House Small Business Committee

The House Small Business Subcommittee on Contracting and Workforce, under the chairmanship of Rep. Richard Hanna (R-NY), today held a hearing exposing problems faced by small construction, architecture and engineering firms who wish to do business with the federal government, and exploring potential solutions.

The hearing specifically addressed ongoing challenges with four key issues: surety bonds, the use of reverse auctions for construction services, subcontracting credit allowances, and the procurement process for design-build contracts. 

“Small construction contractors often do good work at a more affordable price than larger competitors, but first, they must get through a bureaucratic obstacle course. We need a clearer path for small construction businesses to compete for these federal government contracts,” said Subcommittee Chairman Hanna. “I’ve been a construction contractor, so I know these challenges well. The construction industry has taken hard hits in this economy, but making more work available to small contractors will help create the middle-class jobs we desperately need. Small firms are vital to our federal procurement system and save money for taxpayers, so this Subcommittee will continue working to enable them to compete and thrive.”

Materials for the hearing are posted on the House Small Business Committee’s website HERE.

Notable Quotes:

Mark McCallum, Chief Executive Officer, National Association of Surety Bond Producers, Washington, DC, said that NASBP views“H.R. 776 as a critical means to protect taxpayers, federal contracting entities, and construction businesses of all sizes by assuring the integrity of surety bonds on federal contracts when issued by individuals using a pledge of assets.”

Thomas J. Kelleher, Jr. Senior Partner, Smith, Currie and Hancock, Atlanta, GA, testifying on behalf of the Associated General Contractors of America, said, “AGC strongly recommends that Congress reform the federal procurement process to ( l) count lower tier small business subcontractors towards small business subcontracting goals; and (2) prohibit reverse auction procurement for construction services.”

Helene Combs Dreiling, First Vice President, The American Institute of Architects, Roanoke, VA, testifying on behalf of the American Institute of Architects, said, “we respectfully ask that the Committee consider limiting the use of single-step design-build to projects that are less than $750,000 . . . [to] allow for more small businesses to participate in the process. This limit allows smaller firms to gain valuable experience and exposure to the federal construction process, while also limiting federal agencies’ burdens in reviewing a large number of proposals.”

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House Small Business Committee Chairman Sam Graves (R-MO) released the following statement in support of H.R. 3, the Northern Route Approval Act:

“If Washington intends to be focused on jobs, then the Keystone XL Pipeline is a no-brainer,” said Chairman Graves. “Last week, our Subcommittee on Agriculture, Energy and Trade heard from a labor official and small business owners, including one that President Obama visited on Friday, that they want the Keystone XL Pipeline project to move forward. The project would boost the demand for various skilled labor occupations, and create an estimated 42,100 jobs, many of them with small businesses. For something like this to be delayed more than 1700 days is unacceptable. Small businesses across the nation want to grow and hire, as Americans are demanding work. This Keystone Pipeline project is what we should give them.”

Notable Quotes From Last Week’s Hearing:

Brent Booker, Secretary Treasurer, Building and Construction Trades Department, Department, AFL-CIO, Washington, DC, said, “America's Building Trades Unions emphatically support the construction of the Keystone pipeline which will move oil from deposits in Canada to existing refineries in Texas, Oklahoma and the Midwest. Our unions have been actively involved with this project for almost 5 years now, and we are adamant in our belief that the economic, energy security, and national security benefits associated with the construction of this pipeline are too many and too significant to allow it to be derailed by a narrow and misguided political agenda being advanced by a small minority of ill-advised environmental groups.”

Peter Bowe, President and CEO, Ellicott Dredges, Baltimore, MD, testifying on behalf of the National Association of Manufacturers, said, “One way or the other, Canadians will eventually solve their distribution problems, with or without US governmental collaboration. To the extent this process is delayed, the producers will suffer economic loss, and their US suppliers, like Ellicott Dredges will suffer as well, including diminished employment.”

Mat Brainerd, President, Brainerd Chemical Company, Tulsa, OK, testifying on behalf of the National Association of Chemical Distributors, said, “My industry would benefit from building the pipeline in three distinct ways. First, like many industries, chemical distribution benefits from economic growth generally. Second, building the pipeline would reduce our costs for aromatic and aliphatic chemicals, diesel and rail tank cars. Third, it would benefit the economics of hydraulic fracturing, which is an important market that many in our industry serve.”

Dr. Christopher R. Knittel, William Barton Rogers Professor of Energy Economics, Sloan School of Management, Massachusetts Institute of Technology, Cambridge, MA, said, “A recent Cambridge Energy Research Associates analysis finds that the average Canadian tar sands oil is cleaner than heavy Californian and heavy Venezuelan oil. These two sources are the likely oil sources that Canadian tar sands would replace. Given this, it is possible that the Keystone XL pipeline might actually reduce greenhouse gas emissions.”

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While our country's small businesses continue to struggle to produce consistent job growth, the Keystone XL Pipeline would provide a needed boost to our economy. The pipeline will jumpstart local economies, creating an estimated 42,100 jobs, many of them with small businesses. Last week, the Small Business Subcommittee on Agriculture, Energy and Trade held a hearing on the economic benefits of the pipeline. Small business owners also shared how the Keystone XL pipeline would affect their business through the Committee’s interactive website, “Small Biz Open Mic.”  _____________________________________________________________________________

The economy here in Kansas is sluggish at best. I lost all of my trained help 5 years ago when the economy tanked and I could not keep them busy. Those employees have moved on or are enjoying their un-employment benefits and do not wish to return to work. I am slowly finding responsible people to replace them. Kraus Electric LLC is in the electric generator and pump business. I feel we could greatly benefit from the Keystone pipeline and any spin-off business created from the installation and later up-keep of the pumping stations. Kansas has several refineries in the Arkansas City and El Dorado areas that could be re-vitalized and put that oil to good use here in on the high plains.  Lee Kraus (Scranton, KS) Kraus Electric LLC, May 20, 2013 _______________________________________________________________________________________   Bottom line We need to put people back to work. When Americans are working the spend money. Guess where? You got it in our businesses. I belive this pipeline should be allowed to be put in. This will make our dependence on over seas oil start going away, which in return should make our fuel prices go down. This will also help get America back on its feet. Michael Friend (Wyandotte , OK) Firingline, May 20, 2013 ________________________________________________________________________________________ I am fully in support of the Keystone XL Pipeline, and any other project that promotes energy stability in the is country and produces jobs and expands the tax base. I feel that if good projects such as this one are left alone, they will take a lot of the financial pressure off the economy and allow improved growth. It benefits us all. Huey Segura (Breaux Bridge, LA) Bates RV Rentals, May 20, 2013 _________________________________________________________________________________________ I do think not only would it get more jobs, but its quite possible it would lower fuel costs, and lower our dependence on over sea oil. I am all about the conservation of wild life habitat and the grasslands and mountains it would traverse. Stephen Stringham (Providence, UT) Logan Door Service, May 21, 2013 ________________________________________________________________________________________ This is development just like housing, highways, schools or hospitals. We need and use energy and oil and gas is a fact of life in the consumption and implementation our country needs for operational movement. The environmentalist have not made a good case of alternative energy options, as they represent less than 4% of our total usage. Obviously they are not cost effective or easily funded as fossil fuels. Build the pipeline for future generations. This resource will be our future for another one hundred years, until we learn to harness solar and other alternative resources in a fundamental and cost effective way. Pipelines have an excellent safety record as do fracking procedures, so please get beyond your unrealistic bias. Steve Jordan (Ardmore, OK) Jordan Insurance Group, May 21, 2013 _________________________________________________________________________________________ I own a small business in western South Dakota. Our primary market is this region that includes the oil fields of North Dakota and Wyoming. I am support of the Keystone Pipeline; however, I do want to see a larger percentage of total capacity dedicated towards moving oil out of the Bakken oil fields of North Dakota. The many jobs that will be created by the construction and maintenance of the pipeline will be of benefit but only those jobs are temporary. The long term benefit will come if we are moving US oil and the oil fields are sustainable for the long term. Bryan Vulcan (Rapid City, SD) FourFront Design, Inc, May 21, 2013 _________________________________________________________________________________________      What are we doing to grow our economy? to secure our National Energy needs? We have the largest hydrocarbon reserves in the world. They are locked up by environmental rules and roadblocks. We must move now to unlock these as our fastest path to saving our country financially and from the national security standpoint. The Keystone Pipeline decision has certainly made us more vulnerable and protected no one -- the oil will now not be used to drive our country by the U.S. but will be used to drive our non-friends economic engine, the Chinese. Contrary to solar, the product of this work fits right into our existing infrastructure and transportation industry.  Lawrence Cerenzie (Spanish Fork, UT) Cerenzie Engineering Consultants/FSC Coatings, March 2012 _______________________________________________________________________________________                                                  Recognizing the importance of entrepreneurs’ feedback in the process of shaping the very policies that will help determine their business sustainability and growth, Chairman Graves launched Small Biz Open Mic in September of 2011.

President Obama is opposing a bill passed by the House last week that would require the Securities and Exchange Commission to better measure the costs and benefits of new regulations. That's no surprise considering that the latest annual index of federal rules shows that Team Obama is now the red tape record holder.

For two decades, Wayne Crews of the Competitive Enterprise Institute has tracked the growth of new federal regulations. In his 20th anniversary edition this week, he'll report that pages in the Code of Federal Regulations hit an all-time high of 174,545 in 2012, an increase of more than 21% during the last decade.

Relying largely on government data, Mr. Crews estimates that in 2012 the cost of federal rules exceeded $1.8 trillion, roughly equal to the GDP of Canada. These costs are embedded in nearly everything Americans buy. Mr. Crews calculates these costs at $14,768 per household, meaning that red tape is now the second largest item in the typical family budget after housing.

Last year 4,062 regulations were at various stages of implementation inside the Beltway. The government completed work on 1,172, an increase of 16% over the 1,010 that the feds imposed in 2011, which was a 40% increase over 722 in 2010.

Another way to measure the regulatory burden is by pages in the Federal Register, which includes new rules as well as proposed rules and supporting documents. By that measure the Obama Administration did not break the all-time record of 81,405 pages it set in 2010. But the 78,961 pages it churned out in 2012 mean that the President has posted three of the four greatest paperwork years on record.

And to be fair, if Mr. Obama were ever to acknowledge that this is a problem, he could reasonably blame George W. Bush for setting a lousy example. Despite the Obama myth that the Bush years were an era of deregulation, the Bush Administration routinely generated more than 70,000 pages a year in the Federal Register.

When it comes to "economically significant" rules, which are those estimated by the feds to cost at least $100 million each, Mr. Crews notes that the current Administration is "in a class by itself." The bureaucracy finished up 57 such rules in 2012 and another 167 are in the pipeline.

These are largely the progeny of the Affordable Care Act, Dodd-Frank and the EPA's effort to use regulation to impose an anti-carbon-fuels agenda that even a Democratic Senate won't pass. Since Mr. Obama doesn't want to accurately assess the costs of these rules, we'll rely on Mr. Crews.

House Small Business Committee Chairman Sam Graves (R-MO) today announced that two new proposed rules and a request for comment have been added to the Committee’s new digital resource, “Small Biz Reg Watch”: the SBA Women-Owned Small Business Federal Contacting Program; the DHS/DOL Wage Methodology for the Temporary Non-Agricultural Employment (H-2B) Program; and the extension of the EPA Lead Paint Rule to Public and Commercial Buildings.

Small Biz Reg Watch is a new initiative of the Committee, launched in January, to help small businesses participate in the development of federal regulations. This online resource on the Committee’s website will regularly highlight proposed regulations that could impact small companies and instruct business owners on how they can make comments to the federal agency considering the proposed regulation. 

“These proposed regulations have the potential to affect a large amount of small businesses, so the private sector should have the opportunity to participate in the federal government rule-making process so they can affect the outcome,” said Graves. “Compliance with environmental regulations costs small businesses four times more than large firms, so I’m pleased that the EPA has extended the comment period to provide more time for input from small businesses. We’re also pleased that the Administration appears to be working to issue rules that will make it easier for Women-Owned Small Contractor to compete.” 

The SBA has published an interim final rule implementing a statutorily mandated provision that removes the limitation on the dollar amount of set-aside contracts that women-owned small businesses can compete for under the Women-Owned Small Business Program. This statutory change is, in part, the result of the Committee’s small business contracting reforms that were signed into law on January 3, 2013, as part of the National Defense Authorization Act of 2013. Committee Member Rep. Jaime Herrera Beutler (R-WA) recently led an effort by the Congressional Women’s Caucus to expedite this rulemaking. This comment period ends June 6th.

The DHS and the DOL have issued an interim final rule that changes the prevailing wage methodology used by the DOL to calculate certain prevailing wages paid to H-2B workers and employees recruited in connection with an H-2B Application for Temporary Employment Certification. The H-2B program allows non-agricultural employers facing a worker shortage to hire temporary unskilled workers from foreign countries, and is predominantly used by small businesses in the construction, amusement, landscaping, hotel, restaurant and forestry industries. The wage methodology rule, issued on April 24, 2013, is currently in effect under a “good cause” exemption and has increased the wages that small employers must pay to H-2B workers. This comment period ends June 10th.

The EPA has extended the comment deadline for interested parties to provide information and data on the presence of lead-based paint hazards in commercial and public buildings. The EPA is considering whether to extend its lead paint rules to cover renovation, repair, and painting activities in public and commercial buildings in a potential rulemaking. Small businesses that manage or perform renovations, repairs, or painting activities on the exterior or interior of public and commercial buildings will face increased compliance costs if EPA decides to move forward with a rule. This comment period ends July 20th.

Through the Small Biz Reg Watch initiative, the Committee regularly communicates with small businesses via email, social media, and through district events around America when new comment periods begin for select proposed rules that have a significant impact on a wide array of small businesses. The website URL is: www.smallbusiness.house.gov/RegWatch                                                          

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WASHINGTON, D.C. – The House Small Business Subcommittee on Agriculture, Energy and Trade, led by Chairman Scott Tipton (R-CO), today held a hearing appraising the benefits that many small businesses would reap from construction of the Keystone XL Pipeline.

The Committee heard about the economic benefits that will be available to small businesses from both the construction – and the long-term operation – of the Keystone XL Pipeline. In testimony, witnesses discussed how the pipeline would enhance our nation’s energy security, expand economic and job growth, and lower energy prices for Americans. According to a 2012 study by the NFIB, the “Cost of Natural Gas, Propane, Gasoline, Diesel, Fuel Oil” ranks as the third highest concern among small business owners.

Additionally, the pipeline’s construction would be a boon to many rural communities spanning the western United States along the northern and southern routes from Canada to the Gulf of Mexico, bringing in local commercial activity and creating opportunities in fields that include numerous small business contractors. The project would boost the demand for various skilled labor occupations, and create an estimated 42,100 jobs.

“This hearing provided convincing testimony that this vital project is truly a keystone on which we can continue building our national prosperity,” said Chairman Tipton. “At a time when we should be focusing on economic growth and energy security, moving forward with this project is simply common sense. We have a rare opportunity to create thousands of jobs immediately, many through small businesses, and do so in a responsible way.”

Materials for the hearing are posted on the House Small Business Committee’s website HERE.

Notable Quotes:

Brent Booker, Secretary Treasurer, Building and Construction Trades Department, Department, AFL-CIO, Washington, DC, said, “America's Building Trades Unions emphatically support the construction of the Keystone pipeline which will move oil from deposits in Canada to existing refineries in Texas, Oklahoma and the Midwest. Our unions have been actively involved with this project for almost 5 years now, and we are adamant in our belief that the economic, energy security, and national security benefits associated with the construction of this pipeline are too many and too significant to allow it to be derailed by a narrow and misguided political agenda being advanced by a small minority of ill-advised environmental groups… The choice is clear and, again, any further delay by the Obama Administration is unacceptable.”

Peter Bowe, President and CEO, Ellicott Dredges, Baltimore, MD, testifying on behalf of the National Association of Manufacturers, said, “One way or the other, Canadians will eventually solve their distribution problems, with or without US governmental collaboration. To the extent this process is delayed, the producers will suffer economic loss, and their US suppliers, like Ellicott Dredges will suffer as well, including diminished employment.”

Mat Brainerd, President, Brainerd Chemical Company, Tulsa, OK, testifying on behalf of the National Association of Chemical Distributors, said, “My industry would benefit from building the pipeline in three distinct ways. First, like many industries, chemical distribution benefits from economic growth generally. Second, building the pipeline would reduce our costs for aromatic and aliphatic chemicals, diesel and rail tank cars. Third, it would benefit the economics of hydraulic fracturing, which is an important market that many in our industry serve.”

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An investigation by House lawmakers has revealed that the U.S. General Services Administration failed to fully pay thousands of small federal contractors in the past five years.

GSA officials confirmed the error, acknowledging that 1,334 government services firms had been shorted more than $3 million since 2008, the vast majority of them small businesses, because the agency neglected to fulfill a “guaranteed minimum payment” clause outlined in many of its contracts.

A spokeswoman for the agency declined to comment on why the payments were not issued in recent years but said officials will begin soon begin issuing payments to every company that was eligible but did not receive money, dating back to 2007.

The Republican-led House Small Business Comittee, which uncovered the oversight, plans to release a full report of its investigation on Thursday but shared preliminary details exclusively to The Washington Post.

“Contracting with small businesses is good for the economy and it’s good for the taxpayer because small companies bring cost-savings to the federal government,” Committee Chairman Sam Graves (R-Mo.) said in a statement. “But when federal agencies don’t live up to their end of the bargain, small businesses are discouraged from competing and taxpayers lose the benefits of government efficiency.”

The GSA offers an online catalog of government services known as the Multiple Awards Schedules (MAS) Program, from which other agencies can purchase an array of goods and services, from ink pens to construction services, usually at discounted prices. In order to be listed, contractors must undergo a rigorous and often expensive vetting process, and once approved, they must meet minimum government sales mandates in order to stay in the program ($25,000 in combined sales the first two years and $25,000 each year after that).

Meanwhile, the government has its own obligations in the agreement. Businesses that suffer through the vetting process and make it into the program are guaranteed at least $2,500 in orders from federal agencies.

“That minimum sales guarantee is essentially the government paying for the promise that the company makes to deliver the agreed-upon goods and services when ordered at agreed-upon prices,” Alan Chvotkin, executive vice president and counsel of the Professional Services Council, an industry group, said in an interview.

Chvotkin pointed out that the guarantees apply only to contractors who enter into indefinite, multiple-award programs, not those who compete for individual contracts.

So, if a company is removed from the MAS program for not hitting its minimum sales requirement (the $25,000) before it even reaches $2,500, the government must pay the difference. That is supposed to happen automatically when a firm is removed—but officials said they have not been sending those payments.

Graves’ team discovered the mistake last summer while looking into some the agency’s proposed changes to the structure of the MAS program last summer. Those changes would likely remove some contractors from the MAS program; however, the committee’s regulatory affairs team could not find where in its proposal the GSA had accounted for losses stemming from minimum payments issued to some of those ousted businesses.

It turns out, they weren’t factored in because they weren’t being paid.

Nearly a year later, GSA Federal Acquisition Services Commissioner Thomas Sharp confirmed “the problem” in a letter to Graves, noting that the agency owes $3,108,888 to small business contractors.

“Moving forward, GSA intends to administer clause I-FSS-106,” Sharp wrote, referring to the minium payments provision that has been in existence in its current form since 2003. GSA officials also plan to start paying the firms they shorted in the coming months.

“If a contract has been terminated, and the company is no longer in the program, they should be receiving the money,” said Chvotkin. “It’s a contractual right for those businesses, and it’s regrettable that GSA has been holding back on funds legitimately owed to contractors.”

The findings of the investigation add a new element of controversy for an administration already reeling from several scandals. The White House has been defending its response to the attacks in Benghazi, the Department of Justice’s seizure of AP phone records, and the Internal Revenue Service’s targeting of conservative groups.

 

House Small Business Chairman Sam Graves (R-MO) today announced that a year-long investigation into a federal contracting program has uncovered that the government owes more than one thousand small businesses millions of dollars.

“Contracting with small businesses is good for the economy and it’s good for the taxpayer because small companies bring cost-savings to the federal government,” said Chairman Graves. “But when federal agencies don’t live up to their end of the bargain, small businesses are discouraged from competing and taxpayers lose the benefits of government efficiency. Although we’re extremely disappointed that this error has occurred, the General Services Administration has owned up to their mistake and will distribute payment this year.”

The General Services Administration (GSA) Multiple Award Schedule (MAS) program manages approximately 19,000 contracts for goods and services for the entire federal government. About 80 percent of the vendors are small businesses, making up 35 percent of the $50 billion in annual MAS sales.  A successful MAS contract can be a boon to a small business, however, pursuing a MAS contract may cost the small business between $6,000 to $40,000 for a standard GSA proposal. Competing for a federal contract is not only time-consuming but very costly, especially for small businesses, who often don’t have a large procurement team like larger corporations may have. GSA regulation states that each business will receive at least $2,500 in sales, but requires that each small business make at least $25,000 in sales per year to keep their contract. 

GSA generates revenue from fees based on contract sales. Last year, GSA proposed terminating thousands of small business contracts for not meeting the $25,000 annual sales threshold, because these contracts were not generating enough fees for GSA.  The Committee was concerned about the effect on small businesses and the loss of competition, since over half of the 19,000 vendors could have lost their contracts. Further, the Committee noted that GSA’s case for cancelling these contracts in terms of dollars saved did not account for paying some of these firms the $2,500 they would be owed under their contracts.  When the Committee began questioning why the $2,500 was not included in the calculations, it became clear that GSA was not adhering to its own contracts and had not paid the required termination costs to small businesses for at least five years. 

Between Fiscal Year 2008 and Fiscal Year 2012, there were 3,300 of these canceled federal contracts. Of these, 1,334 were eligible for a minimum guaranteed payment from GSA; 1,281 of the eligible firms were small businesses. Because of this error, GSA will pay $3,108,888 owed to these companies. The remaining firms had not filed the necessary forms, so it is unclear if GSA would have owed them the $2,500 payment. 
The Committee’s investigation began shortly after a June 2012 Small Business Subcommittee on Contracting and Workforce hearing on the GSA MAS Program, chaired by Rep. Mick Mulvaney (R-SC). A series of letters between GSA and the Committee during the Fall and Winter led to an admission of error on May 6, 2013.

The Committee has placed advocacy for small business contracting opportunities among its highest priorities under Congressman Graves’ chairmanship, especially in light of the fact that the government has missed its goal to award 23 percent of all federal contract dollars to small businesses for six consecutive years. In early 2012, the Committee introduced a series of contracting reform bills aimed at increasing opportunities for small business, creating protections to fight fraud and abuse, and empowering advocates who fight for small business during the federal acquisition process. On January 3, 2013, the President signed the legislation into law as part of the National Defense Authorization Act of 2013.

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WASHINGTON, D.C. – The House Small Business Committee, led by Chairman Sam Graves (R-MO), today held a hearing examining the changes in the patent system, and how to best protect the innovations of small businesses as new challenges arise.

The Committee heard testimony on the changing landscape of patent law and the effects on small firms, which develop 16 times more patents per employee than large companies. The hearing included discussion of Patent Assertion Entities, or “patent trolls,” and analysis of the early small business impact of the American Invents Act, which was signed into law in September 2011.

“The American Invents Act significantly reforms and strengthens the U.S. patent system. These reforms help reduce barriers to entry for small businesses and foster innovation, but small innovators still face too many claims from patents trolls,” said Chairman Graves. “Today’s hearing offered insight into ways we can further aid small business through a strong and fair patent system. Small firms lead the way in developing new patents, and the law must be an ally of invention to promote economic growth and America’s competitiveness.”

Materials for the hearing are posted on the House Small Business Committee’s website HERE.

Notable Quotes:

Dennis D, Crouch, Associate Professor of Law, University of Missouri School of Law, Columbia, MO, said, “…thousands of small and mid-sized companies are sued for patent infringement each year -- both by competitors and by patent licensing companies. Today, many cases settle in an unsatisfying way with the accused infringer paying a settlement fee simply in order to avoid the high cost of fully defending the lawsuit.”

Jeff Grainger, Managing Partner, The Foundry, LLC, Menlo Park, CA, testifying on behalf of the Medical Device Manufacturers Association, said, “…We depend upon a strong patent system that provides a fast and efficient examination process, discourages frivolous patent challenges, and imposes serious sanctions on infringers.”

John R. Thomas, Professor of Law, Georgetown University, Washington, DC, said, “Patent trolling remains a significant concern for U.S. enterprises of all sizes. In my opinion, trolling results from systemic problems within the U.S. patent system and is not amenable to a quick fix.”

Mark Grady, Founder and President, Indigital, Fort Wayne, IN, said, “Certainly, patent fee reform is helpful to our small business, as is the ‘first to file’ and ‘provisional patent’ concepts that makes the decision to file a patent clearer and easier… We remain optimistic that the Act, with some refinements, will yield faster results for higher quality patents without harming small businesses.”

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House Small Business Committee Chairman Sam Graves (R-MO) today hosted a Small Business Expo in Kansas City, Missouri, to highlight some of the opportunities and challenges for small business owners in this economy.

Rose Mitchell from Hy-Vee, Inc. was the keynote speaker, joined by panelists from both the federal government and the private sector to provide insight, training and information to small business owners.

“I enjoy hearing small business owners share with me their passion for their work or their product, and their hopes for future expansion, yet too often they’re concerned about the federal government’s role,” said Chairman Graves. “Again today, I find that owners of small firms are openly worried about rising healthcare costs, the requirements of the health care law, regulations and taxes. Their message to Washington is that the growing burden is stifling their ability to hire.”

“Small companies create seven out of every 10 jobs in America,” Graves continued. “The Expo is a great resource for small business owners to network and gain information to help grow their business in a challenging economy.  Entrepreneurs tend to exhibit the spirit and persistence to weather setbacks, and find a way forward. I’m always proud of their strength and dedication.”

Graves places an emphasis in the Committee on hearing directly from entrepreneurs and engaging small businesses throughout the country. He frequently joins other Members of Congress in their districts to dialogue with owners of small firms.

The Expo included a variety of panel topics: Access to Capital, Social Media 2.0, The Health Care Law and What it Means for Your Business, Best Business Practices, Success Through Networking, and an Introduction to Crowdfunding and Early Stage Seed Capital.

Graves has hosted the Sixth Congressional District Small Business Expo for the past five years. 

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Week Ahead for the Committee: May 13-17

 

Committee to Hold Hearings on Patent Reform Implementation and The Keystone Pipeline

 

WASHINGTON, DC – The House Small Business Committee, chaired by Rep. Sam Graves (R-MO), today announced the schedule for the week of May 13, 2013:

On Wednesday, May 15th, at 1:00 p.m., the House Small Business Committee will conduct a hearing titledPatent Reform Implementation and New Challenges for Small Businesses. The purpose of the hearing is to examine the impact of the changing landscape of patent law on small firms and the effects of Patent Assertion Entities, or “patent trolls” on small businesses. The hearing will also analyze the implementation of the American Invents Act, which was signed into law in September 2011.

“The American Invents Act made significant changes to strengthen the United States patent system and, in turn, foster innovation, including a provision aimed at curbing the threat of patent trolls,” said Chairman Graves. “Small businesses are our leading innovators, developing 16 times more patents per employee than large firms. This hearing will examine the effects of new patent laws on small businesses and whether additional steps need to be taken to address problems with patent trolls.”

On Thursday, May 16th, at 10:00 a.m., the Small Business Subcommittee on Agriculture, Energy and Trade, under the chairmanship of Rep. Scott Tipton (R-CO), will conduct a hearing titled If You Build It: Keystone XL Pipeline and Small Business Job Growth. The hearing will examine the potential economic benefits to small businesses and rural communities where construction of the Keystone XL pipeline will take place, and will serve as an opportunity to discuss how construction of the pipeline could contribute to enhancing our nation’s energy security, potentially resulting in lower energy prices for consumers.

“While our economy still struggles to consistently add enough jobs to significantly reduce unemployment, the estimated 42,100 jobs created by the construction of the Keystone XL Pipeline would provide a welcomed boost to job creation,” said Subcommittee Chairman Tipton. “In addition to the jobs created by its construction, the pipeline has the potential to lower energy costs for consumers, including small businesses. According to a 2012 study by the NFIB, the ‘Cost of Natural Gas, Propane, Gasoline, Diesel, Fuel Oil’ ranked as the third highest concern among small business owners.”

Watch both hearings live HERE.

Event Details:

Wednesday, May 15, 2013, 1:00 p.m. EDT
2360 Rayburn House Office Building
Small Business Committee
Patent Reform Implementation and New Challenges for Small Businesses

Thursday, May 16, 2013, 10:00 a.m. EDT
2360 Rayburn House Office Building
Small Business Subcommittee on Agriculture, Energy and Trade
If You Build It: Keystone XL Pipeline and Small Business Job Growth

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House Republicans homed in on the health law’s insurance tax Thursday, saying it’s yet another blow small businesses will have to endure as a result of the law.

The health insurance tax will have calamitous effects as insurers pass down the cost to purchasers in the form of higher premiums, argued Republicans — and conservative Democratic Rep. Jim Matheson of Utah — on the House Small Business Committee’s Subcommittee on Health and Technology at a hearing Thursday.

And it will disproportionately hurt small businesses, the Republicans said.

That’s because small businesses that choose to buy their employees coverage — something that’s not required of businesses with fewer than 50 workers — won’t be able to benefit from an exemption applied to the self-funded plans that are typically offered by large employers.

“[A] tax on medical devices alone has already laid off workers,” said Chairman Chris Collins (R-N.Y.), referring to the health care law’s medical-device tax. “[Businesses] can’t absorb a hundred-billion-dollar charge. I would say with some bias I agree with Max Baucus that it’s a train wreck.”

Matheson and Rep. Charles Boustany (R-La.) have introduced bipartisan legislation to repeal the insurance tax.

The tax is set to take effect in January and will raise more than $100 billion over a decade, the Joint Committee on Taxation estimates.

Democrats and their sole witness, former CBO official Paul Van de Water, conceded that the tax could contribute to a small rise in premiums. The JCT has estimated that repealing the tax would reduce prices by 2-2.5 percent each year.

But they urged caution in the matter, pointing out that the tax is part of a broader law that contains dozens of insurance market reforms, some of which could ultimately reduce premiums for some people. That’s not to mention the subsidies many consumers will receive.

And it’s just one of dozens of new taxes and fees that help pay for the Affordable Care Act, which the CBO has said will overall decrease the deficit.

Ranking member Janice Hahn (D-Calif.) said the problem isn’t necessarily the insurance tax — although she didn’t rule out lowering or repealing it. She said the real concern would be insurance companies passing the tax on to customers while enjoying large profit margins.

“I’m not feeling too bad for insurance companies right now or medical device companies,” Hahn said. “If there are places in this law we need to tweak and make better we will. But let’s direct our anger where it’s appropriate.”

The bottom line, she said, is that the health care law’s many provisions work together to improve Americans’ health coverage — and ultimately make their lives better.

“I had a friend who got married to the wrong person just so she could have health insurance,” she said. “So there will be less bad marriages because of this.”

 

 

House Small Business Subcommittee on Health and Technology Chairman Chris Collins (R-NY) today led a hearing to examine the economic effects of the health care law’s insurance tax on small businesses. Beginning in 2014, the health care law imposes a new tax on the health insurance policies that most small businesses purchase. The amount of the tax will be $8 billion in 2014, increasing to $14.3 billion in 2018, and increased based on premium trend thereafter. “The massive heath care law is making a major impact on our lives and the economy overall,” said Chairman Collins (R-NY). “Why? Because the plethora of mandates, regulations, and taxes, such as this health insurance tax, are driving up the cost of providing health insurance for employees. This assessment is not a partisan attack. This is a fact, substantiated by independent studies. Both the Joint Committee on Taxation and the Congressional Budget Office, among others, have said they expect a very large portion of this tax to be passed through to the purchasers of insurance in the form of higher premiums, driving up the cost of insurance for families and small businesses. Although the law exempts self-funded insurance plans, it will harm small businesses because they typically do not have a large enough pool to self-insure, so they face higher premiums in a fully-funded group plan – precisely the plans to which the tax applies. This law is bad for our economy. Without any relief in sight, it appears that the law will continue to be an anchor holding down small businesses.”

A recent NFIB Research Foundation study estimated that the tax will raise the cost of employer-sponsored insurance by 2 percent to 3 percent, imposing a cost of nearly $5,000 per family by 2020. The study also projects the price increases caused by the tax will reduce private sector employment by up to 262,000 jobs by 2020, with 59 percent of the losses falling in the small business sector. A 2011 report by actuarial firm Oliver Wyman provided national estimates of the impact of the tax on health insurance premiums. The report found the insurance tax alone “will increase premiums in the insured market on average by 1.9 percent to 2.3 percent in 2014” and by 2023 “will increase premiums by 2.8 percent to 3.7 percent.”

Materials for the hearing are posted on the House Small Business Committee’s website HERE.

Notable Quotes:

William Dennis, Jr., Senior Research Fellow at NFIB Foundation in Washington, DC said, “The health insurance premium tax was one of the largest revenue components included in the original law to offset the budgetary costs posed by PPACA. Formally structured as a fee on health insurers, this tax was intended to raise more than $100 billion over a decade beginning in 2014. However, both government and independent analysts believe that the tax will be passed on to consumers in the form of higher health insurance premiums.

“The tax falls almost exclusively on small businesses. Their larger competitors have no equivalent obligation. Small-businesses, therefore, are asked to absorb a significant share of the financial load of the program while placing them in a less competitive position to do so.”

Dean Norton, President of New York Farm Bureau in Elba, NY said, “…health insurance costs for small businesses are already rapidly trending higher, increasing 103 percent since 2000. According to the Joint Committee on Taxation, the HIT tax will further increase family premiums by $400 or 2.5 percent in the year 2016, making it even harder for farmers to purchase coverage for themselves, their families and their employees.”

Ryan P. Thorn, of Ryan P. Thorn Insurance Planning in South Jordan, UT said, “The new national health insurance fee that will be imposed on all individual and fully insured group health insurance policies sold in this country from 2014 and forward will impact about 45% of all insured residents in Utah. These are the people who are covered by individual, private Medicare and group policies that are fully insured. This means that all risk for the policies is borne by the insurance company. These are the only type of policies that are impacted by the new tax, which means that the Americans who work for and own small businesses around the country are disproportionately affected.”

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WASHINGTON, D.C. – The House Small Business Committee, led by Chairman Sam Graves (R-MO), today examined the Obama administration’s record of increasing the regulatory cost burden on small businesses, despite its directive to reduce it.

On January 18, 2011, in an executive order, President Obama directed agencies to look again at the regulations in place and find ways to reduce the burden on small businesses. In today’s hearing, the Committee questioned whether agencies’ efforts to engage in a retrospective review of their rules are resulting in meaningful reductions to that burden. According to the Office of Management and Budget, in Fiscal Year 2012, 14 major rules alone imposed an additional $14.8 to $19.5 billion in annual costs, which was the costliest year on record for federal regulation. By comparison, there were only 6 major rules, ten years ago, in Fiscal Year 2003, that imposed only $1.9 to $2 billion in annual costs.

“Retrospective reviews only matter if real improvements are made. It is time that agencies undertake a serious review of the effectiveness and economic impact of regulations and take actions to reduce burdens,” said Chairman Graves. “But these reviews should lead to more than just an additional talking point or nipping around the edges. Small businesses would benefit from an improved overall regulatory environment, and we need to see much more progress in reducing the impediments to growth for our nation’s job creators.”

Materials for the hearing are posted on the House Small Business Committee’s website HERE.

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Small companies don’t have the resources that large corporations have to focus on regulatory compliance, and as a result, small businesses bear a regulatory cost that is 36% higher than large businesses.  Ahead of today's committee hearing on this very topic, small business owners shared how current regulations, under the Obama Administration, affect their plans for the future through the Committee’s interactive website, “Small Biz Open Mic.”  _____________________________________________________________________________

As a small defense contractor, my company faces the same issues documented in this forum. I would also highlight the following: a. The Affordable Health Care Act - I am still under the size that REQUIRES coverage, I OFFER a full HC package in order to attract and retain my employees. As my corporate premiums rise, I have been absorbing the costs out of corporate profits. While I could discontinue the coverage and let my employees 'fend for themselves' on the state exchanges, I won't. They have been loyal and I'll do whatever it takes to return the trust. b. Banking Regulation - I have positive cash flow, 3 years of growth and no longer qualify for a line of credit because of the new stricter requirements. This means I can't increase my workforce until I have enough cash in the bank to cover the increased payroll for at least 90 days. I have refrained from yelling at my local banker, since his hands are tied. So we're back to: If you need a loan, you automatically don't qualify because you need a loan. What have I done, as far as cost control? - My salary stopped 3 years ago. Judith McCarty (Huntsville, AL) Interoptek, Inc 5/6/2013 _______________________________________________________________________________________ We experienced a 7% payroll tax increase which affected our small bottom line drastically. I am on the edge of dropping health care because of a 22% increase coming as a DIRECT result of Obamacare. My premiums actually dropped the last 2 years. Recently I had to go through a vetting process by the Veterans Administration in order to provide services. The process looked into my personal finances and deeply into my business financials. I don't show my tax returns and personal finances to the private sector and the VA nor any other agency should be looking at these things. The biggest issue at hand is that I can't get loans to expand our business. the SBA process and scrutiny does not encourage loans. Lynn Williams (Houston, TX) Advanced Imaging Management 5/8/2013 _________________________________________________________________________________________ SAS is an independent company that administers consumer accounts in response to referrals by attorney firms and other regulated entities who provide a variety of services. Federal Trade Commission Telecommunication Sales Rule (TSR) Section 310.4(a)(5)(ii) mandates this level of consumer protection and describes how the process must be structured. We have been diligent in following the guidelines when setting up these consumer accounts with our chosen financial institution. Recently, our financial institution notified us that it would no longer maintain our accounts effective June 17, 2013 citing unacceptable risk detailed by the Office of the Comptroller of the Currency rule, OCC 2001-47. This action points up the contradictory nature of competing Federal agencies designing laws with no regard to the adverse effects on consumers who number in the thousands, if not millions. If a replacement institution cannot be found in the time allotted, our company will be forced by this regulatory conflict to cease operations leading to certain consumer harm. It would seem that the zeal with which Federal regulatory agencies write law must be tempered to avoid these sorts of consequences. Steve Stratford (Lake Havasu City, AZ) Secure Account Service, LLC 5/6/2013 __________________________________________________________________________________________ I currently cover 100% of the medical costs for my employees to include premium payments and maximum contributions to HSA accounts. I have recently received an updated quote from my insurance provider. Citing the Affordable Care Act, my insurance provider is quoting a 100+% increase in the cost of my premiums next year. While we are shopping around, this may result in my no longer being able to cover the entire cost of my employee's medical benefits, impacting my employees and eventually my business as my ability to recruit and retain is degraded. Jason Keen (Huntsville, AL) IERUS Technologies 5/6/2013 _________________________________________________________________________________________   Recently we have been contacted by the Commerce Dept to complete this survey Space Deep Dive which admittedly will take 14 hours to complete and asks for confidential financial information. Attached is the response I got from one person at the Commerce Department when I complained about being selected. "Thank you for your email. I apologize for the delay in our response. Your company was identified to be an indirect supplier to the space industry through the supply chain. This study is designed to analyze the entire supply chain of the space industry as well as learn about your company's capabilities, directly space-related or otherwise. Our fundamental goal in this assessment is to highlight your company's capabilities to current and potential customers in the U.S. Government. Your contribution is important to the general understanding of the space industrial base, and will help promote better strategic planning on the part of the U.S. Government." I spent at least 14 hours completing this and I am still getting emails asking further questions. I don't have time to complete surveys for the government and run my business. Why don't they understand this. Debara Valeri (North Wales, PA) Laurell Tech 5/6/2013 __________________________________________________________________________________________ For us this question comes too late for our small business. After 23 years in business, we closed our business this year. Between the economy, and the additional costs to support our employees we were forced out of business. If we had received payroll tax relief when Obama took office, we would still be in business, as we were an S corp. And the other reason was capital lending to small businesses because of the bank bailout, was non-existent. Small businesses take the largest hits in the American economy, and work the most hours and worry the most every night where to get the capital to continue. Small businesses worry about employees, payroll, taxes and cash flow. America is built on a capitalistic free market economy yet we do not support the foundations (small businesses) of our economy. Debbie Engel (Portland, OR) JRE 5/6/2013 __________________________________________________________________________________________     We have lead laws, OSHA, DOT, Wetlands, critical dunes, and on and on. We have too many regulations to be enforced. We can not afford to enforce them. Examine why, then at what cost.  Zeak DeWyse (Engadine, MI) Dewyse Construction 5/6/2013 __________________________________________________________________________________________   Our company helps US manufacturers compete in a globalized environment by conducting "Last Mile Manufacturing" here in the US. We help US companies protect their Intellectual Property (IP), reduce risks exposure to foreign manufacturers, become more flexible and reduce the impact of transportation costs. "Last Mile Manufacturing" is a truly revolutionary idea whose time has come and is especially valuable in protecting American IP. However, it is difficult to compete against international manufacturers when payroll taxes, medical insurance costs, and workman's comp costs are as high as they are. To really bring back manufacturing jobs, I think some kind of reduced cost scheme in the above areas along with an effort to evangelize the benefits of manufacturing domestically would be helpful. Sandeep Duggal (Milpitas, CA) Extron, Inc. 5/6/2013 __________________________________________________________________________________________ We have been audited by the IRS three times in four years. It is very hard to run my business by their harassment. We have created nineteen good paying jobs and have always paid our taxes on time. We asked why the do this and they said the computer kicks out our tax return but the do not know why, they said it just the luck of the draw. We have to hire a CPA at $75.00 per hour to answer their questions, this had made a hardship onour small business because we would like to hire more people but can not. Glenn Spencer (Jeffersonville, IN) Spencer Machine & Tool Co. Inc. 5/6/2013 __________________________________________________________________________________________ My husband and I are the owners and sole employees of a small, high tech business. He's a ballistic genius, with US patents on ammo technologies. We design, manufacture, and sell very high performance ammo for SWAT teams, bomb squads, and serious hunters and shooters throughout the USA. The innovations we've created could solve numerous security and environmental problems... if we were allowed to actually work at our own business. Instead, in our two person business, we spend over half of our time dealing with required government paperwork: licenses, permits, special reports and taxes. We are required to maintain over a dozen separate licenses or permits from the federal, state, and local governments to run our business -- over a dozen, for a two person business. We had foreign governments seriously inquire about purchasing our ammunition for use by their air marshals, but exporting even one round of small arms ammunition is so highly regulated that the permit fees and time make it impossible to export unless you are a very large business. Nonetheless, simply because foreign governments asked, the US Dept of State, Directorate of Defense Trade Control, wants us to spend two weeks of time and pay over $5,000/year to register with them. We refuse to comply because we can't afford to export with the fees and time required, and I don't think we should have to register unless we export. We ship our ammo to qualified buyers throughout the USA, with a better vetting process (approved by the ATF) than is required for in-person sales. Despite being licensed by the federal government to make ammo for sale to others, to ship that same ammo by air, rather than ground, would require special classes and a $300 fee in how to fill out HazMat paperwork. Again, business logic dictates the prudent solution of shipping by ground to avoid insane HazMat fees and paperwork.To say that excessive government regulations are unfairly applied to small, innovative, cutting edge businesses, and are effectively killing entepreneurship and innovation in this country would be a gross understatement. Expecting us to deal with dozens of licenses, rules, regulations, and bureaucracies, and their conflicting policies makes it impossible to be profitable and successful as a very innovative, but very small, start-up business. We truly are the poster child for how government is inadvertently killing small businesses.  Becky Davis (Goleta, CA) Custom Cartridge, Inc. 5/7/2013 __________________________________________________________________________________________                                                    Recognizing the importance of entrepreneurs’ feedback in the process of shaping the very policies that will help determine their business sustainability and growth, Chairman Graves launched Small Biz Open Mic in September of 2011.

To be populated later...

Week Ahead for the Committee: May 6-10

Committee to Hold Hearings on the Obama Administration’s Regulatory Record and Impact of the Health Insurance Tax on Small Businesses

WASHINGTON, DC – The House Small Business Committee, chaired by Rep. Sam Graves (R-MO), today announced the schedule for the week of May 6, 2013:

On Wednesday, May 8th, at 1:00 p.m., the House Small Business Committee will conduct a hearing titled Retrospective Review: Have Existing Regulatory Burdens on Small Businesses Been Reduced?  The purpose of the hearing is to examine whether agencies’ efforts to review their existing regulations, as ordered by President Obama, are resulting in meaningful burden reductions on small businesses.

“I applaud the call for federal agencies to identify and review regulations that are ‘outmoded, ineffective, insufficient, or excessively burdensome.’ It is time that agencies undertake a serious evaluation of this order and review the effectiveness and economic impact of regulations and take actions to reduce burdens,” said Chairman Graves. “Our committee wants to make sure this is more than a feel good exercise and has meaningful results.  I also call on the President to similarly evaluate new regulations. According to the Heritage Foundation, the cost of major federal regulations increased by $70 billion during the President’s first term. Small businesses would benefit from an improved overall regulatory environment and I look forward to having a thorough dialogue on these issues.”

On Thursday, May 9th, at 10:00 a.m., the Small Business Subcommittee on Health and Technology, under the chairmanship of Rep. Chris Collins (R-NY), will conduct a hearing titled The Health Insurance Fee: Impact on Small Businesses. A recent study by NFIB found that the health care law’s annual fee assessed on the health insurance policies that most small firms purchase is likely to be passed on to the purchasers of the insurance in the form of higher premiums. This hearing will seek to examine the economic impacts of the fee on small businesses.

“The annual fee assessed under the health care law is not only burdensome to small businesses, but the American economy as well,” said Subcommittee Chairman Collins. “According to the NFIB study, firms that sponsor health insurance policies for their employees may see premiums rise by two to three percent. Paying higher health insurance bills means less money for small business owners to invest in their company, expand and hire new employees. The study projects more than 200,000 fewer jobs as a result of the health insurance tax with the majority coming from the small business sector.”

 Watch both hearings live HERE.

Event Details:

Wednesday, May 8, 2013, 1:00 p.m. EDT
2360 Rayburn House Office Building
Small Business Committee
Retrospective Review: Have Existing Regulatory Burdens on Small Businesses Been Reduced?

Thursday, May 9, 2013, 10:00 a.m. EDT
2360 Rayburn House Office Building
Small Business Subcommittee on Health and Technology

The Health Insurance Fee: Impact on Small Businesses

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