Mr. President, I rise today with Senator Collins to introduce legislation to help reverse the devastating population decline and economic distress that has plagued individuals and businesses in…
Mr. President, I rise today with Senator Collins to introduce legislation to help reverse the devastating population decline and economic distress that has plagued individuals and businesses in Aroostook County, the northernmost county in Maine. What the bill does is simple, it will bring all of Aroostook County under the Empowerment Zone (EZ) program. The legislation is identical to a bill that we introduced in the 108th Congress and was included in the FY 2004 Agriculture Appropriations bill in 2003 as passed by the Senate.
To fully grasp the importance of this legislation, it is necessary to understand the unique situation facing the residents of Aroostook County. ``The County'', as it is called by Mainers, is a vast and remote region of Maine. As the northernmost county, it shares more of its border with Canada than its neighboring Maine counties. It has the distinction of being the largest county east of the Mississippi River. Its geographic isolation is even more acute when considering that the county's relatively small population of 73,000 people are scattered throughout 6,672 square miles of rural countryside. Aroostook County is home to 71 organized townships, as well as 125 unorganized townships much of which is forest land and wilderness.
As profound as this geographic isolation may seem, it is the economic isolation and the recent out-migration that has had the most devastating impact on the region. The economy of northern Maine has a historical dependence upon its natural resources, particularly forestry and agriculture. While these industries served the region well in previous decades, and continue to form the underpinnings of the local economy, many of these sectors have experienced decline and can no longer provide the number and type of quality jobs that residents need.
While officials in the region have put forward a Herculean effort to redevelop the region, with nearly 1,000 new jobs at the Loring Commerce Centre alone, Aroostook County is still experiencing a significant ``job deficit'', and as a result continues to lose population at an alarming rate. Since its peak in 1960, northern Maine's population has declined by 30 percent. Unfortunately, the Main State Planning Office predicts that Aroostook County will continue losing population as more workers leave the area to seek opportunities and higher wages in southern Maine and the rest of New England.
In January 2002, a portion of Aroostook County was one of two regions that received Empowerment Zone status from the USDA for out-migration. The entire county experienced an out-migration of 15 percent from 86,936 in 1990 to 73,938 in 2000. Moreover, a shocking 40 percent of 15 to 29-year-olds left during the last decade.
The current zone boundaries were chosen based on the criteria that Empowerment Zones be no larger than 1,000 square miles, and have a maximum population of 30,000 for rural areas. The lines drawn for the Aroostook County Empowerment Zone were considered to be the most inclusive and reasonable given the constraints of the program. It should be noted as well that the boundaries were drawn based on the 1990 census, making the data significantly outdated at the start and included the former Loring Air Force Base and its population of nearly 8,000 people, which had closed nearly 8 years before the designation, taking its military and much of its civilian workforces with it. The Maine State Planning Office estimated that the base closure resulted in the loss of 3,494 jobs directly related to the base and
another 1,751 in associated industry sectors for a total loss of $106.9 million annual payroll dollars.
Some of the most distressed communities that have lost substantial population are not in the Empowerment Zone, and other communities like Houlton literally are divided simply by a road, having one business on the south side of the street with no Empowerment Zone designation look out their window to a neighboring business on the north side of the street with full Empowerment Zone benefits. The economic factors for these communities and for these neighbors are the same as those areas within the Empowerment Zone. This designation is not meant to cause divisiveness within communities, it is created to augment a partnership for growth and to level the playing field for all Aroostook County communities who have equally suffered through continuing out migration whether it be in Madawaska or Island Falls.
The legislation I am introducing would provide economic development opportunities to all reaches of Aroostook County by extending Empowerment Zone status to the entire county. This inclusive approach recognizes that the economic decline and population out-migration are issues that the entire region must confront, and, as evidenced by their successful Round III EZ application, they are attempting to confront. I believe the challenges faced by Aroostook County are significant, but not insurmountable. This legislation would make great strides in improving the communities and business in northern Maine, and I urge my colleagues to support this bill.
I ask unanimous consent that the text of the bill be printed in the Record.
Mr. President, as Chair of the Senate Committee on Small Business and Entrepreneurship, I have long believed that it is my responsibility and the duty of this chamber to help small businesses, as they are the driver of this Nation's economy, responsible for generating approximately 75 percent of net new jobs annually.
Today, I rise with Senator Bennett to introduce legislation that would address the crisis that faces small businesses when it comes to purchasing quality, affordable health insurance. This is not a new crisis. Nearly 46 million Americans are currently uninsured. We've now experienced double digit percentage increases in health insurance premiums in four of the past five years. Small businesses face difficult choices in seeking to provide affordable health insurance to their employees. We must act now.
Study after study tells us that the smallest businesses are the ones least likely to offer insurance and most in need of assistance. According to the Employee Benefit Research Institute, of the working uninsured, who make up 83 percent of our nation's uninsured population, 60.6 percent either work for a small business with fewer than 100 employees or are self-employed.
Furthermore, many of the small businesses who we meet with tell us how they feel like the cost and complexity of the health care system has moved health insurance far beyond their reach.
That is why today we introduce the Small Business Health Education and Awareness Act of 2006. This bill establishes a pilot, competitive matching-grant program for Small Business Development Centers (SBDCs) to provide educational resources and materials to small businesses designed to increase awareness regarding health insurance options available in their areas. Recent research conducted by the Healthcare Leadership Council has found that a short, less than 10 minute education session, can increase small business knowledge and interest in offering health insurance by about 33 percent.
For those of you who are not familiar, SBDCs are one of the greatest business assistance and entrepreneurial development resources provided to small businesses that are seeking to start, grow, and flourish. Currently, there are over 1,100 service locations in every state and territory delivering management and technical counseling to prospective and existing small business owners.
Our legislation would require the Small Business Administration (SBA) to provide up to 20 matching grants to qualified SBDCs across the country. No more than two SBDCs, one per State, would be chosen from each of the SBA's 10 regions. The grants shall be more than $150,000, but less than $300,000 and shall be consistent with the matching requirement under current law. In creating the materials for their grant programs, participating SBDCs should evaluate and incorporate relevant portions existing health insurance options, including materials created by the Healthcare Leadership Council.
In addition, SBDCs participating in the pilot program would be required to submit a quarterly report to the SBA.
Enacting this legislation is an important step in the right direction towards assisting small businesses as they work to strengthen themselves, remain competitive against larger businesses that are able to offer affordable health insurance, and in turn bolster the entire economy.
We encourage our colleagues to join us in supporting this bill, and to continue to work to address the issues facing the small business community.
Thank you. I ask unanimous consent that the text of our bill be printed in the Record.
Mr. President, as Chair of Senate Committee on Small Business and Entrepreneurship, I rise today to introduce The Small Business Partners In Reconstruction Act of 2006. This legislation, co- sponsored by Senator David Vitter, is the product of 3 hearings held in my Committee in September and November 2005, and in February 2006, which examined the response of the Small Business Administration, the Army Corps of Engineers, the Department of Homeland Security and its Federal Emergency Management Agency, and other Federal agencies to the devastation wrought by the Hurricanes Katrina and Rita on our Gulf Coast states.
Speaking on September 15, 2005 from New Orleans' historic Jackson Square, President Bush declared that ``It is entrepreneurship that creates jobs and opportunity; it is entrepreneurship that helps break the cycle of poverty; and we will take the side of entrepreneurs as they lead the economic revival of the Gulf region.'' Unfortunately, the Federal Government's performance has not matched the President's declaration. This is particularly true with regards to the role of small firms, especially Gulf Coast small firms, with regards to contracts and subcontracts for recovery and reconstruction. Too often, small contractors have been treated in the disaster contracting process less like the partners in disaster recovery and economic revitalization they are, and more like unwanted stepchildren. Eight months after Hurricane Katrina, it is time for this to change.
To begin with, some Federal bureaucrats have used the Katrina and Rita disasters to exclude small business from contracting in the name of emergency and speed. Contracting with small firms, it was said, does not provide sufficient flexibility to the contracting officers in time of crisis. Quite the opposite is true. The Small Business Act contains flexible contracting authorities as part of the 8(a) program, the HUBZone program, and the service-disabled veteran-owned program, which allow Federal agencies to quickly buy goods and services in emergency situations. Indeed, on May 30, 2003, the Office of Federal Procurement Policy issued guidance on Emergency Procurement Flexibilities, which encouraged Federal agencies to use contracting flexibilities, such as the HUBZone flexibilities, which are part of the Small Business Act. This guidance was largely ignored, as billions of dollars went to large corporations through non-competitive mechanisms such as no-bid contracts or the so called micro-purchase authority, originally intended by Congress to cover small purchase card transactions.
My legislation requires the Office of Federal Procurement Policy and the Small Business Administration (SBA) to ensure that Federal contracting officials have the most comprehensive and up-to-date guidance on the full use of available small business emergency procurement flexibilities, and that such guidance is published in the Federal Register. My legislation also ensures that the SBA provides government-wide training for procurement agencies on using small business contracting flexibilities in emergency situations, and directs the SBA to designate at least one advisor for small business emergency contracting who would help Federal agencies apply small business procurement flexibilities in emergency situations.
Small contractors have also been denied access to reconstruction dollars by paperwork and bureaucracy. Red tape had the most serious effect on small disadvantaged businesses. Many of these contractors have been certified to do business under the Federally-funded, Congressionally-established Disadvantaged Business Enterprise Program (DBE) for transportation contracting such as highway or bridge construction. In the Federal procurement system, a parallel Small Disadvantaged Business (SDB) Program exists. According to law and the Memorandum of Understanding between the SBA and the U.S. Department of Transportation, the DBE certifications are based on the SDB certification requirements under the Small Business Act. Unfortunately, DBEs have been unable to secure recognition as SDBs by the Federal agencies or by Federal prime contractors. As a result, agencies and prime contractors had little assurance that SDB goals may be met by doing business with DBEs. My measure will ensure that capable small contractors enjoy full reciprocity among contracting programs instead of the red tape they currently face.
Lack of comprehensive procurement data on Katrina and Rita contracting is another flaw which my bill is trying to correct. It is hard to believe that almost 8 months since the Hurricane Katrina struck, the Federal Government's disaster contracting ship is literally sailing blind. Both the Small Business Act and the Office of Federal Procurement Policy Act require that accurate and comprehensive data on government contracting and subcontracting, especially including small business participation, be collected and maintained. Although the government-wide procurement spending database, the Federal Procurement Data System (FPDS), collects the data related to Hurricane Katrina and Rita reconstruction, this data is demonstrably incomplete. According to the Government Accountability Office and admissions of Federal procurement officials, the FPDS data is not accurate and omits billions in Defense and Homeland Security contracts. As a result of these deficiencies, the Executive Branch made exaggerated claims concerning the share of reconstruction work that went to small businesses. For instance, last October, the Commerce Department claimed that small businesses received 72 percent of Katrina contracting dollars, and the SBA claimed the small business share to be at 45 percent. During hearings before my Committee, the GAO confirmed that the Administration's claimed numbers are unrealistic and unsubstantiated. My legislation directs the Administrators of the SBA and the OFPP to ensure that the Federal Procurement Data System reflects comprehensive government-wide contracting spending on Katrina and Rita reconstruction.
For years, the Historically Underutilized Business Zone (HUBZone) program, created to direct Federal contacting dollars to small firms in economically distressed areas, has been recognized as a potent economic development stimulus. Since its inception in 1997, the HUBZone program stimulated the hiring of over 124,000 HUBZone residents and investment of over half a billion dollars in HUBZones by HUBZone-certified firms. With the support of the Administration, I propose extending the HUBZone designation to the disaster region. A HUBZone designation would enable small businesses located in the disaster area and employing people in that area to receive contracting preferences and price evaluation preferences to offset greater costs of doing business. Extending the HUBZone designation to the Gulf Coast would bring needed businesses development tools to affected areas of the Gulf Coast. Under my proposal, the SBA Administrator would have the discretion to define the geographic scope or duration of this designation to ensure that the HUBZone preference is targeted to those who need it the most.
Small businesses vying for government contracts or subcontracts often must post bid or performance bonds in order to convince Federal contracting officials or prime contractors that small business are a good project risk. In turn, small firms must seek bonding from private bonding companies. The SBA, through its surety bond program,
has provided guarantees on bonds awarded to small businesses up to $2 million. But small firms need an increase in bonds to handle larger projects for hurricane relief. Local small businesses in the Gulf Coast can use higher bonds to compensate for the damage to their assets from the hurricanes. My legislation would increase the maximum size of SBA surety bonds from $2 million to $5 million, and provide the SBA with authority to increase the maximum size to $10 million upon request of another Federal agency. In its proposal to re-build the Gulf Coast region, the Administration suggested making the $5 million increase.
My legislation also directs the SBA to create a contracting outreach program for small businesses located or willing to locate in the Katrina disaster area for the next five years. Federal contracts and subcontracts can provide critical assistance to small businesses located in the areas devastated by the hurricanes in the form of solid business opportunities and prompt, steady pay. In addition, government procurement would open doors for many local small businesses to participate in the long-term reconstruction work in the Gulf Coast areas. While many small businesses would benefit from other forms of disaster assistance, many of them want to get back to work and into business as soon as possible. Technical assistance and outreach through the SBA, the Procurement Technical Assistance Centers, the Federal Offices of Small and Disadvantaged Business Utilizations, and other organizations could prove invaluable to these firms.
Yet, outreach alone would not ensure fair participation of small businesses in Gulf Coast reconstruction contracts. To promote jobs creation and development in the disaster region, the Federal Government must set and follow definitive goals for small business participation. Prior to the disaster, small construction companies in Alabama, Mississippi, and Louisiana received nearly $500 million in Federal contracts a year. Total small business contracts in the Gulf Coast region exceeded $3 billion a year. With the Federal cost of hurricane relief and rebuilding estimated at over $100 billion, small businesses, particularly those located in the disaster area and that employ individuals in the affected areas, should receive their fair share of Federal contracting and subcontracting dollars. My legislation establishes a 30 percent prime contracting goal and a 40 percent subcontracting goal on each agency's hurricane-related reconstruction contracts. These goals are compatible with the Department of Homeland Security's and the Army Corps of Engineers' history of small business achievements.
My legislation would also address two unfortunate provisions in the Second Katrina Supplemental Appropriations that unwisely changed the emergency procurement authority Congress granted to contracting officers in the aftermath of 9/11 and reclassified many reconstruction contracts into categories that excluded small firms from prime contracting or subcontracting. I spoke out against these provisions, and Congress ultimately repealed them last year. Nonetheless, this bill puts in place safeguards to ensure that small firms do not fall prey to such actions again. My legislation protects the Small Business Reservation (SBR) for disaster-related contracts below the Simplified Acquisition Threshold (SAT). The SAT and the SBR are normally set at $100,000. The Federal Acquisition Streamlining Act allowed Federal agencies to use simplified procedures for all contracts below the SAT, but only if they attempt to place, or ``reserve'', these contracts to qualified small businesses. Many small businesses qualify for contracts under expedited procedures under the Small Business Act, which would help to move the reconstruction process forward. The SBR does not delay relief contracting. If no qualified small business is available to do the job, agencies can place the contract with any qualified supplier. This provision restores the parity between the SBR and the SAT any time the SAT is increased for disaster-related contracts.
My legislation also restores small business subcontracting requirements in emergency procurements. The Second Katrina Supplemental abolished small business subcontracting requirements for all Katrina- related contracts by treating contracts for hundreds of millions of dollars as purchases of commercial items, like contracts for office supplies. This is an improper and unjustified procurement practice. The Army Corps of Engineers currently imposes a 73 percent subcontracting requirement on hurricane-related contracts, demonstrating that the subcontracting requirements are not onerous. Under the Small Business Act, only a ``good faith effort'' to provide subcontracting opportunities is required. The legislation allows a grace period of 30 days to negotiate an acceptable plan (subject to a 50 percent payment limitation until the plan is concluded).
Looking forward, my legislation directs the Administrators of the OFPP and the SBA to work with other Federal agencies to ensure creation of multiple-award contracts for disaster recovery which are set aside for small business concerns. As the GAO testified before the Senate Committee on Small Business and Entrepreneurship last year, Federal agencies lacked adequate acquisition planning for hurricane disaster relief. This measure would reverse this practice both for ongoing and for future disaster recovery efforts.
I am a firm believer that the reconstruction acquisition process must be not only efficient, but also transparent. In this regard, the Federal Government provides central website postings for all Katrina- related opportunities through the SBA's Sub-NET. Unfortunately, the SBA's Sub-NET subcontracting database, though recommended by the Government, has been until recently unused by the Katrina prime contractors. My legislation directs all prime contractors which received substantial Federal contracts related to the Hurricanes Katrina and Rita for which subcontracting plans are required to post subcontracting announcements on the SBA's Sub-NET online database.
Finally, my legislation addresses the government's failure to direct contract dollars to those who need them the most--local small businesses. During the hearings in my Committee last November, I was deeply troubled to discover that Federal agencies failed to grant business opportunities to qualified Gulf Coast small firms. These shocking practices make a mockery of our national commitment to rebuild the Gulf Coast. For instance, while investigating Hurricane Katrina contracts at my request, the GAO found a memorandum from an official in the Army Corps of Engineers informing the SBA that the Corps has successfully concealed the information about millions of dollars in upcoming contracts for mobile classrooms in Mississippi from, among others, local small businesses. The Corps requested that SBA approve giving this work to an out-of-state company without any prior experience. As a result, the Corps excluded a local small business, licensed by the Mississippi Department of Education, from bidding. Incredibly, the SBA obliged and approved the contract three times, eventually increasing its value from $10 million to $47 million.
Practices such as these violate Section 15 of the Small Business Act, which unequivocally directs priority in government contracts ``to small business concerns which shall perform a substantial proportion of the production on those contracts and subcontracts within areas of concentrated unemployment or underemployment or within labor surplus areas.'' It is hard to imagine a clearer example of an ``area of concentrated unemployment or underemployment'' or a area with labor surplus than the devastated Gulf Coast region. Nonetheless, some have ignored the clear command of the statute. My legislation would designate the Gulf Coast disaster area as a labor surplus area for purposes of the Small Business Act's preference for labor surplus area contractors. In addition, this provision authorizes Federal agencies to use contractual set-asides, incentives, and penalties to enhance participation of local small business concerns in disaster recovery contracts and subcontracts.
Finally, my legislation suspends the application of the Small Business Competitiveness Demonstration (Comp Demo) program to Gulf Coast disaster contracts. The Comp Demo Program denies the protections of the Small Business Act like set-asides to small businesses involved in construction and
specialty trade contracting, refuse systems and related services, landscaping, pest control, non-nuclear ship repair, and architectural and engineering services, including surveying and mapping. Historically, small businesses have been the backbone of these industries, and these industries are in heavy demand for disaster recovery efforts. The Comp Demo Program, ostensibly a test program, denies Federal agencies likes the Departments of Defense and nine other agencies the ability to do small business set-asides. Essentially, the Comp Demo Program reserves whole industries for big business. Last year, at the request of the Department of Defense, I supported an amendment to terminate the Comp Demo Program. The Senate agreed that small businesses in all industries should receive the full protections of the Small Business Act, and unanimously voted to repeal this Program. Suspending this Program for Katrina and Rita contracts would go a long way towards restoring fair treatment for small businesses affected by this disaster.
I believe this legislation will find broad support in this body. Indeed, the HUBZone designation, the outreach programs, and the surety bonding increase have already been adopted by the Senate on a vote of 96-0 as part of my amendment to the Science, State, Commerce, and Justice Appropriations Act for Fiscal Year 2006. The provisions dealing with the small business reservation offset and retention of small business subcontracting in emergency procurements were cosponsored by a bi-partisan group of Senators as part of my bi-partisan disaster relief bill, S. 1807. With the Senate leadership and every Senator of both parties on the record in support of greater access of small businesses to Federal contracts, I look forward to speedy consideration of this legislation and its support by the Senate.