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Committee on Small Business Holds Hearing Examining SBA Size Standards

WASHINGTON, D.C. – Today, Chairman Roger Williams (R-TX) led a full Committee on Small Business hearing titled “Under the Microscope: Reviewing the SBA’s Small Business Size Standards.” Chairman Williams issued the following statement after today’s hearing.

“Today’s hearing shed a light on how small businesses often get boxed out of the federal procurement marketplace,” said Chairman Williams. “The federal government is the largest customer in our nation, so ensuring accurate size standards is incredibly important so more small firms can compete for contracts. Antiquated standards leave small businesses behind, and it’s this Committee’s job to fix them. I’m grateful for today’s hearing, and I look forward to seeing what legislation we can produce to help make life easier for Main Street.”


Watch the full hearing here.

Below are some key excerpts from today’s hearing:

Chairman Williams: “Mr. Lambke, small businesses are disproportionately affected by the government's increased compliance burdens. We've talked about that, the staffing costs alone to navigate tens of thousands of pages of regulations in addition to abiding by contract rules can be extremely difficult and expensive. In some industries compliance officers end up being a built in cost to doing business. So my question is can you discuss how compliance requirements and navigating red tape can impose a burden on your business?” Mr. Lambke: “Happy to. Thank you. Compliance for us comes in many forms. One of the most recent ones is the CMMC. The cyber maturity model certification, which I referenced in my in my opening remarks, which we the industry believe is the right thing to do. The threat has never been higher at the defense industrial base where we're obviously being attacked daily. And so it's really important that we that we have the right infrastructure and protections in place from a cyber standpoint and for our of our cleared personnel and so forth. The challenge is that, so I'll give you an example on our side. My IT staff has gone from a few people, you know, three or four years ago to a small army today. And in the costs and complexity and that headcount is going to increase as CMMC actually starts to take place, right? So we're in a ramping phase. It hasn't been fully implemented so great requirement but adds people and complexity to the business. That's just one.”

Rep. Alford: “While small businesses are supposed to have unique contracting opportunities, agency decisions can prohibit qualified small businesses. I want to get right into the questions here. I want to start with you, Mr. Moore. Since 2010, the number of small businesses winning federal contracts has dropped by 50 percent. That is a stark decline, and I think it can be attributed to several factors, including the sizing standards. The great thing about it, I hear from both sides of the aisle here. These standards are out of date. We need change, on page 15 and 16. By the way, your testimony is unbelievable. I encourage everyone to read it. Very thorough. On 15 and 16 you offer some solutions. Run through those. Real quick. Just thumbnail solutions for us, please.” Mr. Moore: “I don't have that in front of me, but this the solution has got to be either a ramp off or several things that we've talked about getting credit for certain compliance people. But I think really an increased size standard, if we've gone from half 121,000 down to less than half that small businesses, something's not working. You know, the businesses are going out of business and the small businesses are not surviving long term. So there's got to be some sort of change in the NAICS codes, the size standards, or there's got to be an off ramp.”

Rep. Maloy: “What I'm hearing from you is that could be very confusing. A business may not even know if they qualify as small, depending on which contract they're going for. And I've sat here listening, trying to decide what to ask all of you, because you've defined the problem very clearly. We've asked a lot of follow up questions. So I just want to give each of you a minute. Is there is there anything you were prepared to tell us as part of a solution that you haven't had a chance to talk about yet?” Mr. Christ: “Thank you. So what I would encourage again, I had mentioned a transition period, and I feel that the transition period promotes continuous growth for businesses. Do I have a definition on that transition period and what it looks like? No, that's for additional conversations, and I'd love to have those conversations with you. But the goal is to promote innovation is for businesses to continue to grow. And without that transition period, there's no incentive for growth. They want to get right to that point, be the large gorilla in the room, and they don't want to get out of there. So one other thing that that forces is small businesses to very small businesses to look to team up with larger ventures and create a joint venture agreement. Right? These can be fantastic mentor protege agreements. We are living proof that they work because we're in one right now. However, there are some bad characters out there that will utilize those joint ventures and those mentor protege agreements to just have an avenue to continue to play in that small business market. So, you know, being very diligent and scrutinizing that we feel is also another thing that that could be extremely helpful.”