Steve Chabot

Mr. CHABOT

Mr. CHABOT. Mr. Chairman, we accept the amendment, and we thank the gentleman from Maryland for his leadership on this as he has shown such great leadership on so many other issues as well.

Mr. CHABOT. I thank the chairwoman for yielding. I want to thank the gentlelady from Texas for offering this very helpful amendment. We've looked over it, and we think it's a very good amendment. I've had the pleasure to serve on the Judiciary Committee with the gentlelady for the past 13 years. I've agreed with some amendments. Unfortunately, oftentimes, I've disagreed with her amendments. But it's very nice to be able to agree with one that the gentlelady has offered. So we thank the gentlelady for offering it.

Mr. CHABOT. I thank the gentlelady for yielding, and I want to again commend the gentlewoman for offering a helpful amendment. And we accept this amendment as well.

Mr. CHABOT. Mr. Chairman, I yield myself as much time as I may consume. I will be brief. The amendment offered by Mr. Sestak will increase the protections against inappropriate contract bundling. It represents a compromise between the Small Business Committee's version and the Committee on Government Reform's version of H.R. 1873. I believe it represents an adequate resolution of the issue and pledge to work to make the protections in the Sestak amendment even stronger as we work through the legislative process. Mr. Chairman, I reserve the balance of my time.

Mr. CHABOT. Mr. Chairman, I yield such time as she might consume to the gentlewoman from New York (Ms. Velazquez), if she would like to speak at this time.

Mr. CHABOT. Mr. Chairman, I claim the 5 minutes in opposition to the amendment, although I do not oppose the amendment. I am in favor of it.

Mr. CHABOT. Mr. Chairman, we have no further speakers, and I yield back the balance of my time.

Mr. CHABOT. Mr. Chairman, I continue to reserve the balance of my time.

Mr. CHABOT. Mr. Chairman, tonight I rise in support of H.R. 1873, the Small Business Fairness in Contracting Act. As an original cosponsor of this legislation, we worked closely with Chairwoman Velazquez and Representative Braley to draft a good, bipartisan bill that passed the Small Business Committee by voice vote and was cosponsored by nearly all the members of the committee. Our legislation was intended to reform the contracting process, increase competition and provide a better value to the taxpayer. The legislation also takes steps to provide greater opportunities to small businesses and addresses problems with the Federal procurement database. Promoting competition and increasing suppliers depends on the active participation of small businesses, the fastest growing segment of the American economy. Without small business's participation, the government is forced to rely on fewer and fewer businesses to satisfy its need for goods and services. This concentration is bad for the government and worse for the tax-paying public. For that reason, utilization of small businesses to fulfill government contracts has been a long-standing policy, a policy that is neither Republican nor Democrat. Unfortunately, the bill we are considering today, while making many important reforms, is watered down from the original version we introduced. I commend Chairman Velazquez and her staff for working tirelessly to try and protect the sound work done by the Committee on Small Business. I also want to thank the Rules Committee, and especially Chairwoman Slaughter and Ranking Member Dreier, for allowing me to offer three important amendments, along with three of my Democratic colleagues, to restore significant provisions of the original bill. One amendment that I proposed with Mr. Sestak, however, was not ruled in order. This amendment would have restored a provision of our original Small Business Committee bill related to contract bundling. Contract bundling is a procurement strategy that represents a potential obstacle to small business participation in the Federal marketplace. Contract bundling allows Federal procurement officials to manage the procurement process using fewer contracts. At times, contract bundling may be appropriate. At other times, it may reduce competition by combining multiple contracts for goods or services that could be provided separately into a single contract that small businesses are incapable of performing. Nothing in our original bill as reported by the Committee on Small Business would have completely prevented the Federal Government from bundling contracts, nor is there anything in the bill that we are debating today that prevents contracts from being bundled. Instead, we take the view that bundling can be beneficial if the government gets substantial, measurable benefits in terms of better prices or higher quality or critical delivery terms. However, our original bill would have required that Federal contracting officers examine their contracting strategies to ensure that the government was receiving real benefits through bundled contracts and also consider the potential loss of competition from small businesses being excluded. Or as President Reagan might have put it, trust but verify. The bill we are debating now reduces the amount of contracts subject to the trust but verify standard as compared to our original bill. It does, however, represent an increase from current law in the number of contracts that will be scrutinized. With that in mind and with the amendments made in order, including a separate amendment by Mr. Sestak, the bill moves us modestly in the right direction. I would hope that as we proceed, and especially in conference, we continue to strengthen the trust but verify standards relative to bundled contracts. While this may create more work for Federal contracting officers, it also ensures that the Federal procurement process protects competition in the long run while ensuring that the government benefits in the short run from necessary bundled contracts. As we work through the legislative process with the Senate, it is important that a sensible mechanism exist for an independent arbiter to resolve disputes between the SBA and the agency issuing a bundled contract. It seems unfair that the SBA's only avenue of appeal is to the agency that is doing the procurement. Would anybody be surprised to learn that the administrator has never won an appeal on an agency head on a disputed bundled contract? Not once. Nor should the legislation as it works its way to final passage substitute an appeals process by affected small businesses for that of the Small Business Administrator. Requiring a small business to challenge an agency's decision pits a David against a Goliath. But, unlike the biblical account, Goliath usually win these battles. In addition to the provisions on bundling, the bill we are considering today increases the goals for prime Federal contracts to small businesses. But in my estimation and why I offered amendments is that the increase in the bill does not recognize the 10 percent growth in the number of small businesses since 1997, the last time the goals were raised. Nor does the modest increase from 23 to 25 percent recognize substantial technological changes and the capacity of small businesses to perform contracts overseas. Amendments we will be considering will raise those standards to appropriate levels and recognize the capacity of small businesses to perform work overseas. In addition, I would ask the chairwoman that we work together to remove a provision included in the bill by the Committee on Oversight and Government Reform that treads on the sole jurisdiction of the Committee on Small Business. I believe that sets a bad precedent for future legislation in the House. I also find that the provisions in title III of the bill are worthy of support. I congratulate the Committee on Oversight and Government Reform as well as members of the Committee on Small Business on working to eradicate errors in critical Federal procurement databases. These changes, although seemingly arcane, will ensure that contracting officers award contracts intended to small businesses to actual small businesses. While this bill is not as strong as the version adopted by the Small Business Committee, it nevertheless represents an improvement over existing law. I will continue to work to further strengthen this bill and to ensure that small businesses have their fair opportunity to participate in the Federal procurement process Mr. Chairman, I reserve the balance of my time.

Mr. CHABOT. Mr. Chairman, I yield myself such time as I may consume. (Mr. CHABOT asked and was given permission to revise and extend his remarks.)

Mr. CHABOT. I yield back the balance of our time.

Mr. CHABOT. Mr. Chairman, we accept the amendment. We have no objection.

Mr. CHABOT. I want to thank the gentleman for his hard work on this particular amendment. I think it's a good amendment. I would urge its passage. The amendment expands the pool of contracts included in the Federal governmentwide goal for participation of small business concerns and procurement contracts to include United States small business concern contracts performed overseas. Current law and regulations apply the small business concern Federal governmentwide goal only to contracts performed in the United States. The bill as currently written would continue to apply the small business concern Federal governmentwide goal to contracts performed only in the United States. This methodology clearly does not address small business concerns involvement in today's global economy. When small business policy was first developed in the 1940 to 1950 timeframe, small business concern participation in the overseas markets was fairly limited. In today's global economy, adding contracts where United States small business concerns perform overseas work is reasonable because the availability of the Internet and advances in technology allows contracting officers to acquire information on such activities. Therefore, United States small business concerns global activity should be recognized and, thus, included as a part of the overall Federal governmentwide small business concern goal. Again, I want to thank the chairwoman and I want to thank Mr. Shuler for their work on this particular amendment

Mr. CHABOT

Mr. CHABOT. Mr. Speaker, if the gentlelady will yield, the amendment has been discussed with our side, and we are satisfied with it. It was a mistake made essentially between Rules and here.

Mr. CHABOT

Mr. CHABOT. Mr. Chairman, I yield myself such time as I might consume. Mr. Chairman, today, Madam Chairwoman and I rise to support H.R. 1332, the Small Business Lending Improvements Act of 2007. I want to especially thank the chairwoman and the gentlelady, Congresswoman Bean, for working in a cooperative and bipartisan manner to bring this bill before the House, and I want to commend them for again working with us on this. The Small Business Lending Improvements Act amends the Small Business Act to make necessary improvements and technical changes to the primary lending program offered by the Small Business Administration, the SBA, the 7(a) guaranteed loan program. H.R. 1332 also amends title V of the Small Business Investment Act of 1958 to make significant and necessary changes to the loan program, sometimes called the 504 loan program. Before addressing the particulars of the legislation, it is important to note what H.R. 1332 does not do. The legislation does not modify the subsidy rate for the 7(a) guaranteed lending program. The subsidy rate for the program currently is zero. After this bill is enacted, the subsidy rate for the 7(a) lending program will be zero. In fact, if this bill attempted to modify the subsidy rate, it could not because it would require an appropriation. And of course, as an authorizing committee, we are unable to appropriate. So any argument that this bill will cost hundreds of millions or even billions of dollars over 10 years or so is just plain wrong. At the correct time, I will oppose adding a subsidy for a program that works just fine without one. And now, I turn my attention to what this bill does. The SBA charges a fee to borrowers which can be viewed as akin to paying points on a mortgage, which many people are familiar with doing. In addition, banks pay an ongoing fee each year on the amount of unpaid balance of the loan as guaranteed. Although some confusion exists about this point, I read the Small Business Act as authorizing the SBA to adjust the up front fee or points paid by borrowers in the same way that the SBA has the unquestioned authority to reduce fees to lenders. Despite the authority that the SBA has, the agency has not in recent memory reduced, except when dictated by Congress, the up front fees paid by borrowers. The SBA, on the other hand, has modified the annual fee paid by the lender. The SBA even testified at a committee hearing recently that it would be reducing the fees paid by lenders. Section 101 does two very important things. First, it clarifies that the SBA has the authority to reduce or increase the fees paid by the borrower. This should resolve any confusion as to whether the SBA has the power to reduce the points or up front borrowing fee, as well as the annual fee paid by the lender. And as already noted, section 101 requires that these fees be calculated to arrive at a zero subsidy. That is so that the fees will cover the cost of the 7(a) loan program, without an appropriation, as I just mentioned. The section then goes on to restrict the administrator's discretion in only one regard; if an appropriation is made to support the 7(a) loan program, section 101 directs the administrator to first utilize the funds to reduce fees to borrowers and not lenders. I support this change because the Small Business Act is, first and foremost, legislation designed to assist small businesses, not to assist small banks or any other banks. Therefore, the bill takes the logical step of directing that, should funds be made available, the administrator should reduce the fees to small businesses, not to banks. Section 101 also requires that the administrator update quarterly the reduction in fees given available funding remaining. That makes sense, because if the SBA did not make that calculation, they would not know how much to reduce fees in an upcoming quarter, if at all. The need for this calculation simply recognizes that loan demand is not constant throughout the year and ensures that administrator properly allocates available funds. Once funds are exhausted, the legislation simply directs the administrator to operate the program at zero subsidy, the up front annual fees needed to cover the cost of the 7(a) loan program as if there was no appropriation. Finally, to the extent that loan demand is not high, and there are sufficient funds available, the administrator may use any available extra funds to reduce the annual fee paid by banks. Although this is a possibility, the greater probability is that all funds will be utilized to reduce cost to small business owners. There is more to H.R. 1332 than providing the administrator with a mechanism to reduce fees under the 7(a) loan program, if an appropriation is available. The guaranteed loan program is the largest of the SBA's financing programs, reaching the greatest number of businesses, yet there are businesses whose access to this program remains limited. The SBA loan program is a fairly complex operation, and many banks, particularly community banks, do not have a sufficient loan volume to justify the expenses associated with a 7(a) loan program. This is particularly true for independent and community banks located in rural areas. The bill requires the SBA to establish a low-document, or LowDoc, loan program for banks located in rural areas. To the extent that a rural community has no bank willing to participate in the program, there is nothing in the Small Business Act or the bill that prohibits a small business from using a rural lender not in the immediate vicinity. Title I also makes the Community Express Loan Program permanent. I support this because I believe it can provide the same assistance to low income communities, including those in my district in Cincinnati, which would otherwise be provided under a more costly micro loan program. In addition to providing greater assistance in rural communities and low income communities, the bill also reduces the cost of the 7(a) loans to veterans. In addition, the bill also provides for a reduction in fees to medical practitioners seeking to establish or expand practices in areas deficient of such practitioners. These are noble goals and deserve the support of all Members of the House. Although title I is a significant achievement, I am particularly pleased with title II of this bill. It modifies and strengthens the loan program operator pursuant to title V of the Small Business Investment Act of 1958. Certified development companies, or CDCs, are vital to long-term economic and community development in many districts, including mine, around the country. CDCs operate to provide long-term, fixed rate financing for small business concerns who find their financing needs cannot be met due to the loan limits of the 7(a) loan program. And unlike many 7(a) lenders, CDCs must be locally based so they have a keen understanding of the needs of the communities they serve. The first thing that title II does is change the name of the program. While this may sound minor, it is actually important. Colloquially, the program is known as the ``504 loan'' program for section 504 of title V of the Small Business Investment Act. This section authorizes the administrator to sell the loans made by the CDCs in a secondary market. It is not at all descriptive of the program or the entities involved in the program. By accurately describing the program, it will provide greater recognition to CDCs and enable them to better promote their important mission. Section 202 makes important technical changes to the definitions in the CDC program, including, most importantly, defining the term ``certified development company.'' As a corollary, title II eliminates the outdated term ``qualified State and local development company'' from the Small Business Investment Act of 1958. In my estimation section 203 is the most important provision in the bill. It statutorily establishes the procedures by which the SBA designates entities as CDCs. The most important requirement of these statutory procedures is the mandate that the CDC have local board members familiar with the economic development needs of their communities. Even though the bill authorizes expansion only into neighboring States, the CDC must have representatives that understand the local economic development needs of the new State of operation. Another very important aspect of the bill authorizes CDCs to perform their own liquidations. Data that I have seen shows that current loan liquidation returns are about 20 cents on the dollar. Think of that. Only 20 cents on the dollar liquidation rate. That is very inadequate. By having CDCs with their local expertise perform liquidations, the government should get a better return when a loan goes bad, and that should save the taxpayers money. Title II also makes other changes that will benefit greater financial opportunities to small businesses under the CDC program. Together all these changes made will ensure a robust CDC program that will spur economic development. For these reasons I ask my colleagues to support passage of this important bill. Mr. Chairman, I reserve the balance of my time.

Mr. CHABOT. I thank the gentlelady for yielding. We are in a position to accept this amendment as well, and I commend the gentleman for offering it.

Mr. CHABOT. Mr. Chairman, I would like to yield such time as she may consume to the gentlewoman from Oklahoma (Ms. Fallin) for the purpose of entering into a colloquy with the gentlewoman from New York.

Mr. CHABOT. I thank the gentlelady for yielding, and I want to commend the gentleman from Texas for offering a very thoughtful amendment here. Oftentimes when you have a bill as complicated as this one is, the point of the bill obviously is pretty straightforward: It is to streamline and improve the process, make it more accessible to small business people, because that is one of the main problems that we have, that small businessmen have, and small businesswomen as well, is access to capital. One has to look at this sometimes what do you do to benefit rural communities, and sometimes it is more urban communities. I happen to represent an overall fairly urban community, the city of Cincinnati. But I know the gentleman has a much larger district in mind, one in which the challenges may be somewhat different. And I think it is very good that the gentleman took the time to go through this bill with such care to find a way that he can benefit the people in his community and at the same time make it a better bill. So I again commend the gentleman for his thoughtful approach to this bill, thank him for offering this amendment, and we are in a position to accept it. And I again thank him for his hard work on this.

Mr. CHABOT. Mr. Chairman, I yield myself such time as I may consume. I want to again thank the chairwoman for her leadership on this particular piece of legislation, which I think is very good for small businesses across the country. Mr. Chairman, as was mentioned in the Rules Committee yesterday I believe by Mr. Dreier, it's preferable for small businesses to get their loans through the private sector if they're able to do so. And as one who believes in less government as opposed to more government, that would certainly be my preference. But there are some cases in which the private sector at this point just wouldn't cover those particular entities, some of the start-up small businesses, especially some in struggling areas, some disadvantaged areas as we have in some urban areas, and some rural areas as well. And so there is an appropriate place for 7(a) loans and the 504 loans. As I mentioned, the name of that particular program is going to be changed as a result of this bill. I think these are vital improvements. A streamlining of the process will be helpful to small businesses all across the country. I think we have a responsibility to improve the climate for small businesses, especially when one considers that somewhere between 60 and 80 percent of the new jobs that are created in this country are created not by large corporations, but by small businesses. So I think this bill helps businesses who need it most. I think this is a good bill, and so I urge my colleagues to support it. Mr. Chairman, I yield back the balance of my time.

Mr. CHABOT. Mr. Chairman, I reserve the balance of my time.

Mr. CHABOT. Mr. Chairman, I have no further requests for time, and I will continue to reserve the balance of my time.

Mr. CHABOT. Mr. Chairman, I want to commend the gentlewoman from Oklahoma for her work on this issue. I know she has worked very hard to make this happen. So I want to commend her for that. Mr. Chairman, I reserve the balance of my time.

Mr. CHABOT. I thank the gentlelady for yielding. We would also agree with this amendment. I think they are both excellent amendments. And I meant to comment on the other one as well. When the gentleman included our Reserve forces as well as other member veterans in Armed Forces, I think when one considers how patriotic our Reservists are and how many of them, especially with our involvement in Iraq and Afghanistan, are literally putting their lives on the line, I think this is a very helpful and important amendment, both of them. And so we would commend the gentleman for introducing them.

Mr. CHABOT. Mr. Chairman, we have no objection to the amendment. We commend the gentleman for offering this helpful amendment.

Mr. CHABOT

Mr. CHABOT. Madam Speaker, I rise in strong support of this important resolution. The recognition of National Crime Victims' Rights Week continues the legacy of an individual who committed himself to elevating the status of crime victims in this country. Among the many contributions made during his Presidency, President Ronald Reagan's leadership and vision in advancing the cause of crime victims is immeasurable. Recognition of National Crime Victims' Week reflects just one of a number of accomplishments which also include national days of observance, creating the Office of Victims of Crime, and establishing the Task Force on Victims of Crime. Too often, victims of crime are made to be victims a second time, this time as a result of our criminal justice system, the very system designed to protect them. In 2004, 20 years after Congress enacted the Victims of Crime Act which authorized the Victims Assistance Fund, Congress enacted the Justice for All Act. This was another important victory for crime victims, as it extended a number of enforceable rights to crime victims, including the right to reasonably be heard at any public proceeding involving release, or plea or sentencing, the right to file a motion to reopen a plea, or a sentence in certain circumstances, and most importantly, the right to be treated with dignity and fairness and respect. However, the enactment of these rights is just one of a number of important changes that needs to occur to ensure that our Nation's criminal justice system is just for both offenders and for the victims of those crimes. Continued recognition and support of National Crime Victims' Week serves many purposes, including to remind us of what victims have suffered, to thank those individuals and organizations who have selflessly dedicated themselves to assisting victims, and to urge us all to rededicate ourselves to continue President Reagan's vision and leadership in advancing the cause of victims of crime. And I also want to note that for a number of years a number of us have worked very hard to pass a victims' right constitutional amendment. Now, we ought not to amend the Constitution unless it is absolutely necessary. And I think this is one incident in which it is necessary because the criminals, the defendants, their rights are contained within the Constitution itself. The right to a trial, for example. The right to have witnesses called on their behalf, the right not to have to self-incriminate all are within the Constitution. However, the victims, not a word in the Constitution. There are laws that have been passed, such as the law which gives a victim the right to be heard at a sentencing hearing or have family members heard at a sentencing hearing, but those are statutes. Oftentimes what happens is they come into conflict, and a judge will have to make a decision because they may be in conflict with each other. The defendant has his or her rights within the Constitution. They are up here. The victim, their rights down here are statutory. And when it comes to deciding which one is going to prevail, the Constitution will trump that statute every time. Therefore, the crime, the one who committed the crime, the defendant, the criminal, their rights are held higher than the victims. That is just not right. That is why Henry Hyde, when he was a Member of Congress, had introduced this some years ago, and about 5 years ago I took that up, took up the mantle for Henry to continue to push this way, and we have made progress. We have made progress in the law; but thus far, it is still not within the Constitution and it ought to be. I want to thank the gentlewoman and Mr. Scott also for pushing for this particular resolution this week. I urge my colleagues to support this resolution and to support all victims of crime all across the country.