Field hearing focuses on improving efficiency at SBA
A senator from Idaho gave up part of his July Fourth recess to spend time talking business in Alaska.
Senate Small Business and Entrepreneurship chairman Sen. Jim Risch, R-Idaho, held an oversight hearing at the Loussac Library in Anchorage June 29 to get feedback from Alaska business leaders on how Small Business Administration programs are working — or not — to help them navigate the complex world of federal contracting.
Risch deferred much of the hearing to Sens. Dan Sullivan and Lisa Murkowski, who participated despite not being on the committee, as they are more familiar with the issues facing Alaska small businesses, he said.
He held the hearing in Anchorage at Sullivan’s request.
Risch said its critical to hear directly from those that participate in the federal programs because the SBA helped small businesses contract for more than $105 billion of federal work last year. Federal contracting for Alaska small businesses grew by more than $200 million last year, according to Risch.
“The key, whether it’s the U.S. economy, or the Alaska economy, is small business growth,” Sullivan said in his opening remarks.
Travel issues prevented Murkowski from attending the early portions of the hearing, but she participated in later rounds of questioning the business owners.
When she did arrive, Murkowski emphasized that even a state as small, population-wise, as Alaska, has 71,000 small businesses.
“We are small business. That is what we do here,” Murkowski said.
Witnesses from Alaska Native corporations and professional trade sector businesses consistently stressed that federal regulations often make it difficult for the SBA to efficiently administer the guidance to the small businesses it is tasked with assisting.
The specific regulations and requirements can vary greatly amongst the different assistance programs the SBA offers, but Associate SBA Administrator for Government Contracting Robb Wong largely concurred with that sentiment, saying the agency is continually working to ease those challenges.
Wong said he first worked for the SBA at a lower level and moved to the private sector before returning to government, so he understands both sides of the equation.
“I’m a sales guy by nature and I truly believe that if you have a better mousetrap people won’t beat down your door if they don’t know you have a better mousetrap,” Wong said.
He acknowledged that the SBA’s business opportunity specialists, who work directly with small business owners seeking help, are “burdened by compliance work” to keep businesses eligible for the SBA’s federal contracting programs.
For starters, he said the agency is looking at increasing the number of these specialists in Alaska and is working on a new website that will be easier to navigate and hopefully make it easier for business owners to help themselves.
Additionally, the SBA is making strides in helping government contracting officers understand and use the small business programs it offers, Wong said.
Sullivan said he’s hopeful a new interpretation of a provision in the 2010 Defense authorization bill that aimed to limit sole source federal contract awards at $20 million without high-level agency approval will again increase the government contracting dollars flowing to Alaska Native corporations.
Known as the Section 811 provision, members of Alaska’s congressional delegation have been pushing to reverse the law since it was enacted, contending it was “airdropped” into the bill with no debate.
Alaska Native regional and village corporation subsidiaries are heavily involved in multiple areas of federal contracting through the SBA’s 8(a) program, which aims to help minority and “socially and economically disadvantaged” small business owners by allowing them to receive sole-source government contracts generally capped at $6.5 million, according to the SBA. The 8(a) program provides those eligible small businesses with preferential consideration for government contracts.
After much pressing, Sullivan recently got the military branch secretaries to reread and reinterpret the Section 811 language. It was previously believed the secretaries were required to sign off on any sole source contract over $20 million — which rarely happened given their other duties.
“Those contracting opportunities essentially went to zero from hundreds of millions (of dollars),” Sullivan said.
Based on the new reading that authority could be delegated to others who are able to focus more on such contract reviews.
According to a 2012 Government Accountability Office report, the number of sole-source contracts to 8(a) businesses fell from an average of about 50 per year from 2008-2010 to about 20 per year after enactment of Section 811 in 2011.
Chugach Alaska Corp. CEO Gabe Kompkoff said the 8(a) program helped the regional corporation’s leaders to build their business skills and processes in the early years after it was formed.
“The SBA’s business development program proved to be the missing link for (Alaska Native Claims Settlement Act corporations),” Kompkoff testified.
He pushed back against critics who characterize the 8(a) program as a government handout to the Native corporations, stressing that they still have to perform well on the contract to get follow-on work.
“We believe the customer is receiving greater value in the work we do,” Kompkoff said.
He and other Native corporation leaders who testified also noted their businesses also have an obligation to the overall wellbeing of their shareholders that other businesses do not.
“The problem we have with the (Alaska Native corporations) is they’re misunderstood,” Wong added. “Nobody understands the responsibility they have to take care of their people.”
Kompkoff said he was able to attend college only through scholarships Chugach provided.
Sullivan noted that many Native corporations’ shareholders are from rural Alaska among the most economically depressed regions in the country.
Elwood Brehmer can be reached at [email protected].