I would view what is happening at DOD as a trial.  

MSGI Congressional Hearing Recap - House Small Business Committee Hearing “Prioritizing Small Underserved and Rural Businesses in the SBIR/STTR Programs”

MSGI Congressional Hearing Recap

Committee: House Small Business Committee, Subcommittee on Underserved, Agricultural, and Rural Development 

Hearing Title: “Prioritizing Small Underserved and Rural Businesses in the SBIR/STTR Programs”

Subcommittee Chair: Jared Golden (D-ME)

Ranking Member: Jim Hagedorn (R-MN)

Date: June 23, 2021

Witnesses

Dr. Joshua A. Henry
President and Founder
GO Lab, Inc.
Testimony

Ms. Nancy Min
Founder
ecoLong
*Testifying on behalf of the Clean Energy Business Network (CEBN)
Testimony

Dr. Angelique Johnson
Founder and Chief Executive Officer
MEMStim LLC
Testimony

Dr. David Green
Chief Executive Officer
Physical Sciences Inc.
*Testifying on behalf of the New England Innovation Alliance (NEIA)
Testimony

Main Issues Discussed

Targeting SBIR/STTR to Rural and Underserved Communities

• Ranking Member Hagedorn (R-MN) Question:
• To all witnesses, I am concerned that these awards would be given based on preference on identity or race, like what we have seen with the Restaurant Revitalization Fund having a “priority group.” 
• Response from Dr. Johnson: The program needs to stay merit based. These are not research grants; they are small business research grants. The merit should come from impact on economy and environment. Provide more assistance on the front end, such as "Phase 0" programs that businesses can use to develop a prototype and be successful in Phase 1. 
• Chair Golden (D-ME) Questions: 
• Dr. Henry and Dr. Johnson, can you gauge the impact that SBIR/STTR funding has on rural and underserved communities?
• Response from Dr. Henry: Representation is an issue because rural communities have different values than big cities. The people reviewing these applications are viewing them with a "city" lens. They are looking at scientific merit rather than economic merit.
• Response from Dr. Johnson: There is no consideration of an applicant’s background when determining who will get the grant. We need to look at ways to widen the array of applicants.
• Dr. Johnson, how could the SBIR/STTR programs be better targeted to underserved communities?
• Response: They need to go beyond the academic population and partner with startup ecosystems like SBDC's. 

Difficulty of Grant Applications

• Chair Golden (D-ME) Question: 
• Dr. Henry, can you discuss the bureaucratic struggles of the SBIR application?
• Response: We found it to be the hardest of the federal grants to apply for, it varies across agencies and includes numerous addendums to the questions. Maine has full time consultants that work on this. There is no feedback from reviewers when a feedback is denied from consideration. 
• Rep. Tenney (R-NY) Question:
• Ms. Men, some businesses have trouble getting through the technical and bureaucratic process of the grant applications, should we provide additional technical assistance?
• Response: Yes, we have taken advantage of technical support services in other circumstances, it has been very useful. 
• Rep. Williams (R-TX) Questions: 
• Dr. Green, is there an agency that administers this program the best? How can others follow?
• Response: The Department of Defense (DOD) has a very effective program because it ties the SBIR to agency needs. Department of Energy (DOE) & the National Institute of Health (NIH) have very deep peer review processes, which is helpful. 
• Dr. Henry, could you elaborate on changes that could be made to streamline the application process without compromising security?
• Response: Process is unnecessary, we have won bigger awards with smaller applications.

Best Practices for Success in the Program

• Ranking Member Hagedorn (R-MN) Question:
• Dr. Green, can you explain how you have done well with the SBIR program? 
• Response: We look at all aspects of the problem and the best path to market. There are many stages, this often involves partnerships with other businesses.
• Rep. Tenney (R-NY) Question: 
• Dr. Green, what can New York do to ensure we get more SBIR/STTR grants?
• Response: It is essential for small businesses who are peers to come together and share best practices.
• Chair Golden (D-ME) Question:
• Dr. Green, how did you start your company in the 1970's?
• Response: We existed for a decade before there was SBIR, we supported the government through research and development contracts. We learned that it is better to partner with companies that can do things we can't.

Strengthening the SBIR/STTR Programs

• Rep. Stauber (R-MN) Question:
• Dr. Green, as we look toward reauthorization, what would you recommend we include or remove in these programs?
• Response: No more barriers that make the programs more difficult. I would urge the Congress to continue to make sure that award decisions are made in a timely manner and keep the programs merit based. 
• Ranking Member Hagedorn (R-MN) Question:
• To all witnesses, do you have comments on whether we need to do more to help people?
• Response from Dr. Green: 3% administrative funds are adequate, but they can be administered differently to target other populations. I also suggest reauthorizing the pilot programs and making them permanent. 

 

MSGI Congressional Hearing Recap - House Small Business Committee Hearing “Utilization of Small Contractors in the Infrastructure Plan”

 

MSGI Congressional Hearing Recap

Committee: House Small Business Committee, Subcommittee on Contracting and Infrastructure

Hearing Title: “Utilization of Small Contractors in the Infrastructure Plan”

Subcommittee Chair: Representative Kweisi Mfume (D-MD)

Ranking Member: Representative Maria Salazar (R-FL)

Date: June 10, 2021

Witnesses

Ms. Sheila Ohrenberg

National President, Women Construction Owners and Executives (WCOE)

President, Sorella Group

Testimony

Mr. Ralph Thomas III

Executive Director Emeritus, National Association of Minority Contractors (NAMC)

Attorney, Law Offices of Ralph C. Thomas III PLLC

Testimony

Mr. Josh Bone

Executive Director

ELECTRI International

Testimony

Dr. Annie Mecias-Murphy

Co-Owner & President

JA&M Developing Corp.

Testimony

Main Issues Discussed

Participation of Minority-Owned and Women-Owned Small Businesses 

• Chair Mfume (D-MD) Questions:
• Mr. Thomas, please detail your experience with Amtrak.
• Response: We were working through the Department of Transportation’s (DOT) DBE program on the project.  We performed within budget and on time, the goal was 15% actual action was 17%. The excuse of “we can't find minority businesses” no longer and should never apply.
• Mr. Boon, do recruitment strategies change based on the segment of the population you are trying to attract? How can we attract women and minorities more effectively?
• Response: We must use different methods. Women bring a lot of new skill sets, there are a lot of misconceptions that construction is male driven. We need to educate young girls that this industry is changing, such as shifting to off-site construction and is increasingly driven by technology.
• Mr. Thomas, what are the biggest obstacles that need to be addressed in the infrastructure bill to reach minorities?
• Response: We need a stronger approach to compliance and enforcement. The DOT has a 10% contracting goal for disadvantaged small businesses. However, 23/50 states do not comply or hit this goal, they ask for waivers. Organizations should be funded for the purpose of identifying small, disadvantaged contractors, since many people are unaware.  If Sole source threshold was higher, it would create more opportunities, smaller companies would like this.

Timely Payment to Contractors 

• Ranking Member Salazar (R-FL) Question: 
• Mr. Boon, I am concerned about delays in payments to subcontractors. Can you expand on your suggestion on getting paid on time?
• Response: Capital is king, small businesses have limited funds. When you are a subcontractor of a subcontractor of a subcontractor, it takes a long time to get money. I suggest expanded opportunities for these businesses to work directly with the large companies.
• Response from Dr. Macias-Murphy: Paid when paid clause, can be 60, 90, 120 days – very detrimental to small businesses who don’t have large reserves of money. Prompt payment is a theory rather than a reality. 
• Ranking Member Salazar (R-FL) Question: 
• Mr. Boon, how can Congress help? 
• Response: The paperwork, the bureaucratic part is the problematic – there needs to be a quicker way of going through the leaps and hurdles.

Project Labor Agreements (PLAs), the PRO Act, Unions

• Ranking Member Salazar (R-FL) Question: 
• Dr. Mecias- Murphy, explain the issue of favoring unionized workers over non-unionized workers. What would this look like?
• Response: It would completely take us out from being able to bid on these projects. 80% of the workforce is not part of a union, we would not qualify. 
• Chair Mfume (D-MD) Question: 
• Mr. Boon, can you talk about the importance of unions?
• Response: Electri is not affiliated with unions, but National Electrical Contractors Association (NECA) has no issues - we haven’t seen strikes. 
• Representative Meuser (R-PA) Question: 
• I am favorable to trades. Unions have great apprenticeship programs. However, PLAs are not inclusionary. This is the reason companies have issues with them. The PRO Act removes state rights, states should be able to determine such things on their own. Dr. Mecias-Murphy, how would the PRO Act effect your business?
• Response: The increase in taxes would be harmful. It would impact us financially in a huge way. There was a 3–4-month delay of projects during COVID, we went 4-6 months with no new projects. 
• Representative Newman (D-IL) Question: 
• More than 80% of the time when there is a PLA in place it is beneficial. PLAs require a very specific payment chronology on top of the federal law. PLAs don’t exclude non-unions; they just protect unions and promote safety. Dr. Mecias-Murphy, what are the top 3 things that frustrate you about PLAs?
• Response: First, PLA’s restrict businesses like a “merit-based company” if the certain provisions in the PLA aren’t in place. Second, is the issue of protesting. I will be the one who had to deal with the strikes from labor unions. Third, the increased cost for having unions on the jobs, I have seen this in Florida.

Tax Increases in the American Jobs Plan

• Ranking Member Salazar (R-FL) Question: 
• Dr. Mecias-Murphy, how did the Tax Cuts and Jobs Act help you?
• Response: We experienced a lot of cash flow; my employee was able to purchase their first home.

Labor Shortage & Workforce Development

• Representative Newman (D-IL) Question: 
• Mr. Thomas, can you share what would be helpful to you with workforce training and development?
• Response: We were happy to see more funds for workforce development projected in the American Jobs Plan, but the focus must be on diversity. There hasn’t been a move towards workforce development in DOT since 2017.
• Representative Hagedorn (R-MN) Question: 
• Labor shortage is a huge problem. We must encourage our Governors to forgo extra unemployment benefits – people need to be pushed into the workforce. I have introduced H.R. 2691, a bill that would permit 529 plans (tax advantage savings plan for saving for future education costs) to be used for certain non-degree technical training certificate programs and apprenticeship programs. Dr. Mecias -Murphy, how have you encouraged workforce development?
• Response: We have been able to go into Boys and Girls clubs and expose the students to our industry. We have seen that working with middle and high school students is very important, it exposes students to the future of work. From this effort, close to 40 students have been hired by one of our member companies.

Organizational Protesting

• Representative Stauber (R-MN) Question: 
• Currently there is a pipeline replacement project in Minnesota. This project will supply jobs for small contractors and should be celebrated. However, Democrats are bussing in protestors from large cities and disrupting the process. Dr. Mecias-Murphy, what are the dangers of protestors showing up? What would this do to your small businesses?
• Response: Safety is important to us. People don’t realize that a day of delay can be catastrophic. It can delay you two or four weeks sometimes. It also disrupts cash flow for small businesses -workers cannot go into work, then they cannot get paid. The Biden Administration has cancelled Keystone Pipeline project, ruining many small business contracting opportunities.