▶ 0:12:46Chair Ernst: I call the committee on small business and entrepreneurship to order. We've all heard washington, D.C. referred to as the swamp, but these days it is looking more and more like a pigsty. While iowa small businesses keep the books neat and tidy and pinch pennies, they are the ones who are hurt when the government is sloppy and reckless with hard-earned taxpayer dollars. That's why I made a promise to iowans to make washington squeal.
▶ 0:13:16Chair Ernst: For over a decade I've been exposing the egregious washington waste with my monthly squeal awards. Some examples are two outrages to believe -- too outrageous to believe. Bureaucrats approving ppp loans for applicants who used pictures of dolls for ids. Imagine giving barbie or ken a taxpayer-funded loan.
▶ 0:13:43Chair Ernst: Not only that, but they also believe folks claiming to be over 115 years old were alive and well enough to be approved for $3095 -- 3095 ppp and idle loans worth over 300 million dollars including $36,000 to a 157-year-old. That is pure hogwash.
▶ 0:14:14Chair Ernst: This is only the tip of the iceberg. Instead of boosting main street, billions of your tax dollars were wasted through usaid to fund iraqi sesame street and this one is unacceptable. Improper payments where the government tosses cash into the wrong trough has become commonplace. In fiscal year 2024, federal agencies shoveled out $162 billion in improper payments.
▶ 0:14:45Chair Ernst: The most frustrating part is how simple it is to stop this waste. A report by the pandemic response accountability committee found that $79 billion in potential covid fraud could have been prevented if four basic questions were asked. One, is the applicant's social security number valid? Two, if valid, does the name connected to that number match the name on the application?
▶ 0:15:16Chair Ernst: Three, does the birth date match? Lastly, is the individual alive? Seriously, that could have saved $79 billion right there. The good news is we can prevent nearly all improper payments in the future with my doge and spending act that annexed common sense guardrails like those simple questions.
▶ 0:15:47Chair Ernst: These quick fixes could not come soon enough. Six years after covid, scammers are still pigging out on sba relief funds. I'm proud this committee advanced my fraud enforcement act and I'm eager to see it become law. They must be held accountable. Unfortunately unless my bill is passed by the senate and signed into law, many of these criminals will soon get away with it.
▶ 0:16:17Chair Ernst: During the prior administration, usaid repeatedly rebuffed my request for information, using intimidation and shell games to hide where money is going, how it is being spent and why. This is the same agency that handed cash to violent terrorists and funded dance classes in wuhan, the same wuhan you are thinking of.
▶ 0:16:41Chair Ernst: As a result of my oversight I discovered firsthand usaid was a wrote bureaucracy operating with low accountability and at times, at odds with our nation's best interests. My findings were confirmed when the summer federal prosecutors convicted a usaid contracting officer who raked in over $1 million in bribes, to steer more than $550 million in contracts to program participants.
▶ 0:17:15Chair Ernst: Unfortunately the sba program has been a magnet for fraudsters since its inception. Decades of government watchdog investigations, bipartisan oversight hearings, a patchwork of reforms and what is there to show for it? Not a shred of evidence that the program is worth taxpayer investment. It is refreshing to see an administration take fraud as seriously as I do and I applaud administrator efforts to end program scams for good.
▶ 0:17:43Chair Ernst: In the meantime I have launched my own 8a investigation and stop the 8a contracting fraud act to stop contracts government wide until the sba completes its audit. I am also urging federal agencies to adopt this moratorium. Make no mistake, this waste hurts all of our small business is the most.
▶ 0:18:10Chair Ernst: When covid fraudsters cashed in, thousands of deserving small businesses in iowa were left out in the cold because the funds had run dry. When the biden usaid sent money to every corner of the world, small businesses here at home footed the bill as taxes skyrocketed. When 8a programs deferred government contracts to businesses committing fraud, legitimate small businesses pay the price, losing jobs, revenue and growth opportunities.
▶ 0:18:43Chair Ernst: Government contracting should be based on eligibility and merit, not skin color. I promised to make washington squeal and it is clear that this pigpen needs a thorough mucking out. I want to thank our witnesses for bravely grabbing their buckets. Thank you all very much. Let's clean this up for american taxpayers and put our hard-working small businesses first, and I look forward to hearing your testimony.
▶ 0:19:12Chair Ernst: I now ask unanimous consent for a statement by senator dan sullivan of alaska to be entered into the record. Senator sullivan has been a fierce advocate for alaskans and a partner in working to ensure fraud is eradicated from federal contracting. Without objection, so ordered. I now recognize ranking member markey for his opening statement.
▶ 0:19:36Ranking Member Markey: Thank you so much adam chair. Today's hearing -- so much madam chair. Today's hearing is called run government like a small business. It sounds important. A more accurate title would be running government like a trump family business, cutting deals with billionaires and crushing small businesses. That is what the title on this administration should be.
▶ 0:20:07Ranking Member Markey: The trump administration has chosen to focus their energy on relentlessly attacking small businesses, from tariffs to health care to electricity prices, to contracts. They are focused on small businesses, crushing main street. Through the now defunct department of government for, the administration disproportionately cut contracts for women owned and minority owned small businesses.
▶ 0:20:37Ranking Member Markey: Those of the programs they cut. Additionally, 10% of all contracts cut by doge were veteran owned businesses. Most of whom were veterans disabled in the line of service. Can you imagine? They cut 10% of those contracts for those vets. This is just since january. We all want taxpayer dollars to be well spent.
▶ 0:21:02Ranking Member Markey: We should take note of whom this administration treats as expendable. It is those least able to defend themselves, those least able to flatter and give gifts to the president and his family. The administration's most recent fixation?
▶ 0:21:21Ranking Member Markey: Sba's 8a program, a program that gives small disadvantaged businesses training, technical assistance and federal contracting opportunities for nine years. Those businesses are principally black and brown owned, in our country.
▶ 0:21:46Ranking Member Markey: They are focused on cutting that program for those people, who are just small businesses trying to get a foothold in this american economy during this very difficult economic time with health care costs and electricity costs and with tariffs all zeroing in on small businesses. This program was actually signed into law by a republican president, president nixon in 1978.
▶ 0:22:16Ranking Member Markey: It has done a world of good for tens of thousands of small businesses, disproportionately black and brown, providing access to billions in contracting opportunities, with the largest buyer of goods and in the country, the federal government. Like any program, there have been cases of bad actors taking advantage of these resources, and they should be held accountable. They should be made to pay a price.
▶ 0:22:47Ranking Member Markey: But these rare instances do not warrant an all-out assault on a program that has created good paying jobs, provided pathways to success for small businesses and created economic growth for our country. In a hearing focused on waste, fraud and abuse, you just can't avoid or ignore the elephant in the room. President trump's pay to play system.
▶ 0:23:16Ranking Member Markey: To receive special status as a foreign country, you must give to the president a $400 million jetliner, that he gets to keep when he leaves the white house. That's unbelievable. To get a gold mine of government contracts, just pay for the president's golden ballroom.
▶ 0:23:37Ranking Member Markey: To receive an exemption from president trump's tariffs, simply give the president a lavish gift, or pay to dine at mar-a-lago. Can a small business do that? No they aren't dining at mar-a-lago. They can't afford it, you have to put up $1 million to get in the door. This is not how honest hard-working small businesses get things done. This is how they get business done in the godfather, part one.
▶ 0:24:08Ranking Member Markey: That's what this white house is all about because when it comes to true oversight, who gets to run under the floodlights? It is the little guys, the minority small business owner, black and brown small businesses, veteran owned small businesses, the local restaurants trying to make it through the pandemic. What is it for? All to help the big guys who hobnob with the president and don't want pesky small businesses competing with them for customers or contracts.
▶ 0:24:39Ranking Member Markey: Those big guys have crushed the little guys. If we are serious about cutting waste, crushing fraud, helping small businesses, let's start at the top. The president's handouts to his billionaire buddies, corruption and abuse of power, it is theft. Theft from small businesses, from hard-working americans. Theft from our future.
▶ 0:25:05Ranking Member Markey: Every tariff exemption handed to his political posse breaks the game -- riggs the game against small businesses trying to survive the resident's disastrous trade war. Small businesses had to take the president to the supreme court to remove those tariffs on them. Every dollar the trump family gets by treating our government as their own personal piggy bank is money stolen from everyday people.
▶ 0:25:38Ranking Member Markey: President trump and his family raked in more than $1.8 billion in cash and gifts just this year. It is main street versus mar-a-lago, which is what this hearing is all about. It is time congress does its job and holds this president accountable for turning the federal government into an arm of the trump business organization. The little guys are not the villains.
▶ 0:26:05Ranking Member Markey: President trump's corruption and waste and fraud and abuse is america's real billing and I look forward to this hearing, madam chair.
▶ 0:26:12Chair Ernst: Thank you ranking member markey. I want to extend a warm welcome to all of our witnesses. I am thankful that you turn -- that you took time out of your busy schedules to share your expertise with this committee. I will now introduce our first witness. Mr. louk rosiak. -- Mr. luke rosiak. Mr. rosiak has covered waste in the federal government for over 20 years.
▶ 0:26:42Chair Ernst: He is the winner of the prestigious tao prize for best reporting on government waste, and the 2022 media research center bulldog award for outstanding investigative journalism. Congratulations on your recent awards, it is well-deserved. Next, Mr. john hart is the ceo of open the books. Before joining open the books, he served as to medications director to late U.S.
▶ 0:27:09Chair Ernst: Senator tom coburn where he helped pass landmark transparency legislation that put federal spending online. His work at open the books includes oversight reports on improper payments, government waste and covid fraud. Our third witness, Dr. courtney lafountain is the acting director of financial markets and community investment at the government accountability office, gao, in washington, D.C.. Dr.
▶ 0:27:35Chair Ernst: Lafountain earned her phd in economics from washington university in st. Louis, missouri. She is a recipient of the 2022 arthur fleming award which recognizes federal employees for outstanding public service. Thank you again. I now recognizing ranking member markey to introduce his witness.
▶ 0:27:57Ranking Member Markey: Thank you. Dylan hedtler-gaudette is the acting vice president of government affairs at the project on government oversight, or pogo. Pogo began in 1981 as a federal watchdog and they have expanded focus on the entire federal government, fighting to achieve a more ethical effective and accountable federal government. Mr.
▶ 0:28:21Ranking Member Markey: Hedtler-gaudette has come at a range of issues including congressional stock trading, and a gun accountability, federal spending issues, foreign influence and foreign agents, judicial ethics and capacity as well as others. Pogo is one of my all-time favorites. It is great to have you here.
▶ 0:28:42Chair Ernst: And briefly I will take a moment to explain our lighting system to our witnesses. Mr. hedtler-gaudette, you just talk away. We will let you know if time has expired. There are three lights in front of you. Green means go, yellow means you are running out of time and red means wrap up your remarks.
▶ 0:29:08Chair Ernst: I ask unanimous consent that the witnesses' full statements be included in the record. Without objection, so ordered. As your written testimony has been made part of the record, the committee asks that you limit your oral remarks to five minutes. With that, Mr. rosiak we will start with you and you are recognized for five minutes.
▶ 0:29:28Mr. Rosiak: Thank you. It is an honor to appear before all of you. I've been an investigative reporter for nearly 20 years focused on waste, fraud and abuse in the federal government. We concluded that the most openly abusive and shockingly corrupt program is the set of -- is the so-called set-aside contract. Contracts are set aside from open competition for women and minority owned businesses and other groups.
▶ 0:29:54Mr. Rosiak: The small business administration gives -- this committee has important jurisdictional vantage points for a big pool of money in places like the pentagon. If you were doing something in your yard like taking down a tree or doing other work on your property, you would not do that work unless you called around and got three quotes from different vendors and choose the one with the best value. The government will build a tank without even trying to find the best value first through this mechanism that we call set-aside contracting.
▶ 0:30:25Mr. Rosiak: The program was created in 1978 mostly to help black americans start businesses since they had been discriminate against by the government. But I don't believe anyone in this committee would support the program if you see how it works a half-century later. At least 5% of all contracting dollars are diverted through set-asides but these billions do not go to poor minorities. They go to insiders in the suburbs of D.C., already the wealthiest counties in the country. Very little goes to black americans these days.
▶ 0:30:55Mr. Rosiak: The racial composition of america is more complex than it was in 1978. In the case of first-generation immigrants, this result in an odd policy for the government is prioritizing foreigners over americans. People from the country of india gobble up a lion's share of contracts while black americans get only 15%, not 50%. The scandal isn't that there have been a few examples of abuse. The scandal is that it is hard to find one that is not.
▶ 0:31:24Mr. Rosiak: Pick a random set-aside contract on usa spending. I chose oct consulting llc. This is not a notorious fraudster, I literally just pick them off a list. It is a guy who lists a home in virginia as his company address. He received 19 contracts from the federal government totaling 43 million dollars without having to share that he had the best price or best services. The government didn't even consider anyone else.
▶ 0:31:56Mr. Rosiak: Normally it would be illegal to give a contract to company with no competition. That can enable bribery and kickbacks. In this case it was illegal because the government certified oct consulting is a quote, subcontinent asian indian and american owned a small business participant. Perhaps the sba forgot to check with the U.S. census bureau. Indian americans are the wealthiest demographic in america with a higher income than whites.
▶ 0:32:25Mr. Rosiak: These contracts in the field of I.t. Didn't even exist during the era of government discrimination. Indians have never been underrepresented in the field of I.t.. Listing of D.C.'s most expensive real estate transactions shows that earlier this year, he bought an 11,000 square-foot estate replete with a wine cellar for $7 million. You can see it on the screen. Minority ownership is just to win a contract.
▶ 0:32:55Mr. Rosiak: Every staff member listed at oct consulting's website is a white man except for the owner and his wife. What did he do before he became a disadvantaged businessman and overcame all eyes -- all odds to become a millionaire question he went to george washington university and worked for 15 years as a financial consultant at bergsten young. This is a disgrace.
▶ 0:33:19Mr. Rosiak: You've all seen the video from a native american 8a contractor saying they subcontract the work out and get a huge cut. The story here isn't that a wily businessman concealed this from the government and finally got caught. It is that 8a is a corrupt conspiracy between government procurement officers and big companies. The beltway bandits like lockheed martin.
▶ 0:33:47Mr. Rosiak: Someone from government will be talking to a friend at one of these companies and say I have some work you guys might be a good fit for. But if they have to compete for it, they will have to make sure they charge less. The process will take forever and they can't guarantee they will get it. The contact officer encourage the beltway bandit to seek out a random 8a that is listed like a shell company. The government can immediately award the contract to the 8a, knowing they will subcontract the work back to the big firm.
▶ 0:34:17Mr. Rosiak: It is just a way to bypass competitive bidding, a process we have in place for a reason. So the guy in the video didn't swindle the government. We all knew, the government knew. There are skyscrapers down the street entices court -- in tysons corner with defense contractors who do not have to bid for contracts because we say they are alaska -- alaskan native corporations. Everyone of us knows there are not native alaskans in those buildings.
▶ 0:34:42Mr. Rosiak: 8a creates a random group of influence peddlers who like lobbyists get rich by selling their access to government insiders for the benefit of big business while driving up the costs for all of us. This is the kind of thing people hate about washington. You owe it to voters to end this program.
▶ 0:35:00Chair Ernst: Thank you for the testimony Mr. rosiak. Next we will go to Mr. hedtler-gaudette. Mr. hedtler-gaudette, you are now recognized for five minutes for your testimony.
▶ 0:35:14Mr. Hedtler-Gaudette: Thank you chair ernst, ranking member markey and members of the committee. I appreciate the opportunity to testify before you today on the important issue of waste fraud and abuse in the federal government, particularly in the contracting process. This is a really important and persistent issue and I am pleased to see the senate small business committee taking it up. My name is dylan hedtler-gaudette and I am the vice president at pogo.
▶ 0:35:45Mr. Hedtler-Gaudette: We are a nonpartisan independent watchdog group with 45 years of experience providing accountability, transparency and effectiveness in government. We exist to combat abuse of power and corruption, which necessarily includes trying to root out waste, fraud, abuse and conflict of interest. As you can imagine from the name of our organization, we believe strongly in the power and value of oversight. This hearing today is a prime example of good oversight work.
▶ 0:36:14Mr. Hedtler-Gaudette: We believe strongly that good oversight work is indispensable to the pursuit of good governance. This is why it has been so alarming to see what is happening over the past year or so. The current administration is systematically dismantling the very foundation of the federal government that it is supposed to be leading which has included attacking key oversight institutions.
▶ 0:36:37Mr. Hedtler-Gaudette: Whether it is firing inspectors general en masse, attacking oversight bodies such as the government accountability office and cutting off access to key agencies for press and journalists, nominating unqualified individuals to serve in critical oversight positions, largely relegating congress to the sidelines. The current administration has made a mockery of the very concept of oversight and accountability in government.
▶ 0:37:05Mr. Hedtler-Gaudette: We also saw the hyped but largely failed effort to root out waste, fraud and abuse under the so-called department of government of the. Beyond that we have seen direct assaults on the constitutional structure of government which has included the illegal withholding of congressionally appropriated funds and the unlawful firing of large numbers of federal workers.
▶ 0:37:30Mr. Hedtler-Gaudette: We have already heard today and will continue to hear more about the small business administration 8a business development program. We should put this program into context at the outset. All 8a contract dollars comprise about 5.4% of the total 700 $50 billion handed out in federal contracts last year, the majority of which are awarded to large well-connected powerful corporations.
▶ 0:38:00Mr. Hedtler-Gaudette: If there are people taking advantage of the 8a program or any other program in the government, they should be held accountable. We must realize oversight bandwidth and resources are finite and scarce and we must focus on the most egregious and largest examples of waste, fraud and abuse. We should not select oversight targets on the basis of political or ideological agendas. My primary purpose is not to criticize and complain and point out bad things that have happened.
▶ 0:38:32Mr. Hedtler-Gaudette: I am here to propose solutions. I want to focus on a couple of solution areas here and there are many more I lay out in my written testimony. First we must protect, strengthen and preserve the independence and effectiveness of key watchdogs and oversight practitioners such as inspectors general and the government accountability office. We must sufficiently resource and fund those organizations so they can perform critical oversight duties effectively.
▶ 0:39:00Mr. Hedtler-Gaudette: The senate also has an especially pivotal role to play in providing and advising consent on the nominations of individuals leading those entities in the senate must never allow the confirmation of politically compromised unfit and unqualified individuals. We must also take a long hard look at the ethics, rules and enforcement of those rules that we have on the books currently. They are insufficient to the task of rooting out corruption, conflict of interest and cronyism which play midwife to waste, fraud and abuse.
▶ 0:39:30Mr. Hedtler-Gaudette: We must stop the revolving door between agencies and the industries they are supposed to oversee and regulate. We have an opportunity before us today and in the rest of the 119th congress to advance real reforms to promote government integrity and cracked down on waste, fraud and abuse. Me and my organization stand willing and able to partner with anyone who wants to turn those goals into reality. Thank you for having me today.
▶ 0:39:57Chair Ernst: Thank you Mr. hedtler-gaudette. We appreciate your testimony. Next we will move to Mr. hart. Mr. hart, you are now recognized for five minutes for your testimony.
▶ 0:40:08Mr. Hart: Distinguished senators, thank you for the invitation to testify today. Every dollar saved in washington is a dream realized somewhere in america. Nowhere is that more true than the small business community. Small businesses are not just the engine of growth, they are teachers. They teach us that our founders were right. That thomas jefferson was onto something when he said the natural progress of things is for liberty to yield an government to gain ground.
▶ 0:40:39Mr. Hart: I can -- I commend this senate for committing this hearing. Instead of doing more with less, government does less with more. Over the past hundred years, the federal government has grown massively. In 1920 five it spent about $485 per person. Today that number is more than 20,000 dollars per person. In our economy we see this at work. The best way to make something expensive is for government to make it affordable.
▶ 0:41:11Mr. Hart: Sectors that have been the most subsidized such as health care and education have seen the worst inflation. On the other hand, sectors that have not been subsidized such as electronics tend to produce goods and service is that get better and more affordable over time. Tv's get thinner while government gets bigger. While government borrows, small businesses live in the real world with finite resources.
▶ 0:41:40Mr. Hart: Our unsustainable safety net programs are the primary drivers for the deficit in particular health care fraud but government salaries are part of the problem. Between 2020 and 2024, government salaries rose 33% faster than private sector wages. Meanwhile the number of federal employees earning more than $200,000 a year rose by 82%. Today we have more than 400 agencies and sub agencies in the federal government.
▶ 0:42:12Mr. Hart: Do small businesses really need 400 agencies to succeed or would they be better off with 200? 100? Maybe the four hour founders authorized in the constitution. Instead of expanding federal agencies, we should be expanding their agency. Meanwhile the agency charged with helping small businesses often misses the mark. Across the country we see sba lending flowing to organizations that most americans would never consider small.
▶ 0:42:40Mr. Hart: Sba backed loans go to fortune 500 firms, rolex stores, plastic surgery centers. These are not the mom-and-pop shops congress intended to support. Since 2023, auditors found more than 105 billion dollars in sba loans for private country clubs, beach clubs, tennis and racquet clubs and yacht clubs. Nearly half of that in 2025 alone.
▶ 0:43:09Mr. Hart: Another 11.8 billion dollars went to highly capitalized investment funds and venture finance firms, which was aiding wall street not main street. Fraud and improper payments compounded the problem. The sba -- the sba issued paycheck protection loans to 50,000 entities on the treasury do not pay list. Major law firms and accounting firms received $1.4 billion despite showing little or no financial hardship.
▶ 0:43:38Mr. Hart: And of course we all know -- sba issued 5500 93 loans to businesses owned by people who said they were 11 years old or younger. I applaud that initiative but I think that may not be true. While 3090 five loans went to borrowers aged 115 or older. 640 $5 million in questionable loans in just two years.
▶ 0:44:09Mr. Hart: As you noted, some fraudsters uploaded pictures of barbie dolls as a form of id to obtain loans. I guess that makes us all accessories to the fraud and waste of our own taxpayer dollars. But the good news is our system is amenable to change. 20 years ago, senator tom coburn teamed up with a young senator from illinois named barack obama to pass landmark transparency legislation that put all federal spending online for the first time.
▶ 0:44:39Mr. Hart: Obama said it is not often that two senators from different parties are able to bridge the partisan divide in this town and get something accomplished but the american people demand greater transparency and accountability and it is our honor, privilege and indeed our duty to provide the tools to make that possible. At open the books we are continuing that work. We encourage real-time transparency and building next-generation ai tools.
▶ 0:45:10Mr. Hart: We believe the best way to afford a surveillance state is with a surveillance citizenry. Thank you and I look forward to your questions.
▶ 0:45:17Chair Ernst: Thank you Mr. hart. Dr. lafountain, you are recognized for five minutes for your testimony.
▶ 0:45:24Dr. Lafountain: Thank you, chair ernst, ranking member markey and members of the committee. Thank you for the opportunity to discuss gao's work on small business programs. Sba's mission is to help americans start, grow and build small businesses. Today I would like to discuss opportunities I have identified for sba to improve management and fraud risks, improper payments, contracting programs to better meet that mission.
▶ 0:45:54Dr. Lafountain: My testimony draws on recommendations from gao reports in these areas since spring of 2020. I will begin with opportunities to better manage fraud risks and improper payments that surfaced during the pandemic. Sba moved quickly to respond to the pandemic economic shock and altogether it made a guarantee of more than $1 trillion in loans and grants and assisted more than 10 million small businesses. But the speed of those approvals came at the expense of oversight and fraud risk management, especially early on.
▶ 0:46:27Dr. Lafountain: Our work uncovered several weaknesses such as heavy reliance on self certification. Rather than putting stronger upfront safeguards in place against fraud and other improper payment. Where sba has acted on our recommendations, we have seen clear improvements. It has conducted fraud risk assessments and put controls in place to prevent funding from going to potential fraudsters or ineligible applicants.
▶ 0:46:54Dr. Lafountain: As of the end of fiscal year 25, we have seen improved oversight save the government at least $30 billion. Fraud risk and improper payments did not disappear with the end of the public health emergency. Sba's pandemic programs are still involving large numbers of loans and grants being viewed, monitored and serviced. Because of that, sba needs to continue strengthening safeguards.
▶ 0:47:23Dr. Lafountain: For example by expanding its use of data analytics for detecting fraud, strengthening work monitoring and improving processes for referring potential fraud cases to inspector general's. Sba should enhance its capacity to identify and track overpayments and subsequent recovery. I also want to emphasize that the lessons learned about fraud risk management from sba's pandemic program remains relevant for the other programs.
▶ 0:47:54Dr. Lafountain: The pandemic programs highlighted the importance of conducting robust fraud risk assessments, and we reported recently on weaknesses in fraud risk assessments by agencies participating in small business research programs. Where then if I do steps sba can take in its oversight role to help improve the quality of those assessments should those programs be real. Our work has underscored the value of robust internal controls and quality data for detecting bad actors and ineligible applicants.
▶ 0:48:25Dr. Lafountain: We reported recently on weaknesses in the data systems that sba uses to certify small businesses for contracting assistance programs. While we did not specifically examine those systems through the lens of fraud risk management, the more secure reliable system for validating, maintaining and disseminating information about program eligibility would clearly help reduce risks.
▶ 0:48:49Dr. Lafountain: Finally, in june the sba administrator announced a review of fraud in the 8a business development program, following a department of justice investigation that you discussed involving bribery and businesses participating in the 8a program. Applying the lessons sba learned about fraud risk management in its pandemic programs could be applied to support this effort as well.
▶ 0:49:15Dr. Lafountain: Bottom line, with a more robust system of internal controls in fraud risk management, sba would be better placed to support small businesses both during normal times and in future emergencies while also ensuring taxpayer dollars go where they should. This concludes my opening remarks and thank you again for the opportunity to speak.
▶ 0:49:33Chair Ernst: Thank you everyone for your testimony. We will move into the question and answer portion of today's hearing. I now recognize myself for five minutes for questions. ,, minutes for questions. We will start with you -- Mr. rosiak, we will start with you. Today the 8a program allows washington insiders to sell government access and contract awards. What is your assessment of the current oversight mechanisms and how effective have they been in preventing abuse?
▶ 0:50:03Mr. Rosiak: Oversight has not worked and it's not going to work. It is extraordinarily vulnerable to corruption and fraud and waste. Whenever there is the prospect of millions of dollars going to someone without the usual competitive process, the free market is going to find creative ways to get that money to where it would otherwise have gone, which unfortunately often means big companies. This waste is massive.
▶ 0:50:34Mr. Rosiak: If you look at the women owned businesses in certain industries, like asphalt paving and construction, anecdotally everyone I have talked to have said the majority of these companies are actually owned by the husband of the woman that is the supposed owner. But realistically how would the government ascertain who is in control of the company? The government would have to be in the bedroom to see who is exerting control over the business. It is not realistic.
▶ 0:51:05Mr. Rosiak: In cases of pastors, the disadvantaged companies retain 51% of the proceeds but it is virtually impossible to stop pass-throughs without having the sort of information the government realistically would never see. There are so many ways around it.
▶ 0:51:24Mr. Rosiak: If you partner with a non-disadvantaged companies supposed to get 49% or less, you could put a lot of the expenses on the disadvantaged side including taking some of the staff from the non-disadvantaged company and temporarily hiring them and putting them on the books of the disadvantaged company. It is trivial to hit that 51% marker, not to mention that in some cases they may just keep 51% if they are too lazy to cook the books.
▶ 0:51:52Mr. Rosiak: Just keep it essentially as senator markey made a godfather reference. That is what I heard from some 8a contractors, likening themselves to the mafia. Like protection money. To get these contracts, the big companies know, they have an unspoken agreement with these 8a contractors that you have to cut them in and that's not going to change. I don't see any way around it without just ending the practice of set-asides.
▶ 0:52:20Chair Ernst: Thank you for that response. Mr. hart, I want to go to something you referenced in your testimony. Your former boss, senator tom coburn, he worked with then senator barack obama. One of these instances where we have people of different parties coming together to really do something good for our taxpayers.
▶ 0:52:50Chair Ernst: They wrote the law creating usaspending.gov, a searchable public website of government spending. My team spends a lot of time on that website. Was it their intent for other transaction agreements or the ota's to be omitted from the website?
▶ 0:53:08Mr. Hart: Absolutely not. That was never their intention and that is a tremendous problem right now. That is one of the reforms we need is to immediately fix and patch that so that money cannot be hidden from taxpayers. We have to look at why did the founders right transparency into the constitution? They used the word shall in article one section nine clause seven. Shall provide a regular account of proceedings.
▶ 0:53:36Mr. Hart: They didn't say you can provide them if you feel like it or if it is easy or if it will punish your enemies. They said shall, so it is a requirement. That language precedes the first amendment and the bill of rights. Transparency is a foundational principle, it is the oxygen of the public square.
▶ 0:53:55Mr. Hart: They wrote that today, I'm convinced they would demand real-time transparency be the norm and our ambition 20 years ago was not just to pass a law but to create a norm, this assumption that of course government spending is online and of course we can search what government is doing. Government always lags behind technology so we need to move quickly to upgrade our transparency laws.
▶ 0:54:19Chair Ernst: I agree. Bottom line if we don't know who is receiving taxpayer dollars and why, then there is no way for us to track that and hold recipients responsible for delivering what they have promised to our taxpayers. My time is expiring and I will reserve the rest of my questions for another round and with that I will turn to senator hirono.
▶ 0:54:48Sen. Hirono: Thank you madam chair. As we are focusing on waste, fraud and abuse, there is so much of that rampant in this regime that I wouldn't know where to begin. While this is the small business committee and you want to focus on waste, fraud and abuse in the small business sector, there is massive waste fraud and abuse going on in our government and I want to point out things such as the destruction of the white house and a ballroom being paid
▶ 0:55:22Sen. Hirono: For by individuals and corporations that seek to get support from this administration. If that is not pay to play, I don't know what is. Excepting $50,000 in what looks like bribes to begin amending contracts that he has a relationship or ownership interest in. Talk about ethical problems, there is all that.
▶ 0:55:44Sen. Hirono: Meanwhile this regime has gotten rid of all of the entities, independent entities such as the ig's who might be able to point out to us that this kind of waste, fraud and abuse is going on. I'm also aware that the chair has sent letters to almost two dozen agencies and departments, asking, demanding for a pause on the 8a program.
▶ 0:56:11Sen. Hirono: I don't even know if these agents or departments have the authority to do such a pause because we are talking about contracts and I don't even know what that means to pause, but to know the 8a program consists of entity owned businesses which are native hawaiian organizations, native alaskan organizations, tribal organizations, these are entities that have to give back to communities who can access contracts, large contracts, and
▶ 0:56:44Sen. Hirono: 8a also includes individually owned businesses and they have to show that they are economically and socially disadvantaged. So madame chair when you write a letter saying you want to pause the 8a program, you are focusing your attention on the native owned businesses, who hire thousands of people, giving back to the communities, alleging
▶ 0:57:16Sen. Hirono: Massive fraud, I would like to see that. If there is fraud going on in the 8a program, as in any program, we should go after these people. You don't go in and say wipe out the entire program. I would say that is overkill and I would like to report my serious concern about what you are doing madam chair. I have a question for Mr. hedtler-gaudette. Would you say -- you have an awareness of the 8a.
▶ 0:57:47Sen. Hirono: Would you say that it is fraught with rampant fraud and abuse?
▶ 0:57:53Mr. Hedtler-Gaudette: No. As you just mentioned with any program in the federal government, especially ones that deal with money, there are going to be people who take advantage of the system.
▶ 0:58:06Sen. Hirono: Considering it is made up of $31 billion in contracts, I should think there should be concerns about waste, fraud or abuse in all of those entities getting 755 billion dollars in government contracts and I am very aware of the need for contract performed within the armed services committee because I sat on that committee over 12 years and was the former chair of that committee and they have spent their entire time
▶ 0:58:37Sen. Hirono: Trying to figure out how to do contracting reform. We know there are issues related to oversight. This is a desire to help entities that would otherwise have a hard time, getting a fair shake, a fair share of federal contracts.
▶ 0:59:00Sen. Hirono: This committee is supposed to be supporting those efforts, not supporting waste and fraud, of course not but to enable entities that would otherwise have a difficult time getting their opportunity to provide services to our country.
▶ 0:59:18Sen. Hirono: When I think of all of the conflicts of interest and pay to play going on, not to mention the president wanting to hundred million dollars from the department of defense which he considers his law firm, he considers pam bondi his lawyer. He wants the dod to go after his enemies. What is that? Abuse. Why don't we pay attention to those things? Ok.
▶ 0:59:46Chair Ernst: You have a few seconds.
▶ 0:59:49Sen. Hirono: I have run out of time.
▶ 0:59:51Chair Ernst: Thank you. Just because the member has brought into question my motives, I did say pause on the 8a program, I did not say cancel the 8a program, because of the recent abuse that has been brought to light through various investigative pieces of journalism. You are out of order senator hirono, thank you.
▶ 1:00:19Chair Ernst: Because of the abuse that has existed in the system, and I think most americans and especially our small businesses would want us to open the books and provide transparency. So that is what we are asking, a complete audit. Those fearing audits perhaps should not be participating in federal government programs. I began my political career as an auditor. I believe in transparency and oversight.
▶ 1:00:49Chair Ernst: So next we will recognize senator houston -- senator husted of ohio.
▶ 1:00:58Sen. Sheehy: Was did -- Sen.
▶ 1:01:02Sheehy: Use
▶ 1:01:03Sheehhusted: Given the events, the recent events, the covid fraud in the system was outrageous, including compensation. We are dealing with an issue in minnesota right now, perhaps as much as a billion dollars was stolen and money diverted away from what was supposed to be a food program for poor kids, put into the hands of criminals.
▶ 1:01:32Sheehhusted: I was just on the senate floor, talking about the affordable care act premium subsidies. Which we know have been ripped off between 21 billion dollars and $27 billion. This is the huge issue. People lose trust in government when they think the programs don't work. I'm going to ask each to answer a yes or no question because I am interested in your take.
▶ 1:02:03Sheehhusted: A quick story, I was with a road contractor, doing asphalt and things like that. I asked -- I said what do you think about the set-aside programs? He said they don't really bother me because everybody who has a set just brings their trucks here, -- set aside just brings their trucks here, marks up the price and then delivers to the same place I would.
▶ 1:02:34Sheehhusted: Is that illegal?
▶ 1:02:38Mr. Rosiak: One word?
▶ 1:02:40Sen. Husted: One word.
▶ 1:02:42Mr. Rosiak: Yes.
▶ 1:02:50Dr. Lafountain: I don't know the answer but I would be happy to connect you with our experts on that.
▶ 1:02:55Sen. Husted: The answer I received back was that it was not illegal. It is offensive, it is not how these programs are designed -- designed and it is a rip off to the taxpayers, I think we can all agree with that. It may not be illegal but I work on -- we should work on this to make it illegal because it is not what the programs are supposed to be about.
▶ 1:03:24Sen. Husted: I know finding the fraudsters in the act is a hard thing to do. We have new technology at our disposal, things like ai and tools. I will start with, is it Dr. lafountain? What tech tools like ai, is it possible we could do a better job with tools like that?
▶ 1:03:49Dr. Lafountain: Let me share a couple of things that we've learned from looking at the role of data analytics and similar tools in fraud detection and prevention. We have definitely learned that leveraging big amounts of information and big data across these programs is important for helping agencies detect and prevent fraud.
▶ 1:04:15Dr. Lafountain: We have also learned that leveraging external data, an agency needs to look outside of itself, and find other ways to validate information it is receiving. That's another important way for agencies to detect fraud.
▶ 1:04:37Dr. Lafountain: We do have some work looking at how ai can be used for this purpose and in other purposes, and we would be happy to share the findings of that when we have completed our work.
▶ 1:04:50Sen. Husted: Mr. hart, do you have thoughts on that? What other tools should we use? A lot of the fraud is in the design of these programs while they may be well intended and noble in their pursuit, the practical application is that fraudsters always seem to outwit government and misuse these programs, and don't use them for the purposes they were intended.
▶ 1:05:17Mr. Hart: I will try to be very brief. But between stents when I worked at the senate, I was a consultant for quite a few silicon valley companies where they design these technologies. I'm excited about it for a couple of reasons. What ai can do is pattern recognition and pattern production. I was just in london recently and there are live facial recognition vans everywhere.
▶ 1:05:47Mr. Hart: I found that very dystopian but it inspired me to think about can we do live spending recognition? What we need to do is use our data center, we have the biggest data center of government spending. You need big data, you need an algorithm and you need a processing core. We are working on building tools that can do pattern recognition and then pattern for addiction.
▶ 1:06:17Mr. Hart: We could run circles around cbo and provide those tools to individual taxpayers and make sure that authority and technology belongs with the people. That is achievable and that is what we are working on.
▶ 1:06:30Sen. Husted: Thank you for your time.
▶ 1:06:33Chair Ernst: We now recognize senator markey.
▶ 1:06:36Ranking Member Markey: Thank you madam chair. I want to take note of who is here serving as an expert on supposed fraud in the 8a program. I will have his words behind me to speak for themselves as for why he is qualified to speak on this program. Yvonne -- even elon musk suspended him from twitter for his extreme views. Mr.
▶ 1:07:02Ranking Member Markey: Rosiak's history shows he starts with a point of view and spreads misinformation and conspiracy theories to support his views and that is not journalism. For the past almost 50 years, the 8a business development program has broken down historical barriers that underserved small business owners face when trying to contract with the federal government.
▶ 1:07:33Ranking Member Markey: Decades of research, real stories of discrimination and statistical analysis show that historical discrimination has created an unequal playing field in government contracting. It also shows that discrimination continues to this day, working against minority contractors. Yet programs like 8a are under an all-out attack from opponents within the government and outside the government who claimed the programs are right with fraud.
▶ 1:08:04Ranking Member Markey: It is important to root out instances of fraud. These opponents aim to tear down programs, that address historical discrimination. Mr. hedtler-gaudette, how do programs like 8a and other small business contracting programs help competition, to ensure that in the federal contracting space, that there is room that is made for access for the groups that historically have been left out?
▶ 1:08:34Mr. Hedtler-Gaudette: Thank you for the question. Small businesses are -- as everyone on this committee would agree -- the backbone of the american economy. They are not the backbone of the federal contracting system because there are extraordinarily large and well-connected and powerful corporations who vacuum up the majority of federal contracting dollars. This is particularly true in the defense space but also elsewhere.
▶ 1:09:04Mr. Hedtler-Gaudette: Sba programs and small business set asides are critical to unlock the stranglehold of very large companies having on federal contracting dollars. When you expand and diversify your industrial base, you make it healthier and more resilient. When you have an eye to broadening and diversifying within the small business space and trying to make sure the playing field is level, you do an even better job of increasing the health and resiliency of the industrial base.
▶ 1:09:34Ranking Member Markey: Mr. hedtler-gaudette, do you believe small disadvantaged businesses contracting programs make up the most fraud or waste in the federal government? Do they make up the most within the federal contracting space?
▶ 1:09:50Mr. Hedtler-Gaudette: That is a categorical no, not even close.
▶ 1:09:54Ranking Member Markey: Do you believe the trump administration's actions to the 8a program are effective?
▶ 1:10:03Mr. Hedtler-Gaudette: I do not. If they cared deeply about any of these programs, they would have an inspector general do it. I think it is too convenient that who they are targeting falls into a category of ideological or political viewpoints they disagree with.
▶ 1:10:19Ranking Member Markey: And they hired the best inspector general's in january. In june, sba announced a so-called audit of the 8a program. This month sba ordered all 8a firms to submit extensive documentation over the holidays as part of the investigation. Oversight is important to make sure that government programs are working properly but I'm concerned the sba investigations are politically motivated.
▶ 1:10:50Ranking Member Markey: Dr. lafountain, the gao provides the standards for government audits through what is known as the yellow book. Can you tell us how audits are done and what your -- how your office typically conducts them?
▶ 1:11:05Dr. Lafountain: Thank you for the question. I love to talk about the yellow book. The yellow book is our nickname for the generally accepted government auditing standards. This is a framework for conducting high quality get -- high quality audits with objectivity and independence. The yellow book is a big book and covers a lot of territory.
▶ 1:11:32Dr. Lafountain: It explains the purpose of government auditing, which is to provide objective analysis and information needed to improve government performance and accountability, and includes standards for conducting audits ethically, independently and with sound professional judgment and other matters related to making c1 it is accountable throughout our auditing process.
▶ 1:12:00Sen. Markey: Has a spoke about in my opening statement, it is ironic to talk about this and ignore the elephant in the room. President trump's supercharged pay to play system. Can you explain how president trump is using the federal contracting system to reward donors and political supporters?
▶ 1:12:25Mr. Hedtler-Gaudette: One brazen example of this is worth underscoring because of how shocking it should be to everyone. Recently we had a organization that scanned all of the donors to the vanity project and a large number of them were prime
▶ 1:12:57Mr. Hedtler-Gaudette: Contractors who in aggregate held about 280 billion dollars worth of federal contracts. There is a clear pay to play.
▶ 1:13:08Sen. Markey: And what effect do you see that having on small businesses?
▶ 1:13:16Mr. Hedtler-Gaudette: The more they received, the more they crowd out and close out opportunities for other small businesses.
▶ 1:13:24Sen. Markey: Had does that compare to what the administration is doing with big business contracting? >> I think in terms of scale and scope it doesn't really prepare at all.
▶ 1:13:37Sen. Markey: We thank you. You have helped to clarify what is going on here today. We still have not had a hearing on what the trump administration is doing. Thank you.
▶ 1:13:59Chair Ernst: If you would like to respond, you can respond. >> if I could have a copy of that poster frames that would be amazing. You talked about the prospect of a president giving contracts to his friends. I think that is a concern for all of us.
▶ 1:14:25Chair Ernst: Let's say purely hypothetically speaking president trump wanted to steer a contract to spacex. He cannot do that under the competitive bidding process. They get the sole source contract. And they said out to the people in the network. That is the concern here.
▶ 1:14:59Chair Ernst: The procurement is like water. It follows the path of least resistance. There is a couple of reasons that this is in the spotlight now. One of them is the supreme court. There is a court case that is subjected to an injunction right now.
▶ 1:15:29Chair Ernst: We cannot have a hearing about it. This committee will have to go back and revisit the legislation and they will have to do a rulemaking process. Right now the government cannot treat them differently. If you have a minority set-aside program without the minority you are left with just a random set-aside program.
▶ 1:15:59Chair Ernst: That is rife for all types of exploitation.
▶ 1:16:02Chair Ernst: I met my five minutes.
▶ 1:16:04Sen. Markey: I gave you more time.
▶ 1:16:07Chair Ernst: This is part of my questioning. You will get recognized again. Thank you. I just want to get this straight. We were talking in his line of questioning he said the largest amount of fraud, waste, and abuse is not in the small business administration and its programs. I might be paraphrasing a little bit. This is however the small business committee.
▶ 1:16:38Chair Ernst: That is what we are focusing on today. You said that does not happen. I went through quite a bit of dollars of fraud and waste that happened in these programs.
▶ 1:17:09Chair Ernst: You said we should not go after people committing fraud in the small business programs.
▶ 1:17:17Mr. Hedtler-Gaudette: Absolutely you should go after that wherever it exists.
▶ 1:17:24Chair Ernst: Thank you for the clarification. I have focused on this for the past 11 years. Regardless of which agency or president was at the helm. I think it is fair to say that we fight for taxpayers.
▶ 1:17:52Chair Ernst: That is the purpose of today's committee. We are focusing on the fraud that has occurred in these programs. A question for the entire panel just very quickly, just last week in my home state of iowa, just to show I do not pick on everybody without recognizing issues in my own home state, there was a former cuban military sergeant who came to the U.S. illegally after crossing the southern border.
▶ 1:18:23Chair Ernst: He was sentenced to four years in federal prison for his role in orchestrating a pandemic benefits fraud conspiracy involving $2.4 million in fraudulently obtained ppp loans. This was in iowa.
▶ 1:18:50Chair Ernst: Meanwhile many others were struggling to keep their lights on during the pandemic. Because I only have 20 seconds left, we have a lot of egregious examples. Wouldn't you agree that this is someone who should have been prosecuted? >> yes.
▶ 1:19:11Mr. Hedtler-Gaudette: Yes.
▶ 1:19:13Dr. Lafountain: Based on our work, yes, it should be investigated.
▶ 1:19:19Chair Ernst: Thank you.
▶ 1:19:27Sen. Markey: Thank you. One of your tweets says that d.e.I. Hires are down. I don't think the evidence would bear that out.
▶ 1:19:58Sen. Markey: It continues to reflect a pre-existing bias. In your testimony you called for transparency around contracting. A recent study found that donors to the presidents ballroom have received billions of federal contracts in the last five years. Do you think those donors to the ballroom should have to disclose this?
▶ 1:20:19Sen. Markey: >> what I believe is in our constitution the founders described transparency not as a two-way street but a one-way street. As taxpayers we have the right to inspect the government's checkbook. The government does not have the right to check our textbook. That is the constitutional standard of transparency. When we conflate them, we dilute the meaning of transparency. I am an equal opportunity oversight person.
▶ 1:20:51Sen. Markey: If we expand the aperture of the hearing to look at lowering spending, we should also look at health care fraud. There are billions of dollars in health care fraud. The other title of the hearing could be the opportunity cost of fraud for small business which is extreme all over the federal government, particularly in the health care sector.
▶ 1:21:14Sen. Markey: This year I have sent a number of letters to the sba asking about doge's activities. I requested a meeting with him in february. That has yet to occur. We have not have that. They are like in a witness protection program. We know they are someplace.
▶ 1:21:46Sen. Markey: Same thing is true in the environmental committee. No hearings. We don't have any hearings on it. We know there is a lot of waste and fraud and abuse and corruption going on. We're just not going to have a lot of information about it. That is a crime in and of itself that weird are going to look at that.
▶ 1:22:17Sen. Markey: It is hiding in plain sight. Right in front of us. What kind of self-serving activities are they engaging in? Who are they helping? What is going on? We are the committee of jurisdiction and we have not had a hearing yet. We have not had a joint investigation. We have done nothing to find out what is happening.
▶ 1:22:43Sen. Markey: What little we do know about their dealings is coming from the media rather than responses to congressional requests. I have made these requests over and over and over again. In rare cases that I have received a response there is no helpful information that we get. They write their answers in invisible ink.
▶ 1:23:09Sen. Markey: They do not provide information that the public is entitled to. It is a one-way street. Coming out of the federal government to the american people. They are not going to provide that information.
▶ 1:23:27Sen. Markey: It is my understanding that they have had some trouble getting the administrator and her team to respond to requests for information. I'm glad there is a governmentwide review of the administration's efforts. To implement executive orders. Including how doge has been used to access data and make transparent decisions.
▶ 1:23:58Sen. Markey: What business are they helping? We don't know. It is in every agency. It is the entire federal government. Are you looking to see how they have complied?
▶ 1:24:15Dr. Lafountain: We have a body of work. Eight engagements ongoing. We do have one engagement on data protection that is looking at compliance and privacy and information law.
▶ 1:24:31Sen. Markey: By requests that this committee hold a hearing on the findings on doge and their compliance with data and security laws. This would be helpful since we never heard from them despite our efforts to get them to brief our committee. I make that again is a special request to you.
▶ 1:25:00Sen. Markey: I think the american public is waiting for the answers to these questions. About what is going on inside the sba.
▶ 1:25:08Chair Ernst: Thank you. Doge does happen to be the democrats favorite bogeyman out there. I want to be clear that under this administration we are finally reining in government spending and rooting out waste, fraud, and abuse. During the pandemic and under the biden administration, sba loans were given out like candy.
▶ 1:25:34Chair Ernst: Let's not forget that individuals who used barbie dolls as their photo identification were approved for sba loans. This is totally unacceptable.
▶ 1:25:49Chair Ernst: In march it was announced that because of the hard work done in this area, they had uncovered more than 500 sba loans equivalent to millions of dollars where the listed borrower it was 11 years old or younger. Doge is the democrats favorite bogeyman. If saving taxpayer money scares them, that says more about their priorities than ours.
▶ 1:26:21Chair Ernst: Our my democratic colleagues saying that we should be ignoring billions of dollars of waste, fraud, and abuse because we are focusing only on sba today and not the entire federal government? The biden administration tried to sweep this problem under the rug. We are not doing that. We are going to do everything we can to stop it from happening again. And we collected every penny that was stolen or misspent.
▶ 1:26:50Chair Ernst: As chair of the caucus I agree with the aim of doge which is to ensure that taxpayer dollars are being used effectively. This demonstrates why to create change within the federal government, those -- doge has been given access to systems that allows them to cut through launceston -- long-standing hurdles to find waste in government.
▶ 1:27:21Chair Ernst: All americans should note that doge employees are federal employees. Subject to the same background checks, privacy laws, and restrictions regarding data sharing as any other federal employee.
▶ 1:27:40Chair Ernst: If we want to discuss hypotheticals and leaks data or whatever might be out there, let's talk about real leaks and failures, starting with how a former irs contractor leaked to the private data of more than 400,000 taxpayers including president trump.
▶ 1:28:01Chair Ernst: I have heard my colleagues questioned if doge has saved money and the answer is a resounding yes. They are working to generate real savings and estimates that it has saved about $240 million so far. It is saving americans money across the federal bureaucracy.
▶ 1:28:41Chair Ernst: I would have loved to have had the contract. Thanks to doge, that contract was canceled. While does keeps delivering more savings everyday, democrats are more upset by the efforts to stop was full spending -- wasteful spending than the misuse of taxpayer dollars. As I have always say, if you cannot find waste in washington there can only be one reason.
▶ 1:29:11Chair Ernst: You are not looking. Shouldn't we be pulling the plug on government waste instead of those who are finding it? I have one minute left. Speaking of waste, and I gave the egregious example of a illegal migrant militant who scanned the federal government for $2.4 million.
▶ 1:29:42Chair Ernst: Can you provide any other egregious examples of where there has been scams in the federal government. >> one example we have not touched on is in atlanta there was a mail carrier who stole paycheck protection program checks from peoples mailboxes along his route and used it to provide personal clothing for himself. We have to ask why that happens.
▶ 1:30:08Chair Ernst: I believe it happens because when government gets in the business of deciding you can pick winners and losers, what it ends up doing is punishing the winners and awarding the losers. Made with and have a of federal small business administration wish to return business-to-business and to the states. And let them navigate the questions.
▶ 1:30:28Chair Ernst: That is pretty profound. Thank you for that. I would also like to make sure that the ranking member is aware that on october 30 I requested the sba inspector general to do an audit of this program. I ask unanimous consent to that my b entered into the record. Without objection. So ordered. Do you want another round? You are recognized for five minutes.
▶ 1:30:57Sen. Markey: I would love to see the doge representative sitting here to witness table under oath. I would love to see who that is. We have about a 50% chance of picking that person out of a two person lineup. We have no idea who it is. We have no idea with her name is. We don't even know who they are. And we are supposed to take their word for it. We don't even know their name.
▶ 1:31:29Sen. Markey: How can they have any respect? For people who are too afraid to have us know their names. Too afraid to appear before this committee. They beg to be put in the witness protection program so they can hide out from any scrutiny from the public. And yet we are supposed to respect the numbers they are giving us. We don't even know who they are. This is like anonymity.
▶ 1:32:01Sen. Markey: This is like soviet russia. This is like the deepest, darkest kind of proceeding that we are operating in. We don't have any information to give any kind of respect to any number that they give. I do know one thing, the biggest part of the covid fraud appeared in 2020 when trump was president. Is that not correct?
▶ 1:32:30Sen. Markey: Is that not the conclusion you have reached?
▶ 1:32:32Dr. Lafountain: We did find that they were more vulnerable to fraud early in the program. I checked with our experts and we do not have estimates that break it down from one year to the next.
▶ 1:32:49Sen. Markey: Very vulnerable to fraud during the trump administration. But we're not going to have a hearing on that. We are not beyond taking citizens who have small businesses and somehow being able to smear them.
▶ 1:33:21Sen. Markey: When the vast amount of all of the fraud is not going to come in here and sit down. Maybe we could let them come in like they are ice agents and put bags over their heads. Maybe they could come in wearing masks. We could just have them sit out there and maybe mumble through their masks. About what they have found. We could at least cross-examine them. They are afraid to be recognized.
▶ 1:33:51Sen. Markey: That is a characteristic of the trump administration. People want to put on their mask. Like they are engaging in criminal behavior. Behavior which is unconstitutional. According to the rule of law in our nation. According to due process protections which all of these people in all of these programs are entitled to. That is pretty much my take on this.
▶ 1:34:21Sen. Markey: Until we have these people in here to testify we don't owe them any honest respect at all. Any representation. It is the gao and the inspector general who has to conduct proper oversight of federal programs. Unfortunately this is not a hearing focused on finding bipartisan solutions to those problems.
▶ 1:34:49Sen. Markey: That is what I would like to do rather than turning this into a star chamber. Into a trial. Where it is impossible for us to get to the accusers. Sending out information without anybody to cross-examine them. We should be having real oversight hearings. We should be calling on the administration to make sure the sba programs are running the way they are supposed to.
▶ 1:35:20Sen. Markey: We should be collaborating with the sba inspector general and the gao. To get to the bottom of what is going on right now. Congressional oversight is critical. It is absolutely essential and we cannot do it if we don't have the facts. If we cannot get the information.
▶ 1:35:40Sen. Markey: Otherwise it just turns its political targeting of programs and individuals who have invoked the political ire of particular segments of the trump empire. That is not real oversight. As members of this committee we should do everything we can to help small businesses. That is what this is all about. It is stigmatizing those who are already most vulnerable.
▶ 1:36:08Sen. Markey: We are ignoring the elephant in the room. We know it is the trump administration. Until we get to that gop elephant, we are not going to be doing much. We are just demonizing those who have been most vulnerable.
▶ 1:36:26Chair Ernst: Thank you. With that we will go ahead and wrap up of. I will take a little bit of issue in describing the U.S. as soviet russia. Those who served in uniform for this great nation feel otherwise. I just wanted to make that very clear.
▶ 1:36:49Chair Ernst: I am proud of my country regardless of who is at the helm because our country is made of incredible men and women from all walks of life. If there are no further questions I want to thank our witnesses for being with us today. I ask unanimous consent that the record of today's hearing remain open for two weeks for members to submit questions and advise and extend their remarks and present additional information in the record.
▶ 1:37:19Chair Ernst: With that, the committee on small business and entrepreneurship stands adjourned. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap.org]