Evidence of meeting #118 for Government Operations and Estimates in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was contract.
A recording is available from Parliament.
February 8th, 2018 / 11:20 a.m.
Deputy Associate Administrator, Office of International Trade, U.S. Small Business Administration
That's by dollar volume.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Wow. That's huge.
When did your $150,000 simplified contract start? When did you roll it out?
Acting Director, State Trade Expansion Program, Office of International Trade, U.S. Small Business Administration
Simplified contracting has been around for really quite a long time.
Conservative
Kelly McCauley Conservative Edmonton West, AB
It's a very foreign concept to us, to our government, I think.
Acting Director, State Trade Expansion Program, Office of International Trade, U.S. Small Business Administration
I personally got into procurement in 1984. That threshold in 1984 was $25,000. So it's been in existence since at least 1984.
Deputy Associate Administrator, Office of International Trade, U.S. Small Business Administration
Yes—long before my time.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Okay. So it's been around for quite a while.
I want to get back to some of the set-asides. Your goals are 5% women, 3% disabled, and 3% high unemployment areas. When you look at, say, small business for women or disabled vets, how are you deciding what qualifies as a small business? It's one of the discussions we've had in this whole process. Does it deliver more value to have, say, a gentleman running the business but it benefits women or first nations, or is it better to have a woman own it but it's all employed by men and therefore does not benefit a wide demographic?
Deputy Associate Administrator, Office of International Trade, U.S. Small Business Administration
Right. We don't want to create a police state within the federal government. In order for a woman-owned business to be a woman-owned business, we require 51% of ownership to be held by the woman. When it goes to a contract, not only does 51% ownership have to be held by a woman but the project manager over that particular contract should represent the female gender. That's what we look at.
If she chooses to subcontract out to a male or she chooses to hire men wholeheartedly, we don't police that. What we do police is who the project manager is on the procurement and what the ownership is of the business itself.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Do you feel you're at risk, or has it come up that perhaps people are creating shell companies just to get the business, but it's not really delivering on what the intent was?
Deputy Associate Administrator, Office of International Trade, U.S. Small Business Administration
We do. We find there is very low risk of that. We do report that to our Department of Justice and we will terminate a contract if we find that. We don't actively go out looking for that, but if evidence of the contrary ownership comes available, we do review that and look into it.
I can tell you that, in my 18 years in the federal government, it's been very rare.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Oh, good.
I'm very short of time; I have about half a minute left.
You talked about providing working capital. Can you briefly explain that?
Deputy Associate Administrator, Office of International Trade, U.S. Small Business Administration
Yes. Small businesses don't necessarily have the resources once they go after these contracts, particularly contracts of $4 million or more. They don't necessarily have the working capital necessary to have the inventory or to have the necessary available labour force up and running in order to meet their 30-day to 90-day obligations of payout, or whatever.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Are you providing capital after they've gained the contract: a short-term loan or something?
Deputy Associate Administrator, Office of International Trade, U.S. Small Business Administration
We can provide them working capital, lines of credit, and all kinds of inventory purchase and whatnot through our capital access program.
Conservative
NDP
Brian Masse NDP Windsor West, ON
Thank you, Mr. Chair.
Thank you to our witnesses for being here with us.
My name is Brian Masse, and I'm the member of Parliament for Windsor West, across from Detroit, Michigan.
Deputy Associate Administrator, Office of International Trade, U.S. Small Business Administration
That's my birth place.
NDP
Brian Masse NDP Windsor West, ON
Well, I'm a Lions season ticket holder.
When I cross the border, I always tell them I should be celebrated as a champion, not as a suspect of any sort.
Deputy Associate Administrator, Office of International Trade, U.S. Small Business Administration
I was born right there in the Grace Hospital in Windsor.
NDP
Brian Masse NDP Windsor West, ON
That is literally a block away from my house. This is awesome. This is great.
You'll understand my next question.
I'm Vice-Chair of the Canada–United States Inter-Parliamentary Group, so I'm there not only personally but also professionally, in and around the Detroit region. I'm talking about community benefits for infrastructure and the procurement process.
Can you give me a little bit of a highlight about perhaps targeting some of the programs or the targeting that's done for persons who are under-represented in the workforce and other types of groups and organizations that might have a program to do so?
Do you have programs and services? I know in Michigan they do. Maybe you can shed some light on that for the committee here.
Deputy Associate Administrator, Office of International Trade, U.S. Small Business Administration
Yes. What we do is we will map according to the census and the others into prime zones and empowerment zones. Those are places or areas within the United States that are at a level of the poverty line, maybe one to two standard deviations of the poverty, that we, as the United States, feel need economic development. That's where we apply our overlay of what we call our historically underutilized business zones.
We believe that people hire people locally, people hire people who look and act and walk like them, and communities hire people who are from their own communities. We will try our best to get small businesses to move into areas that are underutilized in business areas, for example, grocery desert areas or where we have a large manufacturer who has left the area, and small businesses are leaving accordingly. We will incentivize them to come into that area and to not only put their headquarters in that area, but to hire one-third of their workforce from that area.
Now, how do we incentivize them? For example, let's say there's $1-million contract. The government likes to go for low-bid contracts. If there are several people competing for a contract of $1 million, and the small business that moved into that historically underutilized area bid $1,100,000, we will still give it to him or her, even though it's 10% more, because of their economic impact for that area, and it's in the best interests of the United States.
NDP
Brian Masse NDP Windsor West, ON
This is nothing new. This has been a traditional model that's helped many areas. Is that correct? I've seen it happen myself in the Detroit region, but you're using this nationally as well. Is that correct?
Deputy Associate Administrator, Office of International Trade, U.S. Small Business Administration
Yes. It is a very well-used program. Like I said, in that program, 3% is our goal for national federal procurement, and we succeed at that every year.
NDP
Brian Masse NDP Windsor West, ON
One of the challenges for the new Gordie Howe bridge that's being built in the Windsor region is community benefits, and we've been working with Delray on that.
Now just to get this clear, though, you use the census information as kind of your backstop to set the targets to identify, for example, where there are visible minorities, persons with disabilities, or underemployment in certain demographic groups. Is that correct?
Deputy Associate Administrator, Office of International Trade, U.S. Small Business Administration
That is correct, we do. We will take that information, we will look at the area, and look at the economic thinking.
