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Chairman Graves Questions Proposals for a Medium-Sized Business Program

Washington, September 14, 2011 -

WASHINGTON— House Small Business Committee Chairman Sam Graves (R-MO) today held a hearing to examine proposals for a medium-sized business program. The Small Business Act, along with the Small Business Administration (SBA), has set forth definitions and size standards to determine exactly what constitutes a small business. These determinations help establish what companies have access to government contracting programs. However, tensions arise when firms no longer qualify as small according to SBA size standards, but still meet the Small Business Act definition. 

“While it is important to analyze the medium-sized business program proposals, we do so with two requirements at the forefront: One, any medium-sized pilot must benefit taxpayers and the government and two, small businesses must be protected.

“Because the administration has not met current small business goals, how do we ensure that a new program for larger businesses will not make it harder for small businesses to compete? As we move forward in these discussions, this must be taken into consideration. Small businesses are the key to repairing our economy, anything that could hinder this growth will not pass the test.

“At today’s hearing, it was extremely helpful to hear from Congressman Rogers and Congressman Connolly on their proposals, as well as the witnesses on both sides of this issue.”

Specifically, the Committee reviewed Rep. Mike Rogers’ (R-AL) proposed amendment to the National Defense Authorization Act (H.R. 1540), which would create a medium small business pilot program at the Department of Defense, and the Small Business Growth Act (H.R. 1812) sponsored by Rep. Jerry Connolly (D-VA). Both members were present to discuss their legislation during the hearing.

For related hearing documents and testimony, click here.

Notable Witness Quotes:

 Margot Dorfman, CEO of the U.S. Women’s Chamber of Commerce, said,“The federal government is not meeting its statutory obligations and goals for contracting with small businesses. These ongoing shortfalls should be the paramount concern of Congress. Over the last five years alone, American small businesses have lost $22 billion in revenues as the federal government has consistently failed to achieve the statutory requirement to place 23% of prime contracts with small businesses. This is a horrific loss of opportunity for small businesses, their employees, families and communities.”

Tonya M. Speed, Executive Director of Mid-Tier Advocacy (MTA) in Washington, DC, said, “The policies that drive the management of size-standard criteria help the entry-level and emerging firms; however, the same policies that make it possible for start-up firms to succeed, also eventually stifle many of them after the businesses achieve some modest success in the federal marketplace, i.e., once they have outgrown their small-business status.”

Michael D. Frisbey, Government Suppliers & Associates in Knoxville, Tennessee, said, “With the federal government having yet to meet the small-business contracting goal Congress set for it more than a decade ago, I think the small-business community would be better served if agencies concentrated on finding ways to expand contracting opportunities for small firms, rather than distracting their attention with a competing constituency, which may not need enhanced governmental assistance in the first place.”

Christopher Yukins, Professor of Government Contracts Law, Co-Director of the Government Procurement Law Program at George Washington University in Washington, DC, said, “Another path, therefore, would be to establish a pilot program, as contemplated by H.R. 1812, to create a procurement preference for mentors in the GSA mentor-protégé program, so long as those firms remained under a certain size limit. Doing so, however, may mean in practice that these mid-sized firms are subject to intensely complex size and affiliation standards, which could have a real impact, in turn, on the those firms’ business decisions, including decisions regarding revenue strategies, capital structure, business development, staffing levels, and governance.”

 U.S. Congressman Jerry Connolly (D-VA), said,“After studying the policy issues involved and the challenges mid-tier companies face, earlier this year I introduced the Small Business Growth Act, H.R. 1812. My bill creates a pilot program to provide small businesses with a growth path once they exceed the small business size standard for their industry.”