Washington, DC – A hearing before the House Small Business Committee Thursday probed how to reignite small business growth on the economically troubled island of Puerto Rico.
With Puerto Rico currently suffering from more than 12 percent unemployment and a loss of more than 250,000 jobs since 2006, Democratic lawmakers examined how procurement policy can be leveraged to stimulate small business job growth in the Commonwealth.
The hearing comes on the heels of the one-year anniversary of Puerto Rico Oversight, Management and Economic Stability Act (PROMESA,) a law enacted last year to help Puerto Rico restructure its $70 billion public debt.
“When small businesses employ more than 80 percent of all private sector workers, it is vitally important we ensure Puerto Rico’s entrepreneurs have the opportunity to succeed,” said Rep. Nydia M. Velázquez (D-NY), the Ranking Member of the Committee.
“I want to be certain the Small Business Administration is doing everything in its power to help small firms in Puerto Rico win their fair share of federal work, which will create badly needed, good paying local jobs,” she said.
Velázquez has authored legislation that would make a number of changes to SBA policies in order facilitate Puerto Rican firms’ participation in the federal marketplace, while also expanding access to capital and bolstering entrepreneurial development services for companies on the island.
Among other changes, her bill, H.R. 2488, the “Puerto Rico Small Business Assistance Act”, would for the first time create a contracting preference for small businesses in Puerto Rico that are doing work in the commonwealth.
“Puerto Rico firms — whether they are small, medium, or large — receive relatively few federal government contracts,” added Rep. Stephanie Murphy (D-FL), Ranking Member of the Subcommittee on Contracting and the Workforce.
“As discussed in the report issued by the Congressional Task Force on Economic Growth in Puerto Rico, the territory ranks nearly last when it comes to the total dollar value of federal contracts performed within each state, and dead last when considered on a per capita basis,” Murphy said.
Last month, the Government Accountability Office issued a report on federal contracting that found while small businesses in Puerto Rico received a relatively high proportion of federal prime contracting obligations for work performed in Puerto Rico compared to small businesses nationwide, many Puerto Rican small businesses miss out on opportunities because of communication barriers and misunderstanding of the federal procurement process.
It also noted that the majority of federal contracts awarded in Puerto Rico result from full and open competition even when the business is certified in one of the four SBA contracting programs, showing that certification benefits are lost on island businesses.
“Doing nothing is no longer an option and in that regard, I’m encouraged to learn that the SBA is serious about its duty to Puerto Rico’s entrepreneurs,” said Rep. Dwight Evans (D-PA), Ranking Member of the Subcommittee on Economic Growth, Tax and Capital Access.
“I look forward to working with my Committee colleagues and with the Small Business Administration to move legislation forward to help small businesses on Puerto Rico because they are the engine needed to promote growth, drive stabilization, and achieve economic revitalization,” he said.
Overall, Democratic Members of the Committee emphasized the need to put Puerto Rico back on a path to prosperity.
“Puerto Ricans have fought and shed blood in almost every major American military conflict,” Velázquez concluded. “We owe it to them — our fellow U.S. citizens — to use every tool at our disposal to help Puerto Rico succeed economically and provide its residents the future they deserve.”