Mr. President, I come to the floor today to speak on an issue that is of great importance to my home State of Louisiana: disaster recovery from Hurricanes Katrina and Rita of 2005 and Hurricanes…
Mr. President, I come to the floor today to speak on an issue that is of great importance to my home State of Louisiana: disaster recovery from Hurricanes Katrina and Rita of 2005 and Hurricanes Gustav and Ike of 2008. Almost 5 years after these first two devastating storms, our eyes are still fixed on our shores during hurricane season as our communities and businesses in the hardest-hit areas continue to rebuild. As chair of the Senate Committee on Small Business and Entrepreneurship, I remain focused on their ongoing recovery efforts and am here today to introduce a bill that I believe will help these struggling small businesses become successful once again and hire new workers.
Charles R. ``Ray'' Bergeron and his wife's Fleur de Lis Car Care Center in New Orleans, Louisiana, is one of the businesses that need this type of assistance. Small Business Administrator Karen Mills and I toured the Bergerons' business back in June. Pre-Katrina, Fleur de Lis, which opened in 1988, had nine employees. After Hurricane Katrina hit, Mr. and Mrs. Bergeron found themselves having to take out two loans, one for their house and another for their small business. As of our visit in June, the Bergerons were down to two employees, not including themselves, and their business was back at about 40 percent of pre- Katrina sales, due in large measure to the population not returning. Their neighborhood is mostly empty homes, which Mr. Bergeron attributes in part to high flood insurance premiums, high property taxes and high homeowner's insurance.
As of June when I met with them, the Bergerons had a $225,000 SBA disaster loan with a standard 30-year term, which Mr. Bergeron says he will not pay off until he is 101 years old. But just yesterday, Mrs. Bergeron contacted my office requesting SBA assistance with their loan repayment after work to repair the flood-damaged roads surrounding their gas station had cut access to their business for even their most loyal customers. Since the project began, Fleur de Lis' sales have been cut almost in half. This latest challenge comes on the heels of the economic downturn, which caused the station to lay off two employees earlier last year.
The Bergeron's story is one I have heard from countless businesses. Coupled with their recovery from the 2005 and 2008 hurricanes, and more recently, the economic downturn, these businesses--the ones that took the initiative to quickly reopen after the storms--are today struggling with one challenge after another. Yet these ``pioneer'' businesses are the ones rebuilding communities need the most because they serve as anchors. If residents see the Bergeron's gas station, or their favorite restaurant, open, they are more likely to come back to rebuild their homes.
To help ongoing recovery efforts in the Gulf Coast, and to give these struggling businesses immediate assistance, I am introducing today the Southeast Hurricanes Small Business Disaster Relief Act of 2010. I thank my colleague Representative Charlie Melancon for introducing the House companion bill. Our legislation would provide targeted assistance to as many as 22,000 businesses in Louisiana, Mississippi, and Texas. What these particular businesses have in common is that they received SBA disaster loans following the 2005 or 2008 hurricanes. While they have made payments on these loans, I have heard from countless businesses in my State that they could expand operations if they had additional cash flow. This legislation would inject immediate capital into these hardest-hit businesses by giving SBA the authority to waive up to $15,000 of interest payments over 3 years, helping to create or save up to 81,000 jobs.
Under this program, SBA is required to give priority to applications from businesses with 50 employees or less and businesses that re-opened between September 2005 and October 2006 for the 2005 storms or September and December 2008 for the 2008 hurricanes. This ensures that SBA first helps true small businesses and those ``pioneer'' businesses that were the first to re-open after the disaster. The program would end on December 31, 2010.
This program makes a difference because for some businesses, depending on the loan term and loan amount, their total principal/ interest payments could run as high as $1,000 per month. For example, for a $114,000 disaster loan with a 4 percent interest rate and a 25- year term, a business could be paying as much as $400 in monthly interest. In one year, this adds up to $4,800 and almost $14,500 in 3 years. While this is not a lot of money for Wall Street banks or Fortune 500 companies, $15,000 makes a major impact for a gas station with two employees, like Fleur de Lis, or a neighborhood restaurant with 10 employees. These businesses have seen their bottom lines shrink as others on Wall Street received extravagant bonuses. I, for one, believe it is time to help these Main Street businesses, as they are the backbone of our communities.
My legislation also follows legislation approved by a previous Congress. The prior bill came after Hurricane Betsy devastated Florida, Louisiana and Mississippi in September 1965. According to Red Cross reports at the time, between 800,000 and 1 million people were adversely impacted by the hurricane. Before this storm, the only previous disaster of that magnitude was the 1937 Ohio-Mississippi River floods, which forced more than a million people from their homes. In total, Betsy destroyed more than 1,500 homes, damaged more than 150,000, and damaged more than 2,000 trailers. Hurricane Betsy also destroyed 1,400 farm buildings and 2,600 small businesses. At the time, the Senate Committee on Public Works noted in Committee Report 89-917 that, ``The overwhelming magnitude of the vicious storm, surprising even to experienced disaster workers, was more apparent every day as storm victims continued to register for long-term recovery help in rebuilding their lives and homes.''
As part of the review to provide Hurricane Betsy victims appropriate assistance, including a field hearing in Louisiana, Congress determined that the massive scale of this disaster required targeted, disaster- specific programs. In particular, Congress approved the Southeast Hurricane Disaster Relief Act of 1965, Public Law 89-339. This bill authorized various business, homeowner, and agricultural disaster assistance, including loans and temporary rental assistance. In its committee report on the legislation, which is referenced above, the Senate Committee on Public Works wrote, ``This bill contains what the committee believes is needed and necessary to give further aid to the disaster-stricken areas . . . including special measures to help these States in the reconstruction and rehabilitation of devastated areas.'' Among other provisions, Section 3 of the bill authorized SBA to waive interest--for loans above $500--due on the loan over a period of 3 years, but not to exceed $1,800 in interest. The bill was signed into law in November 1965 and Congress later approved $35 million to implement provisions in the Act.
Just as with Hurricane Betsy in 1965, in 2005, Mississippi and Louisiana again saw a catastrophic disaster hit their businesses, farms, and homes. Everyone now knows the impact Hurricanes Katrina and Rita had on the New Orleans area and the southeast part of our State. Images from the devastation following these storms, and the subsequent Federal levee breaks, were transmitted across the country and around the world. Katrina ended up being the deadliest natural disaster in United States history, with 1,800 people killed--1,500 in Louisiana alone. Katrina was also the costliest natural
disaster in U.S. history, with more than $81.2 billion reported in damage.
In Louisiana, we had 18,000 businesses catastrophically destroyed and 81,000 businesses economically impacted. I believe that, across the entire Gulf Coast, some estimates ran as high as 125,000 businesses impacted by Katrina and Rita. Many of these businesses, for various reasons, have not returned or re-opened. By mid-2007, Orleans Parish was still down 2,000 employers, or 23 percent of its pre-Katrina business level. Nearby St. Bernard Parish--which had up to 80 percent of its homes damaged--had the largest percentage decline of 48 percent fewer businesses open, according to Louisiana State University and the Louisiana Recovery Authority. These disasters were followed by the 2008 hurricanes that hit the same areas in Texas and Louisiana. With this in mind, on September 25, 2009, I chaired a committee field hearing in Galveston, Texas. At this hearing, we received a progress report from Federal, State and local officials on the recovery from Hurricane Ike in 2008. We also heard from individual business owners in Galveston who were still struggling a year on from the hurricane.
These Galveston business owners, the Bergeron's Fleur de Lis gas station, and many other ``pioneer'' businesses did choose to re-open and are now struggling to stay alive. As is clear from the Bergerons' story, these businesses have suffered from not one disaster, but three: Hurricane Katrina/Rita in 2005, Hurricane Gustav/Ike in 2008, and the economic downturn. My home State of Louisiana was slow to feel the brunt of the credit crunch and economic meltdown, but last year we began to see the drying up of investments and the shrinking of consumers' pocketbooks. I believe the special program implemented following Hurricane Betsy in 1965 would today greatly benefit businesses in these three states hardest hit by Katrina, Rita, Gustav and Ike. Given the urgent needs of many of these impacted businesses, I will be reaching out to my colleagues in Texas, Louisiana, and Mississippi to hopefully gain their support for quick passage of this assistance. While I recognize that these are the hardest hit states, I am also interested to hear from my other Gulf Coast colleagues on whether this program would benefit their impacted businesses as well.
In closing, I would like to note that Congress has been generous in providing essential recovery funds following the 2005 and 2008 storms. However, as we approach the fifth anniversary of the 2005 disasters, we must now ensure that impacted businesses can make it past this anniversary--preventing thousands more workers from being unemployed or additional defaults on SBA disaster loans. One important way that this Congress can ensure that these workers remain employed and that these businesses survive, and even grow, would be to relieve some of the interest on these SBA disaster loans. For this reason, I urge my Senate colleagues to support this commonsense legislation which would make a difference for up to 22,000 Main Street business owners and their estimated 81,000 employees in the Gulf Coast.
Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.
Mr. President, I am pleased today to be introducing the Small Business Contracting Improvements Act of 2010, legislation designed to protect the interests of small businesses and boost their opportunities in the Federal marketplace.
As Chair of the Senate Committee on Small Business and Entrepreneurship, I have focused a considerable amount of energy promoting the interests of small businesses in the federal contracting arena. The legislation I am introducing today marks a critical step forward in this process.
As the largest purchaser in the world, the Federal Government is uniquely positioned to offer new and reliable business opportunities for our Main Street businesses. Government contracts are perhaps one of the easiest and most inexpensive ways the government can help immediately increase sales for America's entrepreneurs, giving them the tools they need to keep our economy strong and create jobs. By increasing contracts to small businesses by just 1 percent, we can create more than 100,000 new jobs--and today, we need those jobs more than ever.
But the reality is, small businesses need all the help they can get accessing Federal contracts. In fiscal year 2007, according to the Federal Procurement Data System, the Federal Government missed its 23 percent contracting goal by .992 percent. That .992 percent represents more than $3.74 billion and 93,500 jobs lost for small businesses. The numbers are even worse the next fiscal, in fiscal year 2008 the Federal Procurement Data System reported that the government missed its goal by 1.51 percent--meaning more than $6.51 billion and 162,700 jobs lost. While these numbers tell the stark story of why this legislation is vital for our small businesses and our overall economy, they are still only a part of the story of why this legislation is needed.
Our small businesses have been taking the brunt of this economic downturn. In this past year, small businesses accounted for more than 85 percent of job losses. This fact was vividly illustrated to me this weekend when I met with Louisiana business owners and officials. A small business owner who spoke at our meeting told of how he was down from 20 plus employees to three. He was clear that if he had access to federal work he would begin staffing up tomorrow. That is the reason I am introducing this legislation today. These contracting opportunities represent job creation for small businesses in a way that is unique. When large businesses get new work they
typically spread that work among existing employees. When small businesses get these contracts they must staff up to meet the increased demand.
Furthermore, last night President Obama made the case that small businesses need to be the focus of our recovery. I have heard over and over again that small business is the engine that drives our economy. Well, if that is true, then it is time to give that engine some gas. President Obama set the right tone last night and today our bill looks to act on his words and fill that tank as we consider improvements in four key areas.
The first area I attempt to make improvements in is the area of contract bundling. Although contract bundling may have started out as a good idea, it has now become the prime example of the old saying that too much of a good thing can be very, very bad. The proliferation of bundled contracts coupled with the decimation of contracting professionals within the government threatens to kill small businesses' ability to compete for federal contracts.
Our bill looks to address those issues by ensuring: accountability of senior agency management for all incidents of bundling; timely and accurate reporting of contract bundling information by all federal agencies; and improved oversight of bundling regulation compliance by the Small Business Administration, SBA.
The bill also ensures that contract consolidation decisions made by a department or agency, other than the Defense Department and its agencies, provide small businesses with appropriate opportunities to participate as prime contractors and subcontractors.
Another way that this bill attempts to tackle the issue of bundling is by creating a joint venture and teaming center at the SBA. This center will provide technical support to associations and businesses who are interested in bidding on larger contracts as part of small business teams or joint ventures. The bill will also ease regulations that serve as a disincentive for small businesses who want to enter into teaming relationships with one another.
The second area that this bill attempts to address is subcontracting. The Committee has heard from many businesses about the challenges that some small business subcontractors face when dealing with prime contractors. Business owners have related that the way subcontracting compliance is calculated creates opportunity for abuse. They also related that many small businesses will spend time, money and effort preparing bid proposals to be a part of a bid team and that once the contract is won they never heard from the prime contractor again. Many also complain about a lack of timely payments after they have completed work.
This bill attempts to deal with some of these issues by including provisions designed to prevent misrepresentations in subcontracting by prime contractors. To accomplish this, the bill: provides guidelines and procedures for reviewing and evaluating subcontractor participation in prime contracts and provides for speedier payments to small business subcontractors who have successfully completed work on behalf of the prime contractor.
The third area I intend to update is the acquisition process. This bill aims to increase the number of small business contracting opportunities by including additional provisions to reduce bundled contracts by reserving more contracts for small business concerns. The bill accomplishes this by: authorizing small business set-asides in multiple-award, multi-agency contracting vehicles; directing the Office of Federal Procurement Policy to issue guidelines to analyze the use of government credit cards for the purpose of meeting small business goals; and requiring that agencies include meeting small business contracting goals in the performance evaluation of contracting and program personnel.
The last area that I tackle in this legislation is small business size and status integrity. The Committee has heard from a number of small businesses about large businesses parading as small businesses. It is imperative that small business contracts go to small businesses. Small businesses may be losing billions of dollars in opportunities because of size standard loopholes.
This bill attempts to address these issues by making additions to the Small Business Act that are designed to strengthen the government's ability to enforce the size and status standards for small business certification. To achieve this, the new section: establishes a presumption of loss to the federal government whenever a large business performs a small business contract; requires that small businesses annually certify their size status; requires the development of training programs for small business size standards; requires a detailed review of the size standards for small businesses by the SBA within one year; and directs GAO to study the effectiveness of the mentor-protege program.
It is well past time to provide greater opportunities for the thousands of small business owners who wish to do business with the Federal Government. I believe that this legislation is a good step toward opening those doors of opportunity. I hope all of my colleagues will join me in supporting this bill and I look forward to working with them as we work to move this legislation forward.
Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.