[Senate Hearing 118-385] [From the U.S. Government Publishing Office] S. Hrg. 118-385 PROMOTING OPPORTUNITY: THE NEED FOR TARGETED FEDERAL BUSINESS PROGRAMS TO ADDRESS ONGOING RACIAL DISCRIMINATION ======================================================================= FIELD HEARING before the COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP OF THE UNITED STATES SENATE ONE HUNDRED EIGHTEENTH CONGRESS SECOND SESSION __________ MAY 6, 2024 __________ Printed for the use of the Committee on Small Business and Entrepreneurship [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Available via the World Wide Web: http://www.govinfo.gov __________ U.S. GOVERNMENT PUBLISHING OFFICE 56-458 WASHINGTON : 2024 ----------------------------------------------------------------------------------- COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP ONE HUNDRED EIGHTEENTH CONGRESS ---------- JEANNE SHAHEEN, New Hampshire, Chair JONI ERNST, Iowa, Ranking Member MARIA CANTWELL, Washington MARCO RUBIO, Florida BENJAMIN L. CARDIN, Maryland JAMES E. RISCH, Idaho EDWARD J. MARKEY, Massachusetts RAND PAUL, Kentucky CORY A. BOOKER, New Jersey TIM SCOTT, South Carolina CHRISTOPHER A. COONS, Delaware TODD YOUNG, Indiana MAZIE HIRONO, Hawaii JOHN KENNEDY, Louisiana TAMMY DUCKWORTH, Illinois JOSH HAWLEY, Missouri JACKY ROSEN, Nevada TED BUDD, North Carolina JOHN HICKENLOOPER, Colorado Sean Moore, Democratic Staff Director Meredith West, Republican Staff Director C O N T E N T S ---------- MAY 6, 2024 OPENING STATEMENTS Page Benjamin L. Cardin, U.S. Senator from Maryland................... 1 Chris Van Hollen, U.S. Senator from Maryland..................... 6 WITNESSES Ms. Natalia Luis, Co-Owner, M. Luis Construction and M. Luis Products, Silver Spring, MD.................................... 11 Prepared Statement........................................... 13 Ms. Tonya Lawson, President and CEO, Lawson Consulting, Fort Washington, MD................................................. 19 Prepared Statement........................................... 21 Ms. Ronnette R. Meyers, President and CEO, JLAN Solutions, Washington, DC................................................. 30 Prepared Statement........................................... 32 Mr. Gary Moore, Senior Business Consultant, Maryland MBDA Business Center, Baltimore, MD................................. 35 Prepared Statement........................................... 37 Mr. Andres Bernal, Vice President, MGT Consulting, Cincinnati, OH 40 Prepared Statement........................................... 42 Mr. Gary Cunningham, Senior Advisor, The New School, New York, NY 43 Prepared Statement........................................... 45 ADDITIONAL LETTERS/STATEMENTS FOR THE RECORD Joni Ernst, U.S. Senator from Iowa Statement dated May 6, 2024.................................. 70 Asian Americans Advancing Justice (AAJC) Statement dated May 6, 2024.................................. 73 Association for Enterprise Opportunity (AEO) Statement dated May 6, 2024.................................. 92 Capital Region Minority Supplier Development Council (CRMSDC) Statement dated May 8, 2024.................................. 96 Doles, Brenda, Healthcare Resolution Services, Inc. Statement dated May 20, 2024................................. 102 Legal Defense Fund Statement dated May 6, 2024.................................. 104 Minority Business Enterprise Legal Defense and Education Fund, Inc. (MBELDEF) Statement dated May 19, 2024................................. 120 Minority Business Enterprise Legal Defense and Education Fund (MBELDEF) Joint Statement With Eight Other Organizations............... 130 Missions Lenders Working Group Statement dated May 6, 2024.................................. 135 National Association of Women Business Owners (NAWBO) Statement dated May 6, 2024.................................. 137 National LGBT Chamber of Commerce (nglcc) Statement dated May 6, 2024.................................. 141 National Minority Supplier Development Council (NMSDC) Statement dated May 6, 2024.................................. 143 Small Business Majority Statements dated May 6, 2024................................. 145 Trans Pacific Communications Statements dated May 6, 2024................................. 152 U.S. Black Chambers, INC Statement dated May 6, 2024.................................. 155 White, LaTanya, Concept Creative Group, LLC Statement dated May 6, 2024.................................. 159 Women Impacting Public Policy (WIPP) Statement dated May 6, 2024.................................. 166 PROMOTING OPPORTUNITY: THE NEED FOR TARGETED FEDERAL BUSINESS PROGRAMS TO ADDRESS ONGOING RACIAL DISCRIMINATION ---------- MONDAY, MAY 6, 2024 United States Senate, Committee on Small Business and Entrepreneurship, Bowie, MD. The committee met, pursuant to notice, at 10:00 a.m., at Bowie State University, Student Center Ballroom, Student Center, 14000 Jericho Park Road, Bowie, MD, Hon. Ben Cardin presiding. Present: Senators Cardin [presiding] and Van Hollen. Also Present: Representative Ivey. OPENING STATEMENT OF SENATOR CARDIN Senator Cardin. Good morning, everyone. The Small Business and Entrepreneurship Committee will come to order. I first want to thank Senator Shaheen and Senator Ernst, the Chair and Ranking Member of the Small Business Committee for allowing us to hold this field hearing. Having previously chaired the Small Business Committee, it is a great honor for me to chair this event with Senator Van Hollen and Congressman Ivey and a distinguished group of witnesses. It could not be at a better location to hold this hearing, ``Promoting Opportunity: The Need for Targeted Federal Business Programs to Address Ongoing Racial Discrimination,'' than here at Bowie State University. To me this is the perfect place. Under the leadership of Dr. Breaux, this campus has been a real magnet for opportunities for small businesses. We recently opened the Women's Business Center here at Bowie State University. This the oldest of our Historically Black Colleges and Universities. We have the Business Innovation Center located here. This has been a real active campus for opportunities for underserved communities and small business opportunities. Before we get started I want to recognize Dr. Breaux for her extraordinary leadership. She is one of our major players in Washington. We bring her there frequently. She has testified before our committees, and she is really a superstar, and we have her right here at Bowie State University. Dr. Breaux. [Applause.] STATEMENT OF AMINTA BREAUX, Ph.D., PRESIDENT, BOWIE STATE UNIVERSITY, BOWIE, MARYLAND Dr. Breaux. Thank you, Senator, and good morning, everyone. [Chorus of good mornings.] Alright, we have coffee on the outside there. Good morning and welcome to Bowie State University. I am indeed Aminta Breaux, the very proud 10th President at BSU, and I am so honored and pleased to welcome you here today and to serve as the host site for the U.S. Senate Committee on Small Business and Entrepreneurship field hearing, and to welcome you, Senator Van Hollen, Representative Glenn Ivey, and, of course, welcoming back our esteemed Chair for today, Senator Ben Cardin. You are no stranger, as none of you are, to Bowie State University, and we truly appreciate all of your support of higher education and especially for our HBCUs. I just want to say a few words before I let you go on with the program for today. We are preparing for commencement that will take place on May 24th, and I want to thank you all for your support throughout this year. For over 150 years, our HBCUs have opened our doors to all in our society and provided a pathway to upward social economic mobility for our graduates and for their families. And as many of you know, while HBCUs comprise just 3 percent of the higher ed institutions in the nation, we produce 20 percent of African American baccalaureate degrees and 25 percent of African American graduates in STEM. Additionally, our HBCUs have been shown to produce about $14.8 billion annually in economic benefit to our country, and HBCUs generate about 134,000 jobs for local and regional economies, according to one study. And then Bowie State University, as I hope you all know by now, we are growing, we are thriving, as we are raising to excellence, the name of our strategic plan. But it is also the mantra by which we live each and every day to serve our students. As a result of the extraordinary efforts of our faculty, staff, and student leaders we have recognized great achievements, including a total growth in enrollment by 2.1 percent and a 25 percent increase in graduate enrollment in 1 year. At the opening of this academic year, in the fall of 2023, we welcomed 6,400 students from 30 states, 37 foreign countries, and a total number of applications reached just about 13,000 for just 1,000 seats. Does that get a round of applause? [Applause.] U.S. News and World Report ranks Bowie State University as number 16 among the more than 100 HBCUs in the nation. It also recognizes BSU as among the most innovative universities and as a top performer for social mobility. And we are listed among the nation's top graduate school programs in nursing, computer science, education, and public affairs. And in addition to creating a pipeline of talent for the workforce, as you just heard from the Senate, we here at Bowie State University champion the spirit of entrepreneurship, recognizing it as a driving force for economic growth, for strengthening our community. It is our vision here at BSU to ensure that every student graduates with an entrepreneurial mindset, and some of the ways we help to inspire that entrepreneurial mindset include integration entrepreneurship into the curriculums across the disciplines and offering entrepreneurship as a topic to our freshman year students as they come in to the university. We offer a concentration in entrepreneurship and small business management in the College of Business, and we provide two post-baccalaureate supplemental programs with stackable credentials. One is an entrepreneurship 12-credit micro- credential and an 18-credit hour entrepreneurship certificate. And as you came into the campus, I hope you noticed the Entrepreneurship Living Learning Community that bridges the learning environments from the classroom to the residence halls, inspiring students to understand that learning happens everywhere. That Entrepreneurship Living Learning Community is home to over 500 students, and on any given day they can get up and see ideation to creation in their products and businesses. But most importantly again, we are helping to inspire them to have an entrepreneurial mindset to navigate this rapidly changing world. I want to again thank Senator Cardin and Senator Van Hollen for your support when you were here not too long ago for the congressionally directed spending that brought out that center of excellence, and allowing for Bowie State University to lead the way for other HBCUs to develop 8 (a) government contracting programs. So can you please give the Senators a round of applause. [Applause.] There are many more items to highlight, and the Senators know this president can go on for a while. But I know you have an agenda. Let me welcome the Committee, welcome all of our elected officials. I would like to acknowledge the mayor of Bowie, Mayor Tim Adams. Would you give him a round of applause please. [Applause.] And finally, I invite you to see what I see here every day as we are racing to excellence, the great excellence among our faculty, staff, and students here at BSU. I know the weather is not as we had hoped, but nonetheless I hope you get out across the campus. It is a 300-acre campus here in Prince George's County, and a gem in Prince George's County. Once again, welcome. I am Aminta Breaux, the very proud 10th president of Bowie State University, the oldest HBCU in the state of Maryland. Thank you. [Applause.] Senator Cardin. I think you all can see why we are so proud of Dr. Breaux, and thank you for the arrangement for this field hearing. It could not be at a better location, and we thank you for your hospitality. You acknowledged the mayor of Bowie, Mayor Tim Adams. Tim, would you like to say a word? We want to be welcomed by you, so it would be nice. STATEMENT OF TIM ADAMS, MAYOR OF BOWIE, MARYLAND Mr. Adams. Thank you. I would simply like to quickly say thank you to Dr. Breaux. It is always a pleasure to be here on the campus of Bowie State University, as she said a number of times, the oldest HBCU in the state of Maryland. I would like to thank Congressman Ivey, Senator Van Hollen, and Senator Cardin, who is the Chair today. I would like to just say that I want to say thank you, because as a resident of the state of Maryland I have closely followed your work and have been consistently impressed by your commitment to public service. You know, your tireless efforts in advocating for our community, needs, and championing important causes such as small businesses have not gone unnoticed. Your leadership and unwavering dedication to the betterment of our society are truly inspiring. I would like to particularly express my appreciation for your work on truly supporting small businesses and advocating for them. Your commitment to small businesses has made a significant difference in the lives of countless individuals, including myself. Your ability to effectively communicate with constituents and listen to their concerns is commendable. It is clear that you genuinely care about the issues that affect our community, and your responsiveness and accessibility as a public servant have been truly remarkable. Once again, I want to extend my deepest gratitude for your service and for representing our community with honor and integrity. Your commitment to public service sets a shining example for the future leaders and inspires me to be more engaged in our democracy. Thank you, Senator Cardin, for your outstanding service to our community. I wish you continued success in all your future endeavors. Senator Cardin. Thank you. I appreciate it. [Applause.] I also wanted to acknowledge the real workhorses that are here, our staff that really put together this hearing and worked with us on these small business issues, Sean Moore, who is the Staff Director of the Small Business and Entrepreneurship Committee; Shivani Pampati, who is my key person for this particular hearing; and Steve Chang. We thank the entire staff of the Small Business Committee for what they have done. We are also joined by Steve Umberger and Larry Webb, who are the two directors of the offices, the regions that include the state of Maryland, so we thank you both for being with us today. And I want to acknowledge Terrance is here, representing Congressman Hoyer, who has been a great champion of small businesses and of course represents parts of Prince George's County, as well. STATEMENT OF SENATOR CARDIN Senator Cardin. This is the right venue for this hearing. I want to take a moment to recognize that the topic we are discussing today is not an easy one. Racial discrimination has plagued our country since its inception. Let me just tell my colleagues, last night I saw the world premier of ``Ain't No Back to a Merry-Go-Round,'' which is the story of the integration of Glen Echo Park, which is, of course, in our community. I recommend the movie to all of you. It was a real testament to the strength of a community to fight for integration in 1960. Those struggles are still continuing today. So I think it just motivated me more for why we are holding this hearing today. Racial discrimination has plagued our nation since its inception, and unfortunately we have not been able to truly reckon with our past in a way that completely breaks down the historical barriers that racial discrimination has created. I want to particularly thank our small business owners with us today. This is not an easy task, and I applaud your bravery and commitment to discussing the facts that racial discrimination exists today, and that it directly impacts your ability to operate and grow you business. Not all business owners were as brave as you. Fear in discussing this topic is unfortunately a common sentiment and why this hearing is so critical. So thank you again to the business owners here today for your willingness to tell the story in an attempt to protect and highlight the importance of targeted Federal programs, like the Small Business Administration's 8(a) program and the Minority Business Development Agency. Attacks on programs across the Federal Government that level the playing field for minority communities are affecting every facet of our society, from education to small business. In the small business space we are witnessing a widespread and coordinated legal attack against public and private programs that aim to uplift minority small business owners and remedy disparities caused by racial discrimination. These programs provide tailored support for communities of color, to address the impact of racial discrimination that they continue to face. To say that I am disappointed by these attacks and court decisions would be a grave understatement. I am trained by Parren James Mitchell, the first Black congressman we had in the state of Maryland. He was the former Chair of the Small Business Committee and used that opportunity to expand opportunity, providing the first set-asides for minority small businesses. He was my congressman when he was first elected to Congress, and he helped me a great deal when I was elected to Congress in 1987. The Small Business Administration's 8(a) business development program was codified in the 1970s. It is a 9-year program that provides socially and economically disadvantaged small businesses with training, technical assistance, and contracting opportunities. This program has helped contractors from minority and underserved communities grow successful and sustainable businesses. Given the most recent lawsuits against this program, 8(a) applicants must now submit to the Federal Government explicit instances of intentional discrimination on the basis of their race in order to qualify for the program. This is not only invasive, but incredibly time consuming and costly for these business owners. As our witnesses will attest, countless studies and other research have proven time and time again that disparities exist in minority business formations and ownership. Research has also demonstrated that systemic discrimination is the primary factor behind those disparities. Small business owners should be focusing on building their businesses and getting the support they need. Instead, minority applicants to the 8(a) program must once again do something that is all too familiar to them--prove themselves above and beyond what is normally expected. Additional obstacles like this are stark reminders of the historical barrier we have rightly done away with, such as poll taxes and literacy tests, redlining, and so much more. These policies were once considered by some to be reasonable standards, but have profound intentional negative impacts on Black and brown communities. As Congress, we must do more. We must ensure the 8(a) program is not further stripped down through these legal attacks and work to not only build it back to what it was once, but also to improve it. Most recently, the Minority Business Development Agency's business centers were challenged in the court. After more than 50 years in existence through executive order, I was proud to codify, on a bipartisan basis, the only agency explicitly dedicated to minorities in the Federal Government. My partner in this effort was Congressman Mfume in the House. Opponents of the agency argued that they agency's use of race in defining socially and economically disadvantaged was somehow unfair or unjustified. To put an injunction on business services that uniquely tailor to the needs of minority individuals is unconscionable. These legal attacks threaten to reverse decades of progressive policies created to help address the injustice and discrimination that persists in our society and within the Federal Government. Without targeted Federal programs, we leave a large swath of our society behind, only strengthening historical barriers. It is important that we, as a country, recognize that when we exclude parts of our society we are actively undermining the social, political, and economic potential of our country. I am honored to be holding this hearing at Maryland's oldest HBCU, focusing on how targeted Federal programs address the impact of racial discrimination and promote opportunity for minority communities. We have an incredible group of witnesses that will join us in this discussion, but first, if I might, I am going to allow my two colleagues to make opening comments. I am pleased that both are joining me. For those, I am sure you know, Senator Van Hollen is not only a champion for small businesses, he chairs the Appropriations Subcommittee of the Small Business Administration. I think that is why we have our two regional directors that are here today. Senator Van Hollen is here to challenge their budget. Senator Van Hollen. STATEMENT OF SENATOR VAN HOLLEN Senator Van Hollen. Well thank you, Senator Cardin, and I want to start where Senator Cardin did, by thanking you, Dr. Breaux, and Bowie State University not only for hosting us today but for your amazing leadership. So it is great to be back on the campus of Maryland's oldest HBCU, and again, thank you. Mayor Adams, thank you, as always, for the warm welcome to Bowie, and it was great that Senator Cardin and I were able to join you recently to provide some additional Federal funding to support the city of Bowie. It is wonderful to be here with my colleague from the House, Glenn Ivey. We work very closely together on all issues, including small business issues and minority-owned business issues. And I do just want to give a special word of thanks to my friend and colleague, Maryland's senior Senator, Ben Cardin. I think all of you know that he has announced that he is not running for reelection. But as you can see what is happening today he has not slowed down one bit. And throughout his entire career in public service, he has always been a champion for small businesses and minority-owned businesses. That has been his record, that is who he is, and that is why today's hearing is so important. He has served for many years as the Chair of the Small Business Administration, the authorizing committee for small businesses, and he, of course, continues to serve on that committee. And like all of you here, we recognize that there is an ongoing threat and attack on the basic laws that provide for minority small businesses in response to historic discrimination. So thank you to Ben Cardin for being here. [Applause.] Let me also join Senator Cardin in welcoming all of our witnesses today. Thank you for coming here to provide your insights on the unique challenges you have faced as small business owners. Thank you for coming here to share your expertise on the significance of programs like the Minority Business Development Agency and the SBA 8(a) program, and how they can help us, and continue to help us create a fairer, competitive environment for small business owners and for our economy. Minority business owners continue to face long-standing systemic barriers in both the private and public sectors, even after decades of building programs to try to remedy this. Lack of access to capital, networks, and contracts remain ongoing barriers to success for many of these businesses. Yet small business owners, like all of you who have joined us today and so many across Maryland and the United States have pushed forward with resilience, fighting to establish yourselves in a whole variety of business sectors, and done so successfully. Entrepreneurs like yourselves have been swimming upstream to contribute to this economy through the work you do. For centuries, governments at various levels have enacted policies and practices that systematically disadvantage minority entrepreneurs, from discriminatory landing programs. Like the redlining Senator Cardin mentioned, to zoning laws that stifled the growth of minority-owned businesses, the hand of government has often been used to reinforce existing inequalities rather than to dismantle them. This discrimination has had a profound impact on the ability of minority small business owners to thrive. Denied access to capital, resources, and opportunities, many talented entrepreneurs have been unable to realize their full potential. They have faced higher hurdles in obtaining loans, accessing contracts, and navigating regulatory environments, all because of the color of their skin or their ethnic background. Amidst this landscape there have been beacons of hope, programs like the Small Business Administration's 8 (a) program, and the Minority Business Development Agency. Thank you, Senator Cardin, for codifying that once and for all in law. Those programs, among others, have helped break down the barriers that we know exist. By providing access to capital, technical assistance, and contracting opportunities, these initiatives have empowered minority entrepreneurs to overcome the obstacles stacked against them. The 8 (a) program, in particular, has been instrumental in leveling the playing field for minority-owned businesses. By offering set-aside contracts and subcontracting opportunities to small businesses owned by individuals who historically have been socially and economically disadvantaged, the program has opened doors of opportunity that were previously shut. It has helped minority entrepreneurs gain a foothold in the industries where they were once excluded, paving the way for greater economic inclusion and prosperity. Similarly, the Minority Business Development Agency has been a life line for minority entrepreneurs seeking guidance and support. Through its network of business centers across the country, the agency provides technical assistance, access to markets, and strategic advice to help minority-owned businesses grow and thrive. I look forward to continuing to work with Senator Cardin in this capacity on the Small Business Committee. As Senator Cardin mentioned, I chair the Subcommittee of the Appropriations Committee that funds the Small Business Administration, as well as the CDFI programs. They are such an important source of capital. I look forward to working with all of you as we confront the attacks that have been made and that are ongoing to these very, very important programs. We have come a long way, but this is not the time to dismantle the programs that have been successful at breaking down those barriers and are needed today because those barriers remain in place. Thank you all for being part of this discussion. Senator Cardin, again, thank you for convening this hearing. Senator Cardin. Thank you, Senator Van Hollen. Our expert in the House of Representatives on the impacts of the court cases on the 8 (a) program and the Minority Business Development Agency is Glenn Ivey. He called me shortly after the court decision as to what we could do to try to remedy the situation. We are very fortunate to have his expertise in the House of Representatives as we look for ways to deal with the realities and impact of these court decisions, to make sure that we keep the tools available to help minority small businesses. Congressman Ivey. STATEMENT OF CONGRESSMAN IVEY Mr. Ivey. Thank you, Senator. I appreciate that. And I do want to join in the chorus of, you know, I guess bemoaning a bit your forthcoming retirement. Senator Cardin. I am still here, guys. [Laughter.] I know you all have seen a lot of ads on television, so you know there is an open spot. Mr. Ivey. You know, when Michael Jordan retired they did a tour, essentially, so he would go play in different cities. I remember in one city they got him a rocking chair. So if you get a rocking chair, don't be surprised. We do want to make sure you are fully recognized for the outstanding work that you have done. And Chris, it is great working with you on these issues, and so many others. You know, it is fantastic to come in. I have only been in Congress for a year and change, but to join a team with this caliber of leadership and skill is a real honor. And I do want to thank Bowie State. You know, you did a great job. The leadership you provided--I don't think you have been here so long, but you have really made a great impact already, and making sure that the university continues to move in the right direction. And to Tim Adams, yes, he is the mayor of Bowie, but he is also a successful entrepreneur, in fact, maybe one of the most successful minority entrepreneurs in the country. And when Jolene Ivey, the chair of the County Council, and I did a joint hearing on this, Tim was one of the great witnesses on that proceeding that did a great job. So I am looking forward to hearing from the panel. I just want to say a couple of things quickly, though. First of all, I see so many friends in the audience from the fights over the years. I first got into this in 1987, when I first came to the Hill. I think you had just gotten there. In fact, Jolene was working for you in 1987. And on the Small Business Committee, Congressman Conyers was on it. Congressman Mfume was on it, as well. And so I remember that year. President Reagan had decided to attack the 8 (a) program, and he essentially tried to dismantle it. Wedtech was the case that they used as sort of the point of attack. And at the same time, they were trying to block effort, Congressman Mfume. Congressman Parren Mitchell had just left the Small Business Committee, but his leadership continued. In fact, I see the individuals from Minority Business Enterprise Legal Defense Fund, which he founded when he left. Talk about not missing a beat. He left Congress and he started MBELDEF like almost immediately. But we fought those fights then, and we were relatively successful. We were able to preserve the 8 (a) program. In fact, there were some changes that I thought, some were beneficial, some were maybe less so. But it stayed, and it continued to move forward roughly in the form that it had. And the MBDA bill, as Senator Cardin mentioned, well, that took a little while to get done, but it did get done. What was that, 2 years ago, I think it was, something like that? Huge achievement over a long term to make that happen. So a lot of that push came from Maryland. We have been the epicenter for these policy fights, in some respects, and I think that is going to continue, as you can see today. But it is particularly heartbreaking then to look back on that history, and as soon as I get to Congress, and I hope it is not a causation or a correlation thing, but then we get the courts attacking these programs that we spent all these years building up and using. And it is especially problematic because it is not like these programs, like people were really getting over before they started attacking them. Yes, they were helpful. Yes, they were beneficial. But there were still challenges in the programs as they existed before these court cases, so we know we have got a long way to go, because we had a long way to go before these court cases even came down. And then when Ultima came down last summer, I was heartbroken, really, because it really went to the heart of a lot of the things we had been fighting so hard to get done. And it looked like, unfortunately, a sign of things to come because they are sort of gathering forces on the other side to continue these court attacks, and they are not stopping. We just had another one come through just the other day that is going to be kind of pushing this envelope along the wrong direction, in my view. So, you know, I think it is critical for us to do a couple of things, and one is I am looking forward to hearing from you all. I know you can't learn when you are talking, so I am going to stop talking in a second. But I do want to lay this out real quick, though, because I think it is important for us to think about recognizing the challenges that are there with respect to these court cases, recognizing some of the challenges that were growing for other reasons. For example, the concentration and consolidation of a lot of these contracts have made it harder for small businesses, in general, to get a chance to even compete for these, much less small minority businesses to compete, and have all the challenges that Ben and Chris laid out with respect to capital and credit and the like. So I think we have to figure out what to do with that. Also, when we come back to this at the end, I think the question of where do we go from here I think is a big one. I think we have got some very good arguments we can make as far as why these programs should stay in place and why they need to continue to expand. On, in particular, from my perspective, the lessons we should have learned from the supply chain issues coming out of COVID, which is to the extent we can have businesses here in the United States that are doing these services as opposed to overseas, that is a great thing. If we can have minority businesses who are doing them here in the United States, and utilizing people who are not so much involved in the economic growth of the United States, that is even better piece. And I think it is also critical for us to make sure that we expand the opportunities available so the American Dream, as we have known it--and we saw it flourishing before it got sort of cut off at the knees when some of these court cases came in. So I do want to make sure that before we end the day we talk a little bit about things that we can do. The Congressional Black Caucus, you know, I appreciate Ben suggesting my role in that with respect to figuring out how to approach the White House, what to do with the courts, what to do with the Department of Justice, things that we can do to take on these challenges. And I think it is critical for us to make sure we do those things now rather than later. Because the Biden administration has trillions of dollars coming out from a Federal contracting standpoint. This is the worst possible moment for us to get cut off from the ability to compete fully for those government contracts. It is generational wealth coming out. Some of these contracts, like some of the bridges and tunnels that you all have been hearing about on the news, those can turn businesses around and turn them into not only just small minority businesses but potentially primes and general contracts down the road. So it is critical for us to fight this fight, keep it moving in the right direction, and I appreciate the leadership that you all have provided in this. And with that I will yield back, and I look forward to your testimony, and thank all of you all for coming today. Senator Cardin. Congressman Ivey, thank you for those comments. Your point is just so well taken. We need to engage all of the talent we have in our community for the full strength of America. There is no question about that. But it also provides a way of dealing with the gaps that we have in our community, the wealth gap. Small business entrepreneur opportunities for underserved communities allow us to be able to build some wealth equities in America. So I appreciate you mentioning both of those points. I will now turn to our witnesses. Your full statements will be made part of the record without any objections, since there is no one here to object. [Laughter.] I think we are safe on that. And you can proceed as you wish. In the committee room we have a 5-minute time. I don't see any timer here, so you are going to probably be relieved from that. But I would ask that you try to summarize in about 5 minutes to give us a chance to be able to have a discussion here. I will introduce you as you speak, since there are six of you. It might just be easier to introduce you one at a time as you speak. We will start with Ms. Natalia Luis, who is the CEO of M. Luis Construction and M. Luis Products. She has 30 years of experience operating her own businesses and guiding other businesses on their growth. Her story is a testament to perseverance and resilience. She is passionate about making an impact in her community, and we are proud to have her business in Maryland. You may proceed. STATEMENT OF NATALIA LUIS, CO-OWNER, M. LUIS CONSTRUCTION AND M. LUIS PRODUCTS, SILVER SPRING, MD Ms. Luis. Thank you, Senator. My name is Natalia Luis. Along with my sister, who is here with me today, I own and operate M. Luis Construction and M. Luis Products, companies based in Maryland that specialize in asphalt manufacturing, asphalt paving, concrete construction, and general contracting. I am here today because the programs that correct an even small amount of the discrimination that minorities and women face in business are essential to our survival and success. My family has faced devastating discrimination from the beginning. Usually the discrimination is worse as we expand the business, challenging white male dominance in our construction industry. There have been all too many instances to recount, but I will give you a few examples. Some of my competition has gone through the extreme of tapping my phones or posted big, tough guys outside of our business operations in an effort to intimidate us and our employees. We are proud that we have a workforce that looks like our community, but these bullies went to the extent of filming our employees and then posted a video on social media with the title, ``Are these the type of people we want working in America?'' They even tried to get the Federal Government to put us out of business. Normally a business like ours will get one or two labor audits every few years. We were hit with half a dozen in one year, all due to our competitors making false claims against us, that is that we were hiring illegal aliens. All the audits showed was that, on average, we were not only paying contractually required wages, but we were providing higher wages and better benefits to our multiracial, multiethnic, e- verified workforce. Yet another instance was when we were seeking to work in one of our counties. We were in a large meeting with 15 to 20 high ranking officials when midway through the Director of Public Works and Transportation looked at us and said, referring to the other Portuguese-owned companies working in the county, ``Why don't you and your cousins get together and figure out your bid because it seems like you don't know how to do math.'' This casual racial belittlement in a public forum directly undermines our business solely based on our minority status. We have brought on board members and numerous outstanding professionals, many of whom happen to be white males. After about 18 months with us, one of them confided in my sister and I that while he was initially skeptical, he was astonished by the racial and gender biases we faced. His experience with our minority-run business brought challenges he had never faced before in his career. Senators and Representative, the bottom line is this: discrimination against minority and women business owners is as despicable as it is pervasive. As I have detailed in my testimony, discrimination and the barriers it imposes affect the ability of our business to operate and receive contracting opportunities. We can and we will do our part to create a prosperous economy for all of us, but we need you to protect the MBE, WBE, DBE programs for victims of systemic discrimination and institutional racism. That is minorities, women, veterans, people with disabilities. We are all counting on you. Thank you. [The prepared statement of Ms. Luis follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Senator Cardin. Well, thank you very much for your testimony. [Applause.] Our next witness is Ms. Tonya Lawson, who is the President and CEO of Lawson Consulting. Her company works on innovative workplace solutions through automation and AI. She has over 20 years of experience working for Federal contractors and operating her own small business. Ms. Lawson. STATEMENT OF TONYA LAWSON, PRESIDENT AND CEO, LAWSON CONSULTING, FORT WASHINGTON, MD Ms. Lawson. Senator Cardin, Senator Van Hollen, Representative Ivey, esteemed guests, thank you for inviting me to testify today. My name is Tonya Lawson, and I own Lawson Consulting. I am honored to be here to address race discrimination against minority-owned businesses as a matter of paramount importance to minority entrepreneurs. I bring a perspective rooted in over two decades of experience in the Federal Government and private sector contracting. I am also a representative of Black American small business community that has faced discriminatory challenges for centuries and continues to encounter discrimination that limits our ability to grow and prosper. I would like to provide just a few examples. A few years ago, I entered a partnership with a large majority-owned government contractor to collaborate on Federal contract with a small business/MBE requirement. Our team successfully secured the contract. Unfortunately, after 2 years of collaboration it became evident to me that this partnership would not foster my company's success or align with my core values. There were indications of discriminatory practices inside the larger company. Employees spoke openly about instances of discrimination against Black employees, including disparities in promotion rates, mentorship opportunities, and customer-facing roles. There was a pervasive sense among Black employees that they needed to exceed expectations significantly to advance, while white colleagues were systematically favored. This year, at a recent small business development event, where networking plays a crucial role in fostering opportunities, I encountered a troubling instance of discrimination that highlights ongoing challenges faced by Black-owned businesses. As I awaited in turn in line to speak with a lead IT procurement representative, he abruptly turned away when it was my turn to talk to me, opting instead to converse with two white women who were not even in line. Simultaneously, he held up his index finger at me, in a dismissive gesture, indicating that I should wait. The procurement representative initially was dismissive, but after my persistence to engage him in conversation he eventually was very impressed with my company's capabilities and core competencies, which focuses on process automation and artificial intelligence. I am not alone in experiencing situations like this. Discrimination is pervasive, and it is effect are long lasting. It is a reminder of the barriers that we Black Americans so very often face in our businesses. The SBA 8 (a) and MBDA programs have been a lifeline for countless minority small businesses like mine, providing training, technical assistance, and access to Federal contracting opportunities. Racism, discrimination, and gender discrimination still exist, especially for Black American business owners. Despite centuries passing since era of slavery, the remnants of racial inequality remain in our society. Supporting Black American businesses is not just about economic empowerment. It is about fostering a more inclusive and just society where everyone has a fair chance at pursuing the American dream. Thank you. [Applause.] [The prepared statement of Ms. Lawson follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Senator Cardin. Ms. Lawson, thank you for your comments also. These are testimonies that need to be heard and documented, so we appreciate it very, very much. I will now go to Ms. Ronnette Meyers. Ms. Meyers is the President and CEO of JLAN Solutions. JLAN Solutions provides management and training services to Federal, state, and local government agencies, and is a certified 8 (a) company. She has been publicly recognized on multiple occasions, including receiving the Biden-Harris Lifetime Achievement Award. Ms. Meyers also previously had a distinguished career in the Federal Government. We look forward to hearing from you. STATEMENT OF RONNETTE R. MEYERS, PRESIDENT AND CEO, JLAN SOLUTIONS, WASHINGTON, D.C. Ms. Meyers. Good morning. Thank you so much. Thank you, Senator Van Hollen, Senator Cardin, and Representative Ivey. Thank you all. My name is Ronnette Meyers. I am the President and CEO of JLAN Solutions. My journey as an entrepreneur in government contracting, particularly within the 8 (a) program, has been profoundly shaped by confronting and overcoming both overt and subtle discrimination and adversity. This narrative is not just about my professional growth but also about an expose of the persistent barrier that minorities and women entrepreneurs frequently encounter, as well as how these barriers directly affect my business operations. Before launching my business, my journey as a technical specialist within the Federal Government was married by discrimination from the outset. Early on, I faced questions from my boss that challenged not just my professional presence but also my racial and gender identity. ``Why are you here? Why did they send you?'' he asked. Throughout my tenure I was isolated and marginalized. That is how I felt. The toxic environment became unsustainable, prompting me to seek new opportunities and embark on a journey of self-employment and entrepreneurship. Transitioning to a government contractor role in Washington, D.C., I found a workplace that valued my skills, where I felt like a genuine sense of belonging, which gave me the inspiration to start my own company, JLAN Solutions, in 2010, and eventually, joining the 8 (a) program in 2018, a move that was fueled by ambition and resilience. Yet this new beginning was quickly tempered by the harsh realities of entrepreneurship in a space where resources were unevenly distributed, and support for minority-owned small businesses like mine was minimal. My early partnerships with the majority-owned businesses were promising but ultimately disappointing. These collaborations, which I hoped would bolster my business' standing and visibility, instead left me feeling exploited and sidelined. The first partnership I formed to secure an opportunity with a Federal agency disintegrated when the company's leadership unexpectedly withdrew the partnership due to my company being a minority small business. A professional rejection that felt personal and left me devastated. It was not just a setback. It was a deeply personal blow that left me questioning my worth and my place in this industry. The subsequent challenge came when another majority-owned business protested our successful contract bid, jeopardizing JLAN's financial stability and future growth. An employee from this company explicitly warned me about significant racial bias in the company, leading all of the minority-owned businesses to unite and address the situation through a collective letter. This protest highlighted the systematic challenges minority businesses encounter, from financial and structure barriers to discriminatory practices that hinder their success. Recently, at a networking event in Virginia, I was one of a few Black women among predominantly white male peers. During the networking session it was clear to me and the other Black women that we were being dismissed by our peers. Our treatment was not a reflection of capabilities but of systematic biases, prejudices that continue to pervade our society. The lessons of this journey are clear. While these experiences have undoubtedly strengthened my resolve, I cannot overlook the tangible losses that have been inflicted upon me and my family. They have taken away real opportunities, both financial and emotional. Racial discrimination and the barriers it has imposed has often hindered my business operations and ability to receive contracting opportunities. Throughout these experiences, the role of the 8 (a) program has been twofold. It has been a crucial lifeline, providing access to opportunity otherwise out of reach, and it has been a constant reminder of the disparities that persist in the business world. Thank you. [Applause.] [The prepared statement of Ms. Meyers follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Senator Cardin. Thank you for your testimony. Mr. Gary Moore is the Senior Business Consultant with the Maryland MBDA Business Center. He has a background in sales, construction, and government, and is an entrepreneur himself. He has provided guidance and consultation to countless Maryland-based businesses, helping connect them to opportunities in networking, capital access, and more. Mr. Moore. STATEMENT OF GARY MOORE, SENIOR BUSINESS CONSULTANT, MARYLAND MBDA BUSINESS CENTER, BALTIMORE, MD Mr. Moore. Thank you. Good morning, Senator Cardin, Senator Van Hollen, and Representative Ivey. Thank you for inviting me to testify today. My name is Gary Moore. I am the Senior Business Development Specialist for the Maryland Minority Business Development Agency under the U.S. Department of Commerce. I have been with the Maryland MBDA Business Center for over 7 years. My primary responsibility is to keep in alignment with MBDA's mission, which is to foster growth and global competitiveness of minority business enterprises. In my role as a Senior Business Development Specialist for the MBDA I help clients gain access to networks, information, and resources, including programs like the SBA's 8 (a) business development program. I work with government agencies, institutions, and privately held corporations on behalf of center clients, advocating for access to capital, procurement opportunities, and providing them with overall strategic business consulting. Our center has directly serviced over 1,000 minority businesses, where I have heard countless stories of disparities in minority participation in private, state, and local procurement opportunities. One of my MBE clients bid on a non-MBE project and was the lowest and most capable bidder. On any large project--this project was for over $3 million--you must present your qualifications, financials for bonding, references, and your capacity to do the work before the bid so that all that is left to do while conducting a low-bid meeting is verification of each line item. When the client arrived at the meeting he knew the minute he walked in, by the prime's startled looks and subsequent questions, they were not expecting a person of color. Instead of conducting a normal low-bid meeting the questions shifted from the bid requirements to him as an individual. Statements were made such as, ``You are very articulate,'' and questions were asked such as, ``How did you grow your business to have a company in double-digit millions of revenue?'' These are not statements and questions posed to Caucasian business owners I speak with. Though my client was highly qualified to perform the work, had full bonding capacity of $3 million, and was the lowest bidder, it was given to someone else who was of Caucasian descent. Focusing on our client as an individual and not the company's success and ability to perform the work is blatant discrimination. If an MBE is the most capable and is the lowest bidder, the MBE is in a good position to win the award when MBE participation is required. This is not the case when MBE goals are not present or when primes are not held accountable to the goals. Before becoming certified, our client had difficulty getting work with prime contractors. Becoming certified has helped open doors for him in cases where MBE utilization requirements are in place. Our clients believe that the impact of Nuziard v. MBDA ruling will hurt the same programs that have helped their businesses grow, despite the ongoing discrimination faced in obtaining capital and procurement opportunities. Our clients have expressed they don't need to have more of an opportunity than anyone else, just the ability to compete on a level playing field. These stories reflect the wider discrimination and barriers that minority business owners face daily as it relates to denying MBE's access to capital, procurement opportunities, networks and resources, as well as adverse treatment by Caucasian prime contractors, both in private and public sectors. I want to say that one of my clients' sentiments was this, that this is not in the spirit of America, where if you work hard and are in compliance with laws you can accomplish anything that you want and succeed. Thank you. [Applause.] [The prepared statement of Mr. Moore follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Senator Cardin. Thank you for your testimony. Mr. Andres Bernal is the Vice President of MGT Consulting Group. He is a legal and quantitative researcher. His company is currently conducting a disparity study for Maryland. Mr. Bernal has extensive experience researching barriers and racial discrimination in Federal contracting space for minority-owned businesses. STATEMENT OF ANDRES BERNAL, VICE PRESIDENT, MGT CONSULTING, CINCINNATI, OH Mr. Bernal. Thank you, sir. Good morning. Thank you Congressman Ivey, Senator Van Hollen, Senator Cardin for having me here today. My name is Andres Bernal, and I am the Vice President of MGT. We are a nationally recognized public sector consulting firm. Since 1975, MGT has provided strategic, operational, and technological solutions to government and education agencies in all 50 states. I have nearly 20 years of direct disparity, consulting, quantitative, and qualitative experience analyzing all aspects of public agency disparity research. In that time, I have authored or co-authored more than 100 reports of findings of whether or not race, ethnicity, and gender affects a person's ability to do business in a marketplace. I have been asked to offer a few observations about historical trends that have emerged regarding how minority- owned businesses are utilized by public entities. Findings from hundreds of disparity studies conducted by MGT and across the industry underscore a continuing opportunity for targeted supplier diversity programs to address underutilization of minority-owned businesses. Almost universally, the results from disparity research continue to show that MBEs are substantially underutilized, and that the markets where these MBEs are doing business are under-realizing their opportunity to expand their entrepreneurial sector of their economies and to broaden economic participation among MBEs. When it comes to analyzing public contracting data, it is case law and industry standard to use what the law refers to as a ``disparity index'' to determine, statistically, if the race of business ownership influences a business's likelihood of availing itself of government contracting opportunities. This index calculates how much public entities utilize minority- owned businesses related to the availability of qualified MBEs in a given market area. Looking at procurement data across the nation, what we see throughout many jurisdictions, historically, is that, despite some progress, MBEs are substantially underutilized across all goods and services categories, such as construction, professional services, and goods. In those rare instances in which there is parity in MBE utilization or even overutilization of MBEs, what we see is a concentration among several companies, rather than an indication that government agencies are consistently and broadly drawing upon the local pool of qualified MBEs. Furthermore, when we look at the private sector business activity and dynamics, the following observations are typically seen. MBEs earn significantly less revenue than their majority- owned business counterparts, even when taking into account characteristics such as level of experience, education, and number of employees. The same dynamic we see when we are looking at the likelihood of MBEs to be self-employed compared to their majority counterparts. Studies after studies are showing the same thing that race, ethnicity, and gender impacts a person's ability to conduct business. The culmination of my research including qualitative studies, disparity studies, regression analyses, continue to support the conclusion that public agencies across the nation have a significant opportunity to expand utilization of MBEs, thereby strengthening their local economies and their communities through broader utilization of qualified minority- owned businesses. Thank you. [Applause.] [The prepared statement of Mr. Bernal follows:] [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Senator Cardin. Thank you for your comments. Gary Cunningham is the Senior Advisor with the Institute on Race, Power, and Political Economy at The New School. Mr. Cunningham works at the intersection of racial equity and entrepreneurship. He has vast experience providing business consultation to minority business owners as well as advocating for minority-owned businesses. His former experience includes being the former President of Prosperity Now and the CEO of Minnesota MBDA Business Center. Mr. Cunningham. STATEMENT OF GARY CUNNINGHAM, SENIOR ADVISOR, THE NEW SCHOOL, NEW YORK, NY Mr. Cunningham. Thank you, Mr. Chairman, Senator Van Hollen, and Congressman Ivey. I appreciate being here today. One, I just want to thank you for holding this hearing at this critical juncture in our history as Americans. I sit here today on the shoulders of many proud ancestors, including the Black Creek Freedmen from Muskogee, Oklahoma, that were in part responsible for creating Black Wall Street. Many of you might have heard of Black Wall Street. It sits as a pinnacle of what can be achieved by African Americans in this country, and it was destroyed in 1921, through a race riot that happened there many years ago. And I would argue that we still have similar conditions today, but may not be as vitriol as they were in 1921, but they exist. We are at a critical juncture in our nation's history where many of our hard-fought gains to create a more perfect union, where everyone, no matter who they are, no matter what their background, can fully participate in the American Dream. These issues are under assault and continuously, court case after court case, and we cannot turn back the hands of time in this country. The American promise or the American contract is built upon the idea that if you work hard, you apply yourself, you can move up on the economic ladder of success. I would argue that this is not the case, that all doors are not open for small businesses within this country, particularly those based on the color of someone's skin. If we are to sustain our democracy it is important that we take action and continue to maintain what we have created, but also build upon what we created, so that all Americans, no matter what their skin color, no matter what their ethnic origins, can participate in our American democracy. Despite the significant contributions of entrepreneurs of color to the U.S. economy, which includes the launching of over 50 percent of the new businesses that have been created in the last 10 years have been created by people of color, creating 4.7 million jobs, these entrepreneurs face systematic, systemic barriers to success. Access to capital, which has already been mentioned, creates a critical hurdle. And there is study after study, both by the Federal Reserve and by private industry, that shows that entrepreneurs of color have been denied loans at nearly twice the rate of their white counterparts. The disparities in loan approval rates and higher interest rates charged to minority-owned businesses highlight the systematic challenges of access to financial systems that impede entrepreneurs of color from succeeding, in many cases. Despite this, entrepreneurs of color have been a vital and critical lifeline for American industry and for our economies, particularly in local communities where they exist. The government has a critical role in leveling the playing field. This historic discrimination in lending practices and unequal access to markets have curtailed the potential of minority entrepreneurs. Addressing these challenges head-on is not only a matter of equity but also economic necessity. To dismantle these barriers, I propose not only to sustain but to expand the initiatives like the Minority Business Development Agency and the SBA's 8 (a) small business development program. Moreover, we must develop targeted financial products, such as grants and low-interest loans, especially designed to meet the unique challenges faced by minority entrepreneurs. Finally, I would argue that the government bears a critical responsibility in not only breaking down systematic barriers but also opening up access to markets, to ensure the success not only of minority entrepreneurs but all entrepreneurs. We strive to build a more prosperous and inclusive economy. It is imperative that we leverage public and private sector solutions to empower these vital contributors to our nation's growth. Let us pledge together to create a more inclusive and prosperous future for every entrepreneur in our nation, recognizing the indispensable role played by entrepreneurs of color. Thank you very much, and I stand ready to answer any questions. [Applause.] [The prepared statement of Mr. Cunningham follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Senator Cardin. Thank you. Let me thank all six of our participants in this hearing. I think, Mr. Bernal, your research conclusions are, you have got the exhibits here that gave you the specifics that show that we have challenges, and that rather than removing those challenges that sometimes there are more obstacles put in the way of opportunity. So yes, we could talk about one of the issues on contracting. We find discriminatory practices of contracting authorities trying to bundle contracts to make it impossible for minority businesses to have a fair chance at a prime contract. They have to come in as subcontractors. We also have the problems of established relations of agencies, and they don't want to open it up to additional opportunities. These are some of the challenges we have to deal with on contracting. And then we have the challenges on financing. Senator Van Hollen already mentioned CDFI program, which is one area that we try to deal with the systemic challenges we have in the banking community of established customers. It is hard to break that cycle. And if you are a small business, is you are not as attractive as larger small businesses, and you are more likely to have minorities starting as smaller small businesses. So all of that adds to the challenges that we have in the system. But I want to concentrate at least my first question on the effectiveness of the 8 (a) programs and MBDA, because that is the area I think we have the experts here to talk about. We recognize what the courts have done. We do not know the full impact of that yet. We are still trying to figure that out. But could you give us some examples or your observations as to whether the 8 (a) program has been effective in removing some of these barriers, and can it be improved, and what damage have the courts done to the 8 (a) program by its interpretation? Whoever wants to start on that. Ms. Meyers. Ms. Meyers. Sure. No problem. Thank you so much for that question. I will just start a little bit about my history. So my grandmother built a hair salon on the front porch of her house in Youngstown, Ohio, where I am from. My grandfather worked in a steel mill, and she had five children she needed to take care of, one was with Down syndrome, so it afforded her the opportunity to be home. But what it showed me or instilled in me was entrepreneurship. I did not know it back then, but that is what it instilled within me. And then my mother is a 24-year United States Air Force veteran. When she retired from the Air Force she started her business in the government contracting space, and hence the legacy is already starting. And one day my mother and I sat down and we started having a discussion about how do we build generational wealth. How do we create legacy businesses, because we were not born into this. After that discussion, JLAN Solutions was born, and I named JLAN after my four children--Jamie, Lenae, Asia, and Nia, because I wanted to instill entrepreneurship in them. And my daughter, Nia, my baby girl who is a rising junior at Pennsylvania State University, is here with me today. And so 2\1/2\ of them have businesses now, because of this conversation, this strategy that we have built around entrepreneurship. My son is 100 percent disabled, but he also played basketball in high school, so he is a shooting coach, and he coaches people around the DMV. And I have another daughter who is a graduate, and she has a virtual assistance business, so she is helping people around. And then my baby girl, during COVID, learned how to braid. So at Penn State she is braiding everybody's hair. So we are instilling it in them. But because of the 8 (a) program it has afforded us the opportunity to start creating generational wealth. It has afforded us the opportunity to start these legacy businesses. My ultimate goal is to get the children in the business--a couple of them are in there now--and have them learn this business, be able to utilize the 8 (a) program as we go on, because now family members are able to participate into this program. But what it has taught me was business development. The 8 (a) program has a lot of programs to help with business development. And it has also given me access to training, leadership programs, and executive coaches, things that we would normally not receive for free. The APEX Accelerator, NMSDC programs like this have just been phenomenal in helping us with access to capital, grants, and contracting opportunities. And now I am proud to say because of the 8 (a) program that I am now the prime contractor on the majority of my Federal Government work. [Applause.] Thank you. The challenges still exist in the access to capital, but we are working on it. But the 8 (a) program has been great for me, my business, my family, and my legacy. Senator Cardin. Thank you. [Applause.] Ms. Luis and Ms. Lawson, do you have any prime contracts or are you all partnership or subcontracts? Have you been able to break through with prime contracts with government? Ms. Luis. So maybe I can start on that. The majority of our work is now prime contracting. We were very deliberate in that journey because, as a subcontractor, it is harder to grow. It is harder to grow. I did want to also say that, Mr. Gary, that there was one single day where as a prime contractor I lost four bids. That was not because I was not the low bidder--I was. In fact, we were the lowest responsible bidder. That contract inevitably ended up being awarded to a multigenerational, majority contractor, which was incredibly disappointing. When we contract, we do not just look at the minimum requirements for MBE and WBE subcontracting opportunities. We actually have a mandate in our organization that we endeavor to always exceed with as much opportunity to the MBE and the WBE community as possible. But it has taken decades to get there, and only because of the support of the MBE and WBE programs have we been able to break through. Senator Cardin. Ms. Lawson. Ms. Lawson. Yes. Thank you for that question. My journey is a little different in that I have been doing government contracting and I have never been into the 8 (a) program. So yes, as some may say that minority businesses need to pull themselves up from the bootstraps and just work hard and through merit that they will be able to accomplish certain things, and my journey has been a struggle. I have always been able to get subcontracting roles, never a prime. A lot of times when--well, yeah, on many occasions when I am sitting down at the table I am the only Black female, Black small business owner and female small business owner, sitting at that table. And that is a big challenge to overcome the hurdles that are put in front of me when there is potentially bias in the decision-making process. I have often thought to pursue the 8 (a) program, but I really wanted to do it on my own. But you know what? I was not really able to get to the level that I wanted to get. So as a result I am now considering. I see the benefit, I am very familiar with the 8 (a) program, I am familiar with the benefits that could be achieved from the 8 (a) program, going through the process of applying to the 8 (a) program. So if this program continues to get watered down or taken away, given the fact that discrimination still exists in America, if this program goes away it would even make it more difficult for small businesses, minority businesses, women- owned businesses to achieve any kind of success. Senator Cardin. Thank you. Senator Van Hollen. Senator Van Hollen. Thank you, Mr. Chairman, and thank all of you for your testimony here. I think you provide very strong and overwhelming evidence about the continuing need for the 8 (a) program and the MBDA programs and other programs, in order to level the playing field. Because as your testimony clearly points out we have ongoing discrimination, as you mentioned, Mr. Bernal, even with these programs in place. They are being underutilized, right. Minority-owned businesses are still underutilized compared to their potential, which means that we are not putting our full potential on the table. So I agree with you, Mr. Cunningham, about the need not only to preserve these programs but find ways to make them even more effective. As I think many of you pointed out, not only is this important to have a fair shot and economic opportunity, but when there are more competitors that are out there, this is also good for the American taxpayer. We want more competition in order to ensure the taxpayers, as they go about choosing these businesses, have a fair chance, and to allow those businesses to get in the game, to get in the game. So I do have a couple of questions with respect to the role that I hear some of your competitors are playing in trying to undermine your success. I think both Ms. Luis, I know Ms. Meyers, others have talked about some of the harassment, some of the false information put out there by competitors. Can you talk a little bit more about how some of the primes that I guess are concerned that they are going to lose a contract to one of you, how they are undermining your efforts? Because as I listen to you, Ms. Luis, your testimony, it seems to me that if you have a pattern of a competitor making false allegations there we need to make sure there is some recourse there. And so I would be interested in comments from any of you about what patterns you see on that issue. Maybe we will start with you. Ms. Luis. Thank you, sir. So I will give you two examples today about patterns. We started as a subcontractor and slowly but surely, organically, grew, mostly because of majority contractor interference. When we started bidding on larger paving contractors, that is when the boxing gloves came out. One of the ways that we were prevented from being successful, for instance, is, let's say I bid a mill and overlay program and I had smaller patching crew, and I depended on subcontractors to mill and overlay, and this happened. The larger contractors, the larger paving contractors would threaten the existing MBE and WBE subcontractors in that if those subcontractors bid to me or worked for me, they would remove all of their work, their contracted work, from them. So these smaller subcontractors refused to bid to us, and in the public sector where I bid most of the time you are outlining your MBE and your WBE participation. And it became very, very difficult to obtain that at the time, and also to complete our jobs. And we are under liquidated damages, so when there was any kind of delay in the schedule there was a very large financial hardship. Another example is when we first purchased our asphalt plant in Rockville from Lafarge we had accounts with every major asphalt manufacturer in Maryland. We had good accounts. We purchased a lot of asphalt. It took us 6 years to negotiate that deal with Lafarge, under complete secrecy, but we got it. And when it was announced the response was extraordinary. It was almost unacceptable that an audacious female immigrant company would have the ability to purchase that plant. Asphalt is temperature sensitive, so you want to work around plants that are nearby. When we purchased the plant, every single manufacturer refused to sell us asphalt. So we had to take asphalt from our Rockville plant, for instance to distances like City Center Baltimore. I would like to say that we won an award for Falls Road with our own asphalt from Rockville, but it was unnecessary because you can imagine it cost us three times, four times more in hauling. It obviously reduced the productivity rates. It increased overtime. And so we are not economically viable for a number of years. And so we went ahead and leased our second plant in the Baltimore city area so we did not have that problem anymore. Senator Van Hollen. Well, thank you for shining a light on those, what I would have to believe are clearly abusive practices, and I guess the question is whether there is a way to make sure there is a penalty attached to unfair competition. Does anybody else want to comment on this particular issue? Ms. Meyers. Absolutely. Thank you so much. I really would like to talk about the disparity or discrimination from large business to small, majority-owned to minority-owned small businesses. Just a few years ago we were part of a team on a large bid for a government contracting opportunity in the IT space. The company won the bid. It was $650 million, and we had a workshare of $9 million. The contract was protested by another large business. The large business eventually acquired that company, and then it took almost 2 years for us to even get work. Where, in my testimony, I talked about how all of the minority-owned businesses who were on that winning contract, we had to write a letter to the ombudsman in order to get work on the contract. Because when large businesses, they do have a requirement to do, I believe, about 35 percent to small business, so they utilize us a lot to get work, but we do not necessarily see the work. It could come in year 2, 3, 4, or 5. We do not know. By then we may or may not still be in business. But they met their requirement. They checked the box at the beginning. But there is no real accountability, from my perspective, of what I have seen. But when that other majority-owned company won the contract we got our subcontract agreement. Our agreement was for $4 million. And I questioned it. I said, ``Wait. We have a $9 million workshare.'' And they stated, ``Oh, you are a minority- owned firm. You are an 8 (a). You only qualify for $4 million, and that is all you get.'' So you can imagine how I felt, because we are ready to staff up. You know, I have to talk to my staff, reduce our staff, because we were expecting to grow from this. This was our foot in the door. But like I said, we only had $4 million workshare. And also, when I brought it to their attention, I talked to the vice president of the company because I was upset. And he said, ``I apologize, but that is all we can do.'' So it makes me think that going forward I do not necessarily want to partner with this company anymore because of the way that they treat their small businesses. And we like to show our customers who we are, what we do every month. We like to do program management reviews and highlight our employees and what they are doing. So we do this with this company. So buried into our contract states that they can hire our employees after 6 months. Early on I was young, naive into the program, did not fully understand the contract, because at the time I could not afford an attorney at the very beginning. And so 6 months down the road they start hiring our employees, hired them on a Friday, did not tell us. So on Monday, Tuesday I reached out to our employees and said, ``Hey, you haven't input your timesheets.'' ``Oh, well, they told us we work for them. We no longer had to input our timesheets.'' No notification to us. So, of course, me, I go back to the vice president and have a conversation and still, ``Well, I'm sorry. It's in the contract.'' So bottom line is we started with six people. We now have one. We were not a Tier 1 subcontractor, so we get what we get. It is really frustrating that we are still treated like this, and there is no real accountability. I am sorry. I am a little emotional about that because it really hurts us as minority-owned businesses, and we are really trying to build something, to grow, and they are still hindering our growth. Senator Van Hollen. Do not be sorry. I would be emotional too. I would be mad as hell. Ms. Meyers. Yeah. Senator Van Hollen. This is one of the reasons we wanted to have this hearing. And again, thank you, Senator Cardin, for organizing it. Senator Cardin. Representative Ivey. Mr. Ivey. I have more questions than I thought I was going to have so I apologize in advance. The $4 million versus $9 million, I was just kind of curious. Did you approach the contracting officer about that? Did the government know about it, or were you concerned about approaching the CO, or how did that play out? Ms. Meyers. So we wrote a letter to the ombudsman, and the ombudsman got involved with the Office of Small Disadvantaged Business Utilization, the OSDBU, and then thereafter we started seeing work but our workshare did not change. No one has addressed the issue of the decrease in the dollar value. Mr. Ivey. And what department was it? Ms. Meyers. Which department? Mr. Ivey. Mm-hmm. Ms. Meyers. Transportation. Mr. Ivey. Interesting. Okay. How long ago was that? Ms. Meyers. So we are in year 4. Mr. Ivey. No. I mean, how long ago was it that this popped up? Was that 4 years ago? Ms. Meyers. Mm-hmm. Mr. Ivey. Okay. Okay. I was going to ask about the new DOT rules that just came out, but I will set that to the side for the moment. Prebid conference was one I had a question about, as well, and I guess this could be, well, not quite panel-wide. Mr. Bernal, I am going to come back to you in a minute. Back before the Ultima decision and some of those, they would have the pre-bid conferences. Sometimes you ended up in a scenario where there were discussions that were had, maybe promises were made that were not kept down the road. But I am kind of curious. To the extent there is a movement away from, by the government, minority-specific race classifications, what happens in the pre-bid conferences now on these issues? In other words, if you have a minority business, I guess back in the day there would be like 35 percent minority business utilization requirement. Is that still in place, or have they started moving away from those because of you are not supposed to be designated as a minority business anymore? Ms. Meyers. So I would probably have Ms. Luis answer that because for us the pre-bid conferences we go to are more on the IT side of the house, but construction is constantly pre-bid, and office movement opportunities are pre-bid. But for us they just kind of lay out what they are looking for, what the socioeconomic set-asides, if there is going to be a set-aside or if it is just for a large business. But they do tell us that before we get there of who is invited. We can go in and we can as our questions, but once we come out, you know, you cannot speak to them anymore once the opportunity hits the streets. So then we actually go ahead and bid on the opportunity. But I think it is more prevalent in the construction realm. Mr. Ivey. Ms. Luis. Ms. Luis. So from a Federal funding component I generally bid to the state, counties, municipalities, public/private sector, so I get the Federal spend indirectly. The number one reason that we started bidding as a prime and letting go of some of our subcontracting opportunities was because of those false promises. We would be written in, and then really not utilized, or if so, often they would come back after bid and try to renegotiate. Over the years there has been a lot of clean-up of that, thanks to your efforts. There are jurisdictions that are much better at accountability than others. We try to stick to those. And as a prime contractor, you know, when we first opened up our plant, one of the difficult things for the minority- and women-owned business arena was that they were not granted credit at asphalt plants because the financial matrices that were used were similar to large banking. And so one of the things that we did is we removed all of that and our team had to come to Cidalia and I and tell us why they were not issuing credit to minorities and women-owned. And I think when we work as a community and we try to make sure that we are protectionists and we keep everyone at a fair play, then everything goes better. There has been improvement, for sure. Mr. Ivey. Prompt pay. Again, this might be more of a subcontract question, but I had thought that, geez, the Prompt Payment Act was like in the '80s or sometime, but now that I am back in the middle of this stuff I am hearing complaints again about late payments that are being made, sometimes for, frankly--they appear to me to be for strategic reasons as opposed to some legitimate dispute about work that has been performed. I wanted to get a sense of if that is something that you are seeing, as well, if that is out there on the street too. Ms. Meyers. Definitely. You know, in the Federal Government, as a small business, the FAR states that they can pay us within 15 days, if we ask, and generally they do comply. But when you are a subcontractor there is a 45- to 60-day waiting period, where we have to be financially stable in order to support these efforts. The payments sometimes come in 45, sometimes in 60, sometimes in 70 days. We still have to reach out and say we haven't been paid, it is in our agreement that we are supposed to be paid on time, and we are still sometimes not paid on time. It poses a challenge because they said, ``Well, you know, our accounting system is set up this way,'' or ``We haven't been paid from the government,'' when in actuality the government pays. But it is the primes that make us wait. Mr. Ivey. Okay. Mr. Bernal, a couple of questions for you. I noticed in your testimony you talked about disparity indexes and sort of the scope of the studies that you do. It mentions in your testimony it looks like you focus primarily on state and local governments. Mr. Bernal. Mm-hmm. Mr. Ivey. All right. Do you have any familiarity with studies that have been done that have targeted the Federal Government? Mr. Bernal. We do not do an overall Federal study, but there are DOT studies that are involved with the Federal Government. But one of the things that we always see in the studies, and it is also because of case law, we need to be sure that when we are analyzing the issues, they are localized. What we see across all the studies is a corroboration of what everybody has said today, that race, ethnicity and gender impact a person's ability to do business in a certain jurisdiction. And I think it is interesting to say, you know, when we look at these targeted programs, such as the 8 (a), we just finished a study for Baltimore that had an 8 (a) component, we do see progress. We see progress in the utilization of minority businesses, subcontractors and sometimes even prime contractors. But one of the things I really want to lay on this, as well, is the economic impact that we see, as well. That is something that we have started really looking into, what is the economic impact of these programs. And all of what we see is that there is a true, quantifiable impact, a positive impact to communities, to overall communities, of having investments in these programs. Mr. Ivey. One of the things that the judge in the Ultima case wrote was that--he did not necessarily base his finding on it ultimately, but he did question, or attack frankly, the studies that were underlying. Basically he said there is insufficient information from a records standpoint to justify the 8 (a) program continuing in the way that it was, in other words, race-based classification for admission into the program. And you might not know what he had access to or not, but what kind of programs or studies are out there, and what would be your thought as to how the Federal Government could go about pulling together those sorts of records? And I guess he wanted specific to, they used to call them SI codes. What are they, NAICS codes now? Okay. I apologize for my oldness on that. But I think he wanted them specific to that too. So locality and also industry-specific would probably be important, and also they have to be relatively contemporary, I guess, based on what he said. He sort of argued that they were so old that they would not be applicable. How should the Federal Government go about pulling that together, and to what extent is there information that is already out there along those lines? Mr. Bernal. And thank you, Congressman, for that question, and you are right. I cannot speak to what the judge had in that. But in my opinion I like to jokingly say, throw the kitchen sink at these court systems. And what I mean by that is we already have a lot of this data already, U.S. census data. That is a lot of the data that we use in our disparity studies to analyze the private sector. It looks at different levels of those NAICS codes throughout the entire nation. It looks at it by jurisdiction. It looks at it in different granularity. And we can use that to determine what is the impact of race, ethnicity, and gender on a person's ability to earn a certain level of business revenue, on the likelihood to be self- employed. So the data is available. It just needs to be used, like you said, specifically to look at commodity code level, jurisdictional level, or even the entire nation. Mr. Ivey. All right. Last set of questions, and I guess, Ms. Luis, these will be mainly for you. Bureau of Engraving is about to start construction a few miles from here, maybe five or six miles. It is a $1.5 billion project, roughly. And I am assuming here is going to be a lot of asphalt, concrete, whatever, that is going to be needed there. When we took a look, we called them up and asked them about what their goals were, and I think it was a 6 percent small business goal, which I thought was shocking. And we are doubling back to it, to make sure that I read that right, but a 6 looks like a 6. I am pretty sure. Had you heard about that? Did you bid on it? And then the follow-up question is going to be--because we have got FBI coming, we have got, tragically, but, you know, it has to get done, Key Bridge is coming, the Baltimore Tunnel is coming. There is a lot of stuff that is coming in the very near future right here in Maryland. And I am sort of curious as to what you are seeing and what you think your chances are for participating in those. What did they say, I think the bridge is going to be $1.7 billion, Engraving is $1.4, FBI is like $3.5 or something. So literally billions of dollars coming just within a few mile radius of here. What are you seeing? And if any of the others of you have any knowledge of that, you speak up too. But we will start with you, Ms. Luis. Ms. Luis. Sure. So on those larger projects I tend to be artificially bid out because we have two divisions to our company, two different companies. One is construction. The revenue cap is measured for retail road construction. For manufacturing it is based on number of employees. That is the test. Mr. Ivey. Number of employees that have not been stolen away from your company, yeah. Ms. Luis. Yeah. Mr. Ivey. I am sorry. Ms. Luis. No, it is okay. It is true. When it comes to the DB factor, our business, even though I have fought this quite a bit, our business tends to be tested on revenue, and because it is a manufacturing plant, those revenues tend to put us out of the ability to compete within the DB market. We like to obviously participate as much as possible, but we are typically subcontractors and utility organizations, such as WSSE or BGE or Washington Gas, DC Water, and whatnot. When it comes to the Federal spend I am relegated out. Mr. Ivey. Anyone else? Mr. Moore. I would say that just about everything everyone said here this morning I hear on a daily basis, three or four times a day. And sometimes I feel like a little bit of a counselor, if you know what I mean, because you have to deal with especially the emotional part of it. But with the infrastructure part we have had difficulty at the Maryland MBDA with even getting our foot in the door to talk to somebody. So if the Senator's office, or your office called, they would pick up the phone. And I would think that the MBDA and the U.S. Department of Commerce, they would pick up the phone for me too. But most of them know what the reason is why I am calling, and so I don't get any kind of communication back. A lot of my client say--some of them do not even want to bid on it. They have already got that. You know, they know who the money is going to. Why should they even bother? And that is also because that is things they see in their past and in their businesses. So I have got to try and turn that around, and I am still knocking the door for those things. And hopefully with your help I will be able to get through and have somebody pick up the phone. That is all I want is a phone call and an opportunity to speak and introduce some of my clients, like M. Luis. Ms. Luis. If I could just add one small piece to that, I think one of the solutions is because these are such large contracts, I think one of the solutions is if the Federal space were willing to create reciprocity with local certifications, such as Prince George's County or MDOT, I think you would quickly get to that 35, 40-plus percent, because you have the businesses that are certified. It is getting through the DBE, that for those kinds of dollars typically the revenue cap inches everyone out. Senator Cardin. I can assure you that we heard you loud and clear, and we will very much be engaged. To Representative Ivey's point about the amount of public construction that will take place in the state of Maryland over the next few years, it is going to be dramatic. So we will absolutely be working with the MBDA, so we will do that. I had one other point that I just wanted to raise and that is with the court challenges to the MBDA programs, your thoughts as to what Congress can do, what we can do, to make sure that the services that are provided there can continue. We know it is going to be a challenge, but we want to work with you in that regard. It is not necessary for answering today, but we would appreciate your technical support in making that a reality. Mr. Cunningham, we also appreciate your help in that regard, with your experience in Minnesota. So any thoughts there, please let us know. Mr. Cunningham. Mr. Chairman, thank you. I would say a couple of things. One is the MBDA is doing a fantastic job of working with the demand of contractors that are coming in to do work with the MBDA centers across the country. The issue is that there is just not enough staff. When I was in Minnesota at the MBDA center, one of the things we saw, we did a market analysis, and what we found was we were only serving about 19, 20 percent of the market that could have been served if we had enough staff. And we were already overloaded. I think all of the MBDA centers are seeing this kind of demand, and that technical assistance and support that they are providing is critical for these folks to be successful in what they are doing. So I would argue that the number one thing is that we have to increase the capacity of these organizations to do this work. This is not only just good for minority entrepreneurs; it is good for the country. So I will stop there, Mr. Chairman. Mr. Moore. And I think the budget was cut $1.7 million. Senator Cardin. We are now in the appropriations cycle for fiscal year 2025, and that is one of our priorities is to try to help in regard to budget support. But as you know, the real challenge is in Representative Ivey's court as we try to get reasonable caps in the budget process, and this is one of the programs that are our priority. So we will be working with you in that regard. I want to thank our witnesses. This has been extremely helpful. I want to acknowledge Carlton Atkinson, Roderick Lewis, and my staff for helping to put this all together today. I appreciate everyone's cooperation. So let me just conclude by a quote from Parren Mitchell that my staff put in front of me, which I think is very appropriate to conclude this hearing. And this is quoting from Parren Mitchell. ``If you believe in fighting racism you make a commitment for the rest of your life. There is no getting off that train. You can't say I'll put five years into fighting racism and now I'm finished. No. You are not finished. Our job is to fight it every day, to continue to shove it down, when it rises up, to shove it down even harder.'' With that the hearing will stand adjourned, and we thank you all for the fight to make our country a better place. [Applause.] [Whereupon, at 11:54 a.m., the hearing was adjourned.] APPENDIX MATERIAL SUBMITTED [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [all]