news

STATEMENT

of the

Honorable Nydia M. Velázquez, Ranking Member

House Committee on Small Business

Contracting and the Industrial Base

Thursday, February 12, 2015

A vibrant industrial base and manufacturing sector is essential to the U.S. economy.  Responsible for 12 percent of GDP, jobs in these industries pay 25 percent more than other jobs.  It comes as no surprise to those in this room that small businesses are at the heart of the industrial base and supply chain, as 98 percent of manufacturers are small.  In order to ensure that this sector continues its resurgence, we need to ensure that small businesses are able to compete both globally and here in America.

Here at home, this means ensuring that small firms can gain access to the nearly $500 billion federal procurement marketplace.  Numerous policies and protections have been put in place to ensure their continued participation in this arena.  This includes goals, set-aside programs, and the assignment of federal personnel to work on behalf of small contractors.  Many of these initiatives have evolved over the years to reflect the changing needs of small firms.

In many regards these efforts have paid off, as small businesses last year won nearly $100 billion in awards.  However, it appears that we have stalled – and in many ways the goal is becoming a ceiling, rather than a floor.  And, with regard to set-aside programs, we continue to see over and over again non-small businesses surreptitiously gain access to small business awards.  Whether its HUBZone, Service-Disabled Veterans, or 8(a) awards, we need stronger protections to keep bad actors out.

Another trend is occurring that may also impact small contractors.  Data shows that the average contract size is increasing.  On first take, this appears to be promising as larger contracts may be more profitable for small companies. However, it might suggest that more contracts are being consolidated –resulting in fewer opportunities for small businesses.  I am particularly interested in witnesses perspective on this during today’s hearing.

What is important for this Committee to keep in mind is that these developments are part of a bigger picture – which is that the federal procurement marketplace is always evolving.  Whether it is sequestration, reductions in federal procurement staff, or the rise of multiple award contracts, there will always be new issues for small businesses to overcome.  And against this backdrop, we must ensure that small businesses are not left behind – and that that procurement laws evolve with this changing landscape. 

During today’s hearing I look forward to hearing about these very challenges facing small contractors and potential solutions.  Doing so is not only essential for small firms and our nation’s industrial base, but the economy overall.  

Small firms bring new ideas to the table, which in turn generate new jobs and even new industries.  Taken together, this is a key part of what has made the U.S. the leader in today’s economy. 

I thank all of the witnesses for being here today and I yield back the balance of my time. 

###