[House Hearing, 114 Congress] [From the U.S. Government Publishing Office] ORGANIZATIONAL MEETING AND SBA VIEWS AND ESTIMATES FOR THE 114TH CONGRESS ======================================================================= HEARING BEFORE THE COMMITTEE ON SMALL BUSINESS UNITED STATES HOUSE OF REPRESENTATIVES ONE HUNDRED FOURTEENTH CONGRESS FIRST SESSION __________ HEARING HELD FEBRUARY 12, 2015 __________ [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Small Business Committee Document Number 114-002 Available via the GPO Website: www.fdsys.gov ____________ U.S. GOVERNMENT PUBLISHING OFFICE 93-465 WASHINGTON : 2015 ________________________________________________________________________________________ For sale by the Superintendent of Documents, U.S. Government Publishing Office, http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free). E-mail, [email protected]. HOUSE COMMITTEE ON SMALL BUSINESS STEVE CHABOT, Ohio, Chairman STEVE KING, Iowa BLAINE LUETKEMEYER, Missouri RICHARD HANNA, New York TIM HUELSKAMP, Kansas TOM RICE, South Carolina CHRIS GIBSON, New York DAVE BRAT, Virginia AUMUA AMATA COLEMAN RADEWAGEN, American Samoa STEVE KNIGHT, California CARLOS CURBELO, Florida MIKE BOST, Illinois CRESENT HARDY, Nevada NYDIA VELAAZQUEZ, New York, Ranking Member YVETTE CLARKE, New York JUDY CHU, California JANICE HAHN, California DONALD PAYNE, JR., New Jersey GRACE MENG, New York BRENDA LAWRENCE, Michigan ALMA ADAMS, North Carolina SETH MOULTON, Massachusetts Kevin Fitzpatrick, Staff Director Stephen Dennis, Deputy Staff Director for Policy Jan Oliver, Deputy Staff Director for Operation Barry Pineles, Chief Counsel Michael Day, Minority Staff Director C O N T E N T S OPENING STATEMENT Hon. Steve Chabot................................................ 1 Hon. Nydia Velaazquez............................................ 2 APPENDIX Additional Material for the Record: Rules and Procedures......................................... 9 Oversight Plan of the Committee on Small Business for the One Hundred Fourteenth Congress................................ 23 Views and Estimates of the Committee on Small Business on Matters to be set forth in the Concurrent Resolution on the Budget for Fiscal Year 2016................................ 30 ORGANIZATIONAL MEETING AND SBA VIEWS AND ESTIMATES FOR THE 114TH CONGRESS ---------- THURSDAY, FEBRUARY 12, 2015 House of Representatives, Committee on Small Business, Washington, DC. The Committee met, pursuant to call, at 10:00 a.m., in Room 2360, Rayburn House Office Building. Hon. Steve Chabot [chairman of the Committee] presiding. Present: Representatives Chabot, Luetkemeyer, Hanna, Huelskamp, Rice, Gibson, Brat, Radewagen, Knnight, Curbelo, Bost, Hardy, Velaazquez, Hahn, Payne, Meng, and Adams. Chairman CHABOT. Good morning. The Committee will come to order. I call the Committee on Small Business Organizational Meeting to order at this time. I want to welcome all the returning and new members of the Committee. And before introducing the new Republican members, I would like to take a moment to recognize the Ranking Democratic Member, Congresswoman Nydia Velaazquez, with whom I served as ranking member when she was the chair of this Committee back in 2007- 2008. We had an excellent working relationship for the most part, and I hope to use that example to foster civil discourse, even when we have our policy differences. And we know, of course, there will be differences in this Committee as there are in all Committees, but for the most part, the Small Business Committee is one of those Committees, kind of like the Foreign Affairs which I also serve on, where there is more to agree on than disagree. So I hope that we can continue to have that very good relationship that we have both personally and professionally. There are seven new Republican members of the Committee. Mr. Gibson retired from the United States Army as a colonel, and then returned to his hometown in the Hudson Valley of New York when he was elected to Congress back in 2010. And we welcome him here to the Small Business Committee. The other new members that I am going to recognize at this time are our freshmen. Mr. Bost served as a state legislator and helped run a small business in Illinois. Mr. Brat was a professor of Economics and Business at Randolph Macon College in Virginia. And it was kind of an earthquake last year when he won a primary but we will not go into that. So we are welcoming him to the Committee certainly. Mr. Curbelo was a small business owner and school board member in Miami, Florida, and we welcome him here to the Committee. Mr. Hardy, Crescent Hardy served in the Nevada state legislature. Where is Crescent? There he is, right here. And owned a small construction firm in Nevada. Mr. Knight is--there he is. Mr. Knight is also a veteran. He was a police officer and served in local government and the state legislature in California. Amanda Radewagen is the first woman to represent American Samoa in Congress, and has the title of orator in the village of Aumua. The very diverse background of our new members will add to the experience and expertise of our returning members to create a pro-growth agenda for America's entrepreneurs. I would like to welcome back the members who served on the Committee during the 113th Congress. Mr. King from Iowa, Mr. Luetkemeyer from Missouri, Mr. Hanna from New York, Mr. Huelskamp from Kansas, and Mr. Rice from South Carolina. And finally, I would like to announce the vice chair of the Committee and the subcommittee chairs for the 114th Congress. Mr. Luetkemeyer, who served as vice chair of the Committee in the 113th Congress will return to that position in the 114th Congress, and we are very fortunate to have somebody of Mr. Luetkemeyer's stature and capabilities in case I cannot make it to a meeting or whatever because he is a tremendous member of Congress and we are lucky to have him. Two subcommittee chairs from the 113th Congress also will be returning to those positions in the 114th Congress. Mr. Hanna will chair, again, the Subcommittee on Contracting and Workforce, and Mr. Rice will chair the Subcommittee on Economic Growth, Tax, and Capital Access. Mr. Curbelo will chair the Subcommittee on Agriculture, Energy, and Trade. Ms. Radewagen will chair the Subcommittee on Health and Technology. And Mr. Hardy will chair the Subcommittee on Investigations, Oversight, and Regulation. And I think we are going to have a great year, a great Committee, and we welcome everybody--the new members back and the older members, we hope that you will put as much effort into it this Congress as you did last because it was really an excellent Committee under the previous chairman, Mr. Graves, and we are going to try to follow in his footsteps as far as the way he led this Committee because I think he did a very good job. And I would now like to yield to the Ranking Member, Ms. Velaazquez, to introduce her members. Ms. VELAAZQUEZ. Good morning, and thank you, Mr. Chairman. I, too, want to say that it is a pleasure to have Chairman Chabot at the helm because we have worked together before when I was the chair of the Small Business Committee and he was the ranking. I always say that when it comes to small business, there is no republican or democratic approach; that we need to do our best to address the issues that will enable small businesses to do what they do best, and that is to create jobs and to expand our economy. I look forward to a cordial, productive, substantive working relationship with the chairman and to be able to pass bipartisan legislation the way we did when I was the chair. I always recognized the right of the minority, and I expect that the chairman will do the same. I am confident that will happen. Also, I would like to welcome the members of the committee, new members and all members from both sides of the aisle. We have two new members joining us, Brenda Lawrence of Michigan. I believe she is not here yet. Representative Lawrence is new to Congress this term. She is a former mayor of Southfield, Michigan, and a former long-time employee of the U.S. Postal Service. She also serves on the Oversight and Government Reform Committee where she is ranking member of the Subcommittee on the Interior. Alma Adams of North Carolina, welcome. Representative Adams is new to Congress as well. Prior to being elected to the House, she served in the North Carolina House and was also Professor of Art History. In addition to this committee, she serves on the Education and Workforce Committee and the Agriculture Committee. We have several returning members to the committee. With us today is Janice Hahn of California. This is her second full term on the committee and second in Congress as she initially won a special election in 2011 and filled a portion of that term. Prior to being elected to the House, she served on the City Council in Los Angeles. She also served on the Transportation and Infrastructure Committee. Congresswoman Grace Meng hails from Queens, New York, and this is her second term in Congress and on the committee. In addition to this assignment, she also serves on the Foreign Affairs Committee. An attorney, she previously served in the New York State Assembly. I look forward to working with all of you during the next two years. I thank the chairman and yield back. Chairman CHABOT. Thank you very much. The gentlelady yields back. Now we will move on to the organizational part of today's meeting. There are 28 million small businesses in America, a lot. While the members of this Committee will have policy differences, all of us have one common goal--to make sure that our small businesses can prosper and create the solid middle- class jobs that America needs. Given that, there are certainly numerous issues where we can find common ground, as the Ranking Member said, that will make government more efficient and ensure that the Small Business Administration carries out the will of Congress, rather than continually inventing new and untested initiatives. I believe that the Rules Package, Oversight Plan, and Budget Views under consideration today will lay the groundwork for finding those areas that we have in common, while maintaining the highest levels of bipartisanship for which the Committee is known. I would now yield to the ranking member, Ms. Velaazquez, if she would have an opening statement. Ms. VELAAZQUEZ. Thank you, Mr. Chairman for yielding. Small business continue to make unprecedented contributions to our economy, and we will do whatever it takes to support them. They have generated nearly two-thirds of net new jobs over the last 15 years and are the innovators and drivers of economic progress. Entrepreneurship also serves as the backbone of our nation's economy, enabling individuals to pursue their dreams and become financially self-sufficient. As we move forward, we must make sure that small businesses are given the resources and protections they need to prosper as both republicans and democrats want and need small firms to succeed and create jobs in our community. I look forward to continuing this tradition during the 114th Congress. I yield back. Chairman CHABOT. Thank you. The gentlelady yields back. I would like to thank the majority and minority staffs for their hard work and cooperation in putting together this rules package. There is only one significant change from the rules adopted in the 113th Congress. In consideration of the time demands of members, I believe it is appropriate to apply the five-minute rule on questioning of witnesses to the Chair, myself, and the Ranking Member. Even with this change, I expect that we will be able to accommodate the needs of all members in questioning witnesses. So basically, we had the opportunity to go on more or less as long as we wanted before other members and we are going to make sure that we make it as equal as possible so that all members have an opportunity to question witnesses. So we are going to apply that same rule to ourselves. And I would now recognize the ranking member, Ms. Velaazquez, for any remarks that she may have on the rules package. Ms. VELAAZQUEZ. Sure. Thank you, Mr. Chairman. Our committee's rules are not only a vital institutional requirement, but they also set clear parameters for how we will operate. More importantly, they contain protections to ensure that all points of view are considered. It is important for members on both sides of the aisle to note that in most regards, these are the same rules that I used when I was chair of the committee, and I believe this is a testament to Chairman Chabot's leadership. In this day and age when too many try to stack the rules in their favor, it is refreshing that this committee does not have to be concerned about those distractions. A committee that is run openly and with a sense of community is a committee that works and can best achieve its objective. It is my hope that the rules we consider today will make this happen. I yield back. Chairman CHABOT. Thank you. Are there any other members who wish to be recognized for a statement on the rules package? If not, the Committee now moves to consideration of the rules package. The clerk will read the title of the document. The CLERK. Rules and procedures adopted by the Committee on Small Business, United States House of Representatives, the 114th Congress 2015-2016. Chairman CHABOT. I ask unanimous consent that the rules package be considered as read and open for amendment in its entirety. Does any member seek recognition for the purpose of offering an amendment? Seeing no amendments, the question is on adopting the rules. All those in favor say aye. All opposed say no. In the opinion of the chair, the ayes have it. The ayes have it. The rules for the Small Business Committee of the 114th Congress are adopted and the staff is authorized to make technical and grammatical changes. Today's second order of business is to consider the Committee's Oversight Plan. This plan represents the agenda for the Committee during the 114th Congress. I wish to thank the ranking member, Ms. Velaazquez, for her input into the Oversight Plan. The plan is very similar to that adopted in the 113th Congress with a slightly greater emphasis on performing an examination of SBA programs. It is my view that the plan recognizes this Committee's broad oversight authority under the rules of the House to investigate any problem affecting small business. At this point, I would yield to the Ranking Member for nay comments she may have on the Oversight Plan. Ms. VELAAZQUEZ. Thank you, Mr. Chairman. The oversight plan sets forth a policy framework for our work this Congress, and the chairman is to be commended on producing a thoughtful document. The plan calls for the robust oversight of the SBA and other federal small business initiatives, a long tradition that this committee takes seriously. It also delineates several programs for review and possible termination. In this context, the committee has forged a bipartisan consensus opposing the SBA's continued creation of unauthorized pilot programs. Diverting taxpayers' dollars away from proven programs can often open the door to fraud, waste, and abuse, something we are all working to minimize. Whether it is the SBA or other matters of importance to small businesses, Congress needs a clear agenda of assisting them, and it is paramount that we start addressing these issues as soon as possible. By doing so, we have the potential to truly help create new jobs and move the economy forward. With that, I urge members to approve this oversight plan. I yield back. Chairman CHABOT. Thank you. Are there any other members who wish to be recognized for a statement on the Oversight Plan? If not, the Committee now moves to consideration of the Oversight Plan. The clerk will read the title of the document. The CLERK. Oversight Plan of the Committee on Small Business for the 114th Congress. Chairman CHABOT. I ask unanimous consent that the Oversight Plan be considered as read and open for amendment in its entirety. Does any member seek recognition for the purpose of offering an amendment? Seeing no amendments, the question is on adopting the Oversight package. All those in favor say aye. All those opposed say no. In the opinion of the chair, the ayes have it. The Oversight Plan for the Small Business Committee in the 114th Congress is adopted, and Committee staff are authorized to make technical and grammatical changes in the Oversight Plan. Today's third order of business is to consider the Views and Estimates of the President's Fiscal Year 2016 budget for the Small Business Administration. The SBA budget request for Fiscal Year 2016 in my view fails to address certain critical matters. These matters are not items on which the Agency has discretion; they have been mandated by Congress. During the last five years, Congress has imposed some 15 requirements on the SBA to complete with respect to its government contracting programs. The SBA only has completed one of those tasks. Despite this, the SBA budget request makes no mention of these mandates. The SBA is required to have an individual whose primary responsibility is to oversee acquisition management within the Agency, the chief acquisition officer or CAO. This is a significant vulnerability for the SBA in my view and for the taxpayers. Yet, the Agency's response is to assign the CAO's duties to the chief financial officer, thereby distracting the chief financial officer from providing appropriate oversight to the SBA's $100 billion loan portfolio. In addition, the Agency does not have an individual that serves as the chief information officer even though it is a statutory requirement. This compounds the problem of overseeing the SBA's information technology, including the Loan Management Accounting System that uses 1960s technology and that the inspector general continues to cite as a critical vulnerability. While the Agency continues to ignore congressional mandates, the budget request has the audacity to request over $40 million for initiatives of its own design. The SBA's first responsibility is to complete the tasks mandated by Congress before it expends funds on untested initiatives the Agency believes will help small businesses. Even if the SBA had completed all of the tasks assigned to it by Congress and filled the statutory mandated management positions, the budget request priorities still, in my view, are misplaced. The budget request makes no mention of adding more key personnel who will help small businesses enter or compete in the nearly $500 billion federal procurement marketplace. Instead, the SBA requested nearly $37 million to provide entrepreneurial training that duplicates longstanding programs operated by the SBA and its partners, such as Small Business Development Centers and SCORE. The views and estimates that we are considering today highlight these problems and asks for a reduction of SBA's budget while judiciously reallocating funds to areas that will reduce agency vulnerabilities and prove more effective in assisting small business owners. At this point, I would like to yield to the ranking member, Ms. Velaazquez, for any comments she might have on the Committee's views and estimates. Ms. VELAAZQUEZ. Thank you, Mr. Chairman. The SBA continues to be an important agency for spurring economic activity. Through its access to capital, procurement, and entrepreneurial development programs, the agency assists hundreds of thousands of entrepreneurs each year. The SBA budget submission gives this committee the opportunity to assess the agency's priorities on whether it is carrying out its statutory mission appropriately. The SBA's near-term blueprint for accomplishing its mandate is its Fiscal Year 2016 budget request of $860 million. This funding will enable the agency to continue to provide loans, contracts, and training to small businesses across the country. In this capacity, the SBA truly plays a vital role, strengthening our economy and promoting job creation. In many areas, I concur with the majority's views and estimates on this project. This includes opposing unauthorized pilot programs which continue to grow unchecked at the agency. Policing SBA's contracting programs has unfortunately become a necessity and this needs to be a top priority. Finally, I am glad to see that the majority opposes the administration's 504 refinancing proposal. Such an initiative is outside of the mission of the underlying program's purpose and places undue risk on taxpayers. However, in several areas the views and estimates take cost-cutting measures a bit too far. It supports abolishing the Prime program as does the administration itself. This program should continue to be funded as it provides resources to low income entrepreneurs seeking to become self-sufficient. Critics say Prime is duplicative, but that is a hard case to make when the Microloan program is tied to a loan and Prime is tied to capacity building and technical assistance. Plus, they barely receive more than 3 percent of the agency's budget. Similarly, eliminating the Veterans Business Outreach Center, Office of Native American Affairs, and Office of International Trade are misguided. While other departments do, in fact, perform similar activities, the SBA operates these initiatives with a small business focus, an element that the other federal entities lack. As a result, these activities should remain in the SBA, and if reform is needed, it should be pursued incrementally instead. As we all know, disagreement on priorities in the agency's annual budget is not unusual. As we move forward, I look forward to working to refocus the SBA on its statutory mission in a manner that is both efficient and prudent. And with that, Mr. Chairman, I yield back. Chairman CHABOT. Thank you. The gentlelady yields back. Are there any other members who wish to be recognized for a statement on the Committee's Views and Estimates on the SBA budget request for Fiscal Year 2016? If not, the Committee now moves to its consideration of the views and estimates. The clerk will read the title of the document. The CLERK. Views and estimates of the Committee on Small Business on matters to be set forth in the concurrent resolution on the budget for Fiscal Year 2016. Chairman CHABOT. I ask unanimous consent that the views and estimates be considered as read and open for amendment in its entirety. Does any member seek recognition for the purpose of offering an amendment? Seeing no amendments, the question is on adopting the views and estimates on the SBA budget request for Fiscal Year 2016. All those in favor say aye. All those opposed, no. In the opinion of the chair, the ayes have it, and the views and estimates are agreed to. I now recognize the Ranking Member for a motion. Ms. VELAAZQUEZ. Sure. Mr. Chairman, I would like to ask unanimous consent. I would like to give notice pursuant to House Rule 11 Clause 2(l), that the committee democrats will be filing additional views with the Budget Committee regarding SBA's Fiscal Year 2016 budget. Chairman CHABOT. Without objection, so ordered. And the Committee is authorized to make technical and grammatical corrections to the views and estimates. I would like to thank everyone and look forward to working with all of you. This meeting of the Committee on Small Business is adjourned and the Committee will stand in recess for a few moments to prepare for a Committee hearing. We do have a hearing following up, so members and anyone here that would like to stay, we will be starting that up in just a moment or two so we can get the witnesses in there. So at this time, the Committee is briefly adjourned. We will be back shortly. [Whereupon, at 10:25 a.m., the Committee was adjourned.] A P P E N D I X [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [all]