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Opening Statements

Chairman Williams: “Under the Microscope: Reviewing the SBA’s Small Business Size Standards”

WASHINGTON, D.C. – Today, the House Committee on Small Business is holding a full committee hearing titled “Under the Microscope: Reviewing the SBA’s Small Business Size Standards.”

Chairman Williams’ opening statement as prepared for delivery:

Good morning, and welcome to today’s hearing where we’ll be taking a close look at how the SBA defines small businesses and the impact it has in the federal contracting marketplace.

To start off, I’d like to thank our witnesses for attending today’s hearing. We know you have other work you could be focusing on, and we greatly appreciate your input.

Size standards were established over 70 years ago to protect small businesses by ensuring that only small firms received SBA assistance, in addition to determining eligibility for federal contracts.

While size standards may seem like a topic that shouldn’t garner too much attention, it’s no secret to anyone here that determining what classifies as a small business is more complicated than it seems. Accurate size standards from the SBA are critical because they impact the eligibility of small businesses for contracts across the entire government, not just one specific branch or agency.

Beginning in 2010, it was decided the SBA would reassess their size standards, industry by industry, every five years. While there are many differing opinions about whether the standards are too low or too high, one thing is abundantly clear: the SBA’s size standards have a drastic impact on who can compete in the small business market.

A common issue this Committee has observed is the boxing out of small businesses from the federal procurement space. Since 2010, the number of small businesses winning federal contracts has decreased by 50 percent, which is unacceptable and an issue we want to correct.

Moreover, like anything in the federal government, the federal procurement space is home to fraud. Despite being faced with harsh penalties, fraudsters misrepresent themselves as small businesses to gain access to lucrative contracts.

The other, larger concern is real small businesses losing their small status. Many agencies use a receipt-based standard, and if it is too low, it may prevent the business from fully participating because they can lose their size status due to a high revenue generating contract. This is nothing more than punishment for a business succeeding, which is antithetical to the American dream. Additionally, small businesses that lose their status are often left to compete with large firms that dominate the industry. We must ensure the SBA’s standards are not so rigid that they exclude thousands of small businesses.

Outside of size standards, the theme of today’s hearing is ensuring small businesses are not left behind. At the end of the day, the federal government is the largest customer in the world. Our small businesses deserve to compete fairly in this lucrative market. Federal procurement is incredibly complex, and any small business can get lost in it. It is the job of this Committee to give Main Street a voice at the table, and that’s exactly what we are here to do today.

I’d like to once again thank our witnesses for being here with us, and I look forward to today’s discussion. It is my hope we can find some common ground as to how best to help our nation’s small businesses during this time.

With that, I will yield to our distinguished Ranking Member from New York, Ms. Velázquez.