-- ensure [unintelligible] >> sometimes more than once a week. some come around very regularly. i am pleased we should be focused on that. i think outside the the nec, one of my colleagues referred to the officials' meeting. the have encouraged the officials would to work together and the department to do so as well. i think the international development secretary and i can say that relations between the foreign office, despite mr. this

question -- this tbs -- mischievious questions, i do not eat -- paint. but coordination across departments and ministers, there is also a responsibility between departments to make sure we have an overall strategy. that is what is happening in each of these departments. >> we do speak to one another. >> if i may add something, what really struck me as we have gone through the many discussions on a wide range of issues, is that you cannot predict what the

foreign office of view and the defense view, this is not operating as a series -- we genuinely have a discussion about how we want to go forward on any given question and what resources we have available to us. people talk in terms of what their department can contribute. i have been impressed by the extent to which having this formal meeting and having it discussed many things rather than just one thing makes it be the case that people stop thinking of themselves -- they engage together as a manifestation of the government tried to solve problems. >> [unintelligible]

>> i think it is getting better. the fact that the three of us work together for of five years running up to the election, there is no doubt that all that the national security council has made clear both white to the aged -- why they should be -- these humanitarian problems in libya. the work we do and the way we are joined together is extremely important for getting across a in that respect. >> i want to ask -- >> we should also point out there is a huge amount of the engagement a round of this

process. meeting thatiefs' other departments attend. other departments attend the meeting among the evening to look the current operations. that is also attended by other departments. there are a number of other bodies cross referencing and feeding into the process on a real-time basis. it is not just the officials. you have a whole range of cross department tell people. >> this as an outsider of the cabinet, why doesn't it meet --

presumably, the beans that you are dealing with our important that need input from the rest of the cabinet. >> we do not -- it is also met more frequently than each week precisely to consider the things that might need to be referred to the cabinet. there have been frequent occasions, i would not like to try to recall the exact number, but there have been frequent occasions when the decisions arrived at have been discussed at the cabinet of that following week. it depends on the circumstances but it is soon enough. >> that is a week later.

i have given some thought to this. i have deeply thought about it a long while back. it is quite frequently useful for the results of one meeting to be aired before there is a further debt -- discussion of it. otherwise there are those who were not present and had the opportunity to listen. if you word to seek this -- persuaders to move it back, you would have to move it way back. i do not think it would make much difference at that point. >> what capabilities are needed to the national security strategy, homeland defense, and

overseas. i am not talking platform. >> we need to have that sound sources as has been said across all environments. we need to be able to have our land the source is capable of expedition. we have to have maritime capability to take care of piracy. we need to be able to take part in training and other missions. we have to of the ability to support those admissions. we have to have lift capability when required. we have to be able to have a sufficient number.

also the protection of the ground forces if we are attacked. again, i can go until it is tedious. that is why we went to an adaptive policy. that is not we did not lean too heavily toward any other type of asset precisely because we believe that we may be required to do a range of things. the ultimate threat to -- >> did you lean toward property? did you take into consideration? >> we just published -- we had decided that it was the essential to invade.

we had to have the technology to back it up. it crypts in, that is a sovereign capability that we need to have. leader of the debate about how internationalized we are becoming. >> i should add that as we work together on the question of the white paper, we have been enormously clear that it is defense requirements that should drive the process and not an industrial requirement. if there is a defense reason for a sovereign capability, we should invest. but we are not allowing ourselves to be led by the

concerns, however valid, of the shareholders or national economic considerations. in dealing with defense, we have been clear minded about these requirements. >> de you have as criteria in methodology -- a methodology on which decisions have been met? >> we had a single tool which we looked at when making decisions about -- we had the proposal,

capability implications of the decisions, what capability we currently have, that have been diminished or lost at as a result of the changes, and we looked at operational implications that we might not be able to do if we took that decision. there are regeneration requirements, how quickly do we regenerate. and then the real world of risk. this is the answer to your question. we cannot find this balance of forces on an abstract basis. we do not have the budget to buy everything you could possibly need. that is one of the reasons for us. it gives us the changes in real time against which to measure

the change, and anything we might need to do in the future. >> now i remember. you give us this evidence in june of last year. i am trying to pick up a bit of speech. i know people have a lot of things to get through. if both members of the committee -- >> i would like to clarify, the decisions were based on acceptable risk. how is that risk defined and who defines it? >> we look at the evidence that exists about what capabilities

might threaten the u.k. and our interests. we need to prepare. there are some capabilities that do not threaten us and others that might. that is why i gave the example before of maritime vessels in the gulf. the real world risk was too great. that may change. it may be become a benign paradise. >> could you tell us about what the main driving forces behind other countries? it is -- is it to have access to

the military? could you clarify which one of your departments takes the lead on establishing those alliances? >> the driving factor behind national prosperity and national security. they are both present in a different combination. if it is nato, it is national security. the european union is about maintaining our national prosperity. our relationship with united states is a mixture of the two. and of the rut -- countries of latin america, it can lead to a defense cooperation. there are elements of defense

cooperation from one case to the other. one thing to note on the national security council is that one of the emerging power is a subcommittee which is quite heavily prosperity- focused even though it comes under the umbrella of the national security council. it is a defensive for most of this discussion. it is a port to be developing the national relationships which may serve as years from now. we oversee those relationships including culture and the diplomacy in the business

department relationships as well. all of these things are factors into creating alliances and the national relationships. >> the whole approach has been to create a multi layered approach. we have bilateral relations with the united states which are political and military and economic. we tried to develop relationships where we feel we should have a stronger relationship like in turkey or india. turkey because it has strategic geographical position. we see a nato partner that has been alienated by the eu approach to citizenship.

we have to improve some of the areas like nato which moves too slowly on occasion. we want to have as many readers -- leaders that government can .ulool for example in southeast asia. the effected the mechanics are there. >> in terms of leading, how does that work? >> the international relationships are a matter for the foreign office. able to put these things together. we are able to say that it was a

bilateral relationship. we're going to work with them and development. we will extend their cooperation. we're going to upgrade our systems. we will have a stronger cooperation and communication, whatever it may be. our objective has been to run through the veins of the entire government. not just the foreign office. >> we are creating new structures to enable that to happen. we are creating new ways and new structures to make sure we are maximizing for our foreign policies what can be built --

provided through defense relationships. >> it is a more systematic use of our asset for our prosperity agenda. it is very important. we are working now in the foreign office to develop a defense the engagement strategy which recognizes our defense capabilities have influence beyond the military pact. we have to make sure we maximize the effect it can have on international priorities. that is something we will be dealing from now on. caller: >> you mentioned earlier the relationship with norway. it might say the region might see the relationship with norway has nothing to do with the middle east or north africa. of course it does.

deepening relationships with norway and securing energy as a result of that relationship may have a direct bearing on activities going on in the middle east and north africa. we deliver that kind of question. >> returning to the bilateral, how effective will that alliance thbe? >> that operates on a number of levels. in terms of our relationship with france, we have a number of joint military exercises set to begin this month or next month. we are working through some of the differences that we have in

the military approaches in terms of logistics. we wanted it to be incremental. we wanted it to be organic and not some big bang that we announced. we have discussions on procurement where we have duplication of research that we might be able to reduce on military planning, on trading exercising, and in terms of future program -- procurements. >> in terms of a suspect, the review of the national security strategy that we have committed ourselves to is an ideal vehicle to review the effectiveness of the difference in strategy. >> you mentioned the doorway. what progress is have been made

-- progresses have been made? >> i have had discussions with the german defense minister just a few weeks ago to see whether there are areas where we could work more closely together. we did not have a treaty with france just because we thought it would be nice to have a treaty. we are thinking in terms of partnership. we would not want to seek to have treaties with other countries just to have them. that does not mean that we cannot seek cooperation on about rigid bilateral basis.

we were accused of one of the summits of collateralizing -- bilateralizing as though it were some sort of crime. nobody thought of that relationship weakened nato, so why should it weaken other organizations? >> finally, how do you establish the sit-in? what are the implications of the new alliances, particularly with the united states? >> they are sitting very well. they meet a range of threats that we have identified in our strategy. we spoke earlier about the meetings we had in australia.

that relationship has not been given enough attention by government. we agree to have the meeting of the defense and foreign ministers of the u.k. and australia in australia. we did that in january which allows us to see the whole global picture together and identify areas where we can collaborate. first, the defending ourselves in cyber space. there are -- these are countries that we can do a great deal with together. i think it sits and very well into this just as the building up of new, stronger alliances can be made.

and the threat that the defense secretary dave. >> groupings have the ability to provide us with stability. the northern group, norway, sweden, and finland, it is another area where we can focus on particular areas of concern to us. it might not be of concern to a larger grouping inside nato or the eu or whatever. there is a geographical position that these to be discussed. >> our final question relates to money. >> i will be as brief as i can.

so much happening, doctor fox, at the moment. the ministry of defense is hampered for delivery. >> we will work with what other -- whatever budget the set. we have to have better real-time control of the defense budgets. you are trying to do it strange at the same time. it is a paradox. >> it is not a revolution. it will require money to be undertaken. we do require a change to be on the ticket. i can think of one example.

the fact that there is no real accountability for 20 major programs that are 80% of the budget is incredible. what we sent out the program to have reduced --reviews on time and on budget, if we are not happy we will publish it so that they can see which programs will be at risk in the future. i think it is essential that we get that real time control of the budget. to talk about the other changes we are making without having real-time control means that the bridge it can move quite quickly.

>> that leads nicely to the second question, that of the revolutionary. you want some money for your revolution. who is that that is going to make sure the program, which partner is going to drive it through? >> in terms of that particular project, i am going to do that. that is my responsibility. there are some things that should be controlled centrally. that is part of the reform process. one thing that these to be controlled is the real time budget. that has to be gripped right at the center. >> good luck. [laughter] >> in the past you have told us the government spent around 30

billion on a defense program. what did this go to? >> this was the difference between what the department had planned to procure and what we had in the resources if you assumed flat level growth. >> this will planned procurement. >> yes. >> how much of that is on a contractual basis or not? >> the with the previous procurement works, it was a smaller proportion left for what we might choose to do. this year that is that 90% of the budget is committed before we are able to look at the

planning. as to a number of the projects that have begun, projects like -- and pastor that number of the other side because of the lawn scope, in the long run we have stripped out a large proportion of that. we are still involved and a wit -- and do not want to tie my hands. >> 90% of the 38 billion was committed. >> of our program budget. >> that allowed to about 10%. >> is that really what you are saying? >> were you saying that 90% of

the budget is already committed? >> 90% is already committed. >> the 38 in the defense program. ok. >> how much of that 38 billion was contractually committed? >> i could not give an actual figure but i will give a figure. >> more than two-thirds? >> there is a huge ability to reduce a large portion of that. we will be talking of something like eight or 9 billion.

we have taken these huge proportion of that out as a result of the current spending. >> when we have a that i will make that available to the committee because the numbers will become readily apparent. >> the commitment agreed to cuts but has not specified those cuts. is it four 0.7 billion over the next four years? >> it was always going to be extremely difficult to deal with the plan to spend. we have to work our way through

that. there are a number of areas where we have to have the decision making on the reserves on what we do with that germany. we are putting it in the planning of runs. >> just to be clear, that means you still have about 1 billion which you have to apportion. >> that is dependent on the resources that we are discussing at the moment with the treasury. about 500 million of the money might be expected from previous receipts that are not available. we are a part of those discussions.

>> there is 1 billion around. >> that depends on the finance available on the other side. if we were to have to close the gap entirely, if you look at the because of a few movements, there has been quite a bit. that is something we will discuss with the treasury. >> just to be clear, you have not shown she is ridiculous. [laughter] >> i would never dream of that. >> the is strategy, and i do

not know if it is this or that. is there a projection for these things? >> we think is late june, early july. a long spring. >> i thought so. >> what is a plan and procurement and what is a commitment? i have talked, i have a plan to buy new [unintelligible] how much of the plan the procurement are actually defined contracts? or are they more aspirational? it would be helpful to see the difference.

>> absolutely. this is one of the things i have been -- i have agreed to do. it seems to me to be exactly in line with the question that there are projects begun, there is money without it being in the full budget. we are starting lots of projects in the hope money will come. i want to make sure we do not spend money on any program unless we are sure the budgetary line will be there for development and deployment. it seems what we are to do, if we are beginning to spend money in the hope that it will be a continued program, that leads to the bad way if we have been

seeing. the way the starting to break. >> the problem is that you have been using this 30 billion without there being any great degree of clarity as to what is something that has been committeed. do you feel you should be able to produce that clarity in public? >> we intend to commit to this. it will be substantially less because we are looking to see where we can pull out future expenditures that will

ultimately go to fruition. >> are you not able now to give any answers in relation to that 38 billion pound figure? >> in terms of how much to strip out? >> in terms of how much upper -- of it is aspirational. >> it is difficult because there are programs that have begun. there is no money in future programs to pay for them. that is what we have to make sure we strip out. we have to make sure that there is a big but -- real budgetary line or does it wish list. -- it is a wish list. >> so many of the decisions that have been taking, how do you justify --

>> had we got ahead with all of these projects that were in the pipeline on complex weapons, on other projects that we would have had we assumed flat rate growth in spending, we would have had a budget overlap for the treasury. it took in ever more over committed budget with less discretionary spending. >> we are in the same boat. these are practices that have gone on for many years, pushing budgetary talks to beat right. this has meant that every year the budget is more over committed that the previous year. we are at the point where

wickes -- where it could become unmanageable. >> i suspect this is an issue we will be to come back to. we will need to ask you to come before us again. >> it would be a pleasure. >> before we do, there is just one question which i would like to put. we know that doctor fox has a strong personal view that he would like to see an increase in real terms as from 2015. he said so. we know that the prime minister has said the same thing. is a critical, do you believe it, that it will happen? >> it will not surprise if i tell you the council has a heavy

influence over the prime minister. i asked him that it case you wanted to ask me. he said, "this will buy a year on year real time growth beyond 2015." that is what he said. >> you find this credible? >> i certainly do. it is not the only credible, it is something that is powerfully put by the prime minister. >> is it government policy. >> is the view of the prime minister. >> let me explain the difference. it is not possible for the machinery of government to set expenditure decisions across a long range that the spending of view. that is the structure of our

machinery of government. so the spending review 2010 set the pattern for four years. i did not know any government that could do that. we are engaged in replacing trident. that is our policy. >> why could it not be policy to increase spending -- defense spending? >> there is a difference between the decisions to take to spend money now, but there is some spending going on now. there are decisions of great importance in spending that money in order to maintain the capabilities we need to maintain and do the work we need to do. there is expenditure going on now.

the prime minister was stating his personal view as prime minister and leader of the conservative party about something that will fall to a subsequent period to decide. we'll have to make some decisions about it. >> we have an election in 2015, say, and then we discover whether the increase is going to come into affect. >> i think it is inevitable if there is an election that the government will take a view of beyond that year. i feel beyond 2015, because of our democratic process, people will have to wait. >> the prime minister has taken

a view about what he would wish to see if he were prime minister at that time. >> that is his personal view? >> i do. >> is there anyone in the cabinet to does not share this personal view? >> we had better bring the whole cabinet before, one by one. >> there is one thing that if we want to get toward the 2020, we are required to have increases in the budget. for example, there are so many

different assumptions and figures, if we saw the growth that we want, if we were still dependent on defense spending, we would get to that level. the speed at which we go is part of the debate as a committee. we are looking at aj-shaped curves to where we get to the planning run. the gradient required to the extent that the exact figure wheat are required to get from in 2014 will be dependent upon the decisions we take in the first few years.

>> i am not sure i understand. what would be the consequences of failing to increase the defense budget by some noticeable about from 2013? >> the rate of real term increase will determine how quickly we can get to the benchmarks we have set now. if it is a steep increase, we will reach that point earlier. >> what do you mean by a steep? >> that would be very nice. it also depends on the decisions we take in the early years as to where where we are on the gradient of the upswing of that.

if we were to take deeper savings in the early years, that requires a sharper up creased -- upswing. the actual number will depend upon where we are at the beginning of next year. >> you have not told her it that she is ridiculous. >> to be able to make a contribution to the deficit and to deal with the budget that is 90% committed, it was never going to be an easy exercise. none of us pretend it would be. >> no one pretends this is easy. you are suggesting a real increase just in time when we are leaving afghanistan. >> we have set out what we believed to be the correct

posture and balance for the united kingdom going ahead. we had basically three options. what was to try to keep our heads above water a year by year. the other was to freeze capabilities where they were. the other was to say, let's find a strategic point, 2020, which we think appropriate for balancing the u.k. in that year and work toward it. i believe it was the right course to take. >> we have your comments. we heard you say a decision that has been put off till 2015. and a charitable observer may suggest that if there was a

change of government in 2015, they would put it to you that you have a black hole in defense spending if you do not know you are going to get eightn a --n an increase. is that an unfair characterization? >> we cannot speculate what it would be. nor do we know, unless you are dealing with the treasury, what the budget will be in the future years. >> you are going to give us more detailed figures that is very useful. you might say something about how much you were told --

whittled down this number. >> by the time we are at planning, it should give us more space to start to look at some options. we will have a better idea of what those numbers are. >> fair enough. >> is that your plan -- you will start working on 2012. we should be able to know that planning route 14 what your plans are coming up. >> that we do not plan far

enough in advance. i do not think the department has sufficient flexibility. we have to try to get ourselves away from this level of predetermined budget. >> you would go for a longer budget. >> that would be extremely helpful. >> the government cannot say. they're not going to be in office longer than five years. >> government that might be, it cannot set a budget laundered? >> we cannot set real budgets.

>> what are you doing to address the concerns of the public? how are you reassuring people? we have seen a high turnout here today. it is possibly one of the major inputs into our system. have your going to reassure the public that the decisions are the right one -- right ones for the country? >> we use the usual channels. talking to the public relations forces. talking to think tanks. briefings, we are undertaking to get a better understanding. the apostasy -- nobody wants to

see reductions in our defense budget but there is a reason why we have to reduce the defense and other budgets. next year, we pay more in debt interest than the various budgets combined. that is becoming a strategic liability for the united kingdom where more and more money is pre committed but rather than its use. >> you said [unintelligible] d you think that is sufficient? >> i would go farther.

i would give a report to parliament as a whole. i think what we are doing is trying to be transparent so people can see what we are trying to do and what future budgetary and liabilities there are. privacy is the least of my problems. >> i think we have finished here for this. we'll ask you to come back. i would like to express the committee posts of gratitude for giving helpful answers. we appreciate that. brett's it very much for this extremely helpful discussion. [captions copyright national cable satellite corp. 2011]

>> >>, speakers from the irish parliament speak before mr. kenny. we hear his first speech as prime minister. portions of his speeches are in gaelic. >> i will now receive motions. >> it is a great honor of the youngest member to a formula -- formally rice and nominate deputy tenney k --enny. he will use his skills as a beater to preside over government committed to public service at the time when such

commitment is so urgently required. his ability to recognize the talent and skills of others places him in a very strong position to appoint, the, and preside over a government with the capabilities and the determination to work for this nation and its people. at a time when my generation is faced with the grim prospect of forced emigration that when unemployment blights our society, we need someone determined to restore credibility and help to this country. the people expect, deserve, and require a government led by a person who will not just restore the economy but will build -- i am sure my predecessors have helped that there nominee was

honest and decent. i find myself in the enviable position of not just hoping that identity, but, along with my colleagues on these benches and on all sides of the house, knowing that the core of the deputy kenny there is that decency. we realize the hope and dream of our people. today, the period of mourning is over. today, we hang out our brightest colors and move forward yet again as a nation. it is the pride, honor, and delight as i propose the election of a deputy kenny. [applause]

>> is my privilege on behalf of the labor party to second demotion for appointment by the president. this is a historic moment. a moment when the two largest parties have joined together to form a strong and stable government. a government that knows the national interest is best served by putting the people pose a waitress at the heart of everything it does. the government will have the strongest mandate in the history of our state, a mandate for an island we can be proud to have up to our children this will be a partnership of government, a national government where we are united to serve those that look to us for help, for leadership,

and for the leadership of purpose. that will be to ensure that our economic strength are used to benefit all of our people. in the words of that program for 92 years ago, we must secure that no child shall suffer hunger or cold and to provide for the care of the nation's young that are entitled to the gratitude of consideration. all of this in a free and fair ireland that we can be proud to call our own. >> good morning.

[speaking gaelic]

do you think these rules and regulations are helpful? >> we do a tremendous amount of traveling around the country listening to small businesses in these round tables.

explicitly in these round tables that we have announced, we will ask that they come and talk about those specific regulations on which they have concerns. when we talk about specific regulations, they mention 1099. when they talk about specific regulations, we have the ability to go back to the issuing agencies and to help work the small businesses through them. overall, when they talk about uncertainty, they are referring to the uncertainty they feel in the economic environment. small businesses feel the recession is not over. they want to fulfil the next order. they come to us for counseling and advice on what is available

to them. but i hope that we can do to help the small businesses is bring them into our counseling office. we have now -- 9000 offices with thousands more of a volunteers. we will see if a tax credit benefits them. 17 exist for small businesses. we need to make sure that they know what is possible for them. those services are free. >> how many small businesses are there in the united states? >> just under 30 million small businesses. 6 million have employees.

>> how many have received services from this organization last year? >> we have many ways we deliver services. some of the highlights are that we have 50,000 that we give capital and loan guarantees to you. $100 million worth of contracts we put into their hands. we council more than 1 million. >> how many do you think you could reasonably touch? many share with us a different perspective than what you share today. the health care bill is making it difficult for them as they feel they should risk capital right now.

what about their ability to borrow money. there are other entities in washington that are unpredictable and come through the executive branch. how many small businesses can you sit down with to allay those concerns set all of the uncertainty that they talk to me about, how many of those can they've resolved effectively and what do we do about the other 29 ?illion tax >> we hope th >> we hope to help them with these issues. we have millions we help every day to get access and

opportunity to the things that small businesses need. we have those that we held in our disaster operation as well. >> regarding trade, what do you do to help a small business owner to find out if they can trade with anything that the organization does? >> we have an intensive program. one of the most important things we can do now is to achieve and double our exports over the next five years. small businesses are 30% of the exports. only 250,000 of those millions of small businesses that are described are actually exports.

most on the export to one country. we are working on bringing more into the funnel. there are lots of wills and learning curves. how can you become an exporter tool is on tougher website. -- tool is on our website. >> thanks. >> thanks. next speaker. >> good to see you.

of what to follow up on the small businesses that i saw in south florida. i have been involved when people from your offices have been out there. you do a gauge of of its planning some of the programs. the question i have is more limited. in recent investigations, 14 companies received millions of dollars in set aside contracts for it the u.s. small businesses. the investigative services testified to that 13 of the firm's misrepresented their eligibility for the programs.

and the staff allegedly allowed three firms to remain in the program and receive programs despite clear evidence provided by officials to show that they no longer qualified. here is the question. if that is the case, why would they allowed to remain in the program? >> i am glad that you brought up this issue. we have very terrific programs, probably the largest program for small businesses. our goal is to make over $100 billion into the hands of small businesses. in order to do this, the program

must have integrity. we are going after fraud and abuse in these programs. these are issues that other courts have brought up along with judges. we have instituted -- we took the issue face on. we have a three-pronged strategy for getting a views in the programs. the first part is effective certification, making sure that the program benefits are getting to the intended recipients. this was one of the issues in that report. we have done a host of things in progress across to our area to ensure that we are screening both those potential program

entrance. the second is continued surveillance and monitoring. the third is robust and timely enforcement. we have quite a substantial record on prompt and protective forces. every single case that has been in and a report, we can show you the activity and documentation. we respect it must happen for each of these small businesses. we will go after the bad actors. we have a strong track record in this regard. >> to the bad actors that do fraudulent applications, i guess

they claimed that someone did not qualify. is there any action to those people inside of your organization, that missed seeing this? work their those that saw it in their those- were that saw it and missed it? >> the end higher -- there is a new suspension and debarment task force about our agency, which made even more robust activity around the suspensions

that we have had. many activities throughout cover programs. we are serious about this. all of the staff has come forward and put tremendous effort into the more intensified certification activity, the surveillance activities and monitoring the enforcement. >> i understand and appreciate that. i commend you for your passion on that. he said without the integrity, we would be in big trouble. there are always two sides in this issue.

one that is applied and one that is cut one -- not cut when it should be. bailout three firms to remain in the program despite clear evidence provided by company officials to show they were ineligible. i commend you for your efforts. i want to make sure that one of the things that people get frustrated about is when people claim or think there are no consequences for those in government that may have made the wrong choice. that is where i am going to as well. >> in this circumstance, i would also look to the due process

activity. our performance management standards have been very clear about what is expected. >> keep us involved and informed into those actions. are you asking for increased funding for these programs? we have to make sure that integrity is there. >> we are asking for 24 more positions, largely around 18 of them near fraud and abuse and enforcement. it is fort -- tan for the

women's business will implementation. we just brought it forth on february 4. >> there is conversation about the health care bill. i am not one to put you on the spot about this. you must have heard from some small businesses about some concerns about the health care bill. you hear about a specific regulation. have you not heard any concerns about the health care bill? i get it all the time from a number of businesses. maybe 46 employees. do you not get a lot of concerns

-- concerns from small businesses about the effect of the health-care bill on their ability to grow in the future for their bottom line? >> the number one concern for small businesses is access to affordable health care. it has been that way since 1986 according to one survey. small businesses want to provide health care. i have heard they are benefiting from this tax credit. 6 million small businesses. we estimate that up to 4 million may potentially be eligible for the tax credit, which kicked in the 2010 year. that is the first thing they want to know.

can i get money back on my health care. or make it affordable. small businesses want to provide health care. they just cannot get a quote. that is where the second piece comes in. right now, small businesses have to call two or three brokers before they can get someone to bid on their business. they pay 18% more for health care. it is just because they are small. if someone gets sick, their rates go up. they say, how do i get more access to an affordable ". there is some mandate for small businesses over 50 to provide

health care. when they look at the facts of what is in there and what their concerns would be, they have not expressed concerns about those, because there is no mandate. >> you are not seeing a lot of concerns about the health care bill? >> we go out to talk to them about a lot of things. one of them said when i was able to provide health care for my employees, that is the day i considered my business a success. >> thanks for being here. i also made with small businesses. there seems to be a lot of concern about the uncertainty. i am surprised, because i hear

about it all of the time, unsolicited. one of the issues that always comes up are concerned about the bill. you have not heard that. maybe they talk to you and talk to me and say different things. thanks. >> as the lender, they do not want to say too much. i hear about it all the time. it is nonstop. let me ask you a question. how does your organization -- organization define a small business. define it for me.

>> the general break off his 500 employees or more. we actually have different definitions for every industry category. a manufacturer that has 190 people may be small, but an accounting firm that has 100 people may be big. -- >> driven as opposed to profit margin? >> there are some complicated pieces to it. there can also be some things to deal with revenues. >> since we are always fighting amongst the house, even the province -- private sector, you

could pick any number to suit your purposes. that is kind of duplicitous to me. maybe it is more specific as to go down through categories or not. on the business loans, we talked about why costs are steadily increasing. what is the process that you use to monitor with to make sure your loans are going to creditworthy businesses? >> we have a complicated and robust credit process. it is driven largely through our

private sector partners. banks use their credit process seized, and we provide credit guarantees. the first screen is the banks process. there are a number of factors that occur in underwriting. we pay quite a bit of attention to loans. they are really coming from the 2005, 2006, 2008 cohort, where the market was very hot and banks were making lots of loans. now we see our credit scores on the new loan for 2009 are actually higher. >> interesting. curious about that.

real-estate prices just had a huge impact. now that i am very concerned about floods, everything that flows from north dakota on down ride by cover area in missouri, and i know you have asked for $167 million for administrative costs, more than 2010, but what about subsidy appropriation? i know that if i understand correctly, the appropriations for 2010 were partially carried over by some assigned to

disasters. now there is no more carryover and we are done. those expenses were funded through week programming of 126 $9. what assumptions do you use to arrive at the requested level? how do you determine what they are going to be? >> in 2012, our request reflects an $8 million savings in disaster loan administration. that is a result of the engineering in our disaster loan centers that are described. instead of operating at a steady level, on average the funding

that we have been using is 1000 people. we are able to provide the same state of readiness with the same staffing of 850 people. some efforts we have done and to streamline and improve our processing operation, a continuous process that we feel we need to pursue aggressively and provided the savings at a tough fiscal times. we believed that we needed to be at that level of readiness. we also have 2000 ready reserves on top of that. and something happens, we have the staff that we can bring in the system.

for subsidy levels, we have reserves that we are using. >> what do the ready reserve people do on a daily basis? are they small business people? who are they? >> they are all kinds of people. i have met a number of them. when we went to the coal in the bp oil spill, a number of them came in. they are from all walks of life and operations. we have a system by which we say, are you ready and available? they come back. we tried to keep a full complement of them available. >> very nice to have those

people. what happens if we have a large disaster, say another katrina episode? do you have enough subsidy carry over to support the program has you need to respond to such a thing? >> we have built a substantial both in number of physical activity. we went from 366 seats in the civic center. now we can see we to exceed 1750. we have a concurrent users before. now 10,000. we have beefed that of more aggressively. we maintain our ready reserve.

we have an electronic reservation now. 30% of our loans come in electronically. the of the rate in over 40 regions concurrently. we stay in a region for a long time. we can stay for up to nine months. we can service numbers and locations concurrently and for a large location. also a very serious disaster besides stimulating it is, we have engaged a full-time district staff member who does not operate on disaster operations to be lent on the ground in cases such as national

or bp oil spills or other large- scale disasters. we have not only our disaster operation people but never for district office people coming to assistance and lending their support. everybody is on the ground. >> from a money stand point, how much of disaster stuff do you have in reserve? >> we can give you an answer to that. we have a number of disasters subsidy. give us the you can numbers and the amounts to five years or so, could we possibly look at the the the subsidies to pay for the disaster administration if necessary? >> the issue is prepared in this and the level of risk we want to

take on. we want to be prepared in case of disaster. that was the commitment we made during hurricane katrina. no one knows what the future may bring in terms of hurricanes and earthquakes. we have seen around the world that it can come. we have a level of preparedness that we can handle. we want to make sure that when we go into the field, we have the loan subsidies so that we can execute them. >> thanks in advance for giving us those numbers. cover current continuing resolution is set to expire after this. in 10 days. i do not think a shutdown will

occur. i hope we can work out our differences in keep the government working. we have a plan for operating during any kind of shut down. if so, can you tell us what kind of activities and personnel would be considered essential? >> everyone is working very hard on avoiding a shutdown. the president has said, and we agree that a shutdown would hurt the economy. it would affect small businesses. we have prepared since 1980, every agency has been required to have a plan that would go into effect in case of a shutdown. on an ongoing basis, we are

updating that plan. we are committed. it is across the bipartisan effort to work that there is appropriate funding for 2011. there are walls around it. our disaster operation will not shut down. it is considered to be inessential operation. it is not part of the appropriation. >> would it be possible to get a copy of your plan? >> we are updating its on an ongoing basis. at this moment, things are so fluid that we are in the continuous update mode. >> is it possible to get last

week's plan? it is for our own sense. we can have a further discussion on this. >> you really want that plan. so you live. i could be supportive of a shutdown if it means all of our troops would come back home and the war is over. something tells me that that would continue. the fiscal year of the 2012 budget proposes to eliminate the

prime technical assistance program. do you explain your rationale for cutting small assistance -- assistance to small businesses? how do you intend to search through these businesses? >> if you knew it was coming, why not make the proposed cuts? >> part of being part of a fiscal responsible profits, we are tightening our belts. we are slimming operations.

we have to make difficult choices. we have a program that gives technical assistance to communities involved in our micro loans. what we have done is try to look at places where we can streamline without losing the value of the technical assistance. we have initiated a very strong overall activity for the markets. we made changes to cover loan programs. hopefully it will go to our micro lenders and institutions that meet certain qualifications. they provide technical assistance for the loans at

their own costs. what they want from us is the availability of the loan subsidy and guaranteed. we are looking at ways where we can do what we do best, opening up more access and opportunities to the loan guarantees and encouraging our partners to provide the technical assistance, which they do best. that set of activities will give a robust sense of help to the small business. we are looking forward to working with our partners to boost their capability to give loans and give that technical assistance capability. i want to point out very

important partners to us. half of the reduction in the funding does not relate to the base level. we have been able to reduce prior special purpose programs, which takes account of just over half of the proposed reduction. >> see the eyes are being judged a failure as well. the problem after your explanation is regarding an early question that you answered. you mentioned the inability to do more in low-income communities. why would you voluntarily cut those programs? i know that i mix my questioning

with an attempt at humor at times. we should be serious, but we should not sound too serious. all agencies should be aware that the plan is to cut to the bone. it is our goal to be fiscally response will. >> i think what i was referring to is gas in the market is in the area of underserved communities. the market has not come back to provide access and opportunity for those communities. we have intensified our efforts around the underserved market. a council will be led by kathy hughes who founded radio one.

we are working across all of our programs to increase access and opportunity in the market. that is a very important role that we play and the markets do not. as we go forward, we have developed this program of community to bring these into the activity as lenders in our traditional lenders 7-a product. i think it will help us get what we want, which is more points of access in underserved communities, with lenders that understand these small businesses. these are the people that higher in the communities. our government contracting

program are counseling operations are also going to be part of the underserved council and effort that we have. the role of government is to provide access and opportunity. we are three to five more times likely to make a loan to a minority warm -- china region minority-owned or women owned business. >> how are we doing with meeting the contract in targets for women-owned businesses? >> the goal is to make the goal. we had a very good experience in the recovery act, where we

exceeded our goal, but we made every single one. in the past, we have not made our women contract in goal. we fell short. $4 billion not in the hands of that constituency when we fall short. we implemented the women's contract law. it was passed in the year 2000 but was never implemented until we came on board and made it a priority we see the fabulous efforts of whole sets of committed people across the agency and outside and across government. that is on february 4. more than 1000 small businesses that have of loaded their data,

their certification data into our data banks. we are hopeful and determined to make sure that this new tool allows us to make it. >> let me ask you about these regional question since talk about the how you see the program evolving in the years ahead. >> this is a very highly competitive process. a huge demand for small business communities. we were able to fund some extraordinary initiatives. the closest example is the connecticut hydrogen fuel coalition, which includes connecticut, massachusetts.

others in the gulf coast have an innovation cluster. . i was in cleveland, where one company does flexible electronics. it is where you can put electronics on a flexible piece of paper. you can put it on a helmet or on anything. we have a carolina nuclear cluster and in agricultural cluster in california for agricultural innovation. what these clusters do is they allow small businesses who do not have the power individually to access the resources when they clustered together, they can access university research, and it gives small businesses in

these sectors the ability to transform the region. they are what i call the link leverage in the line of money that creates new economies in transform those economies and a pretty good bang for the taxpayer but. >> emerging leaders program. how has the program been implemented so far? 3 million request it. what do you do that has an impact? >> it has an extraordinary impact. specialized training for on for consumers largely in underserved communities.

it has happened in the african- american community with great success. we track the metrics very heavily on this. half of the participating businesses had an increase in revenues. they secured more in financing a 60% of them have hired new workers. we know that this program creates the intended effect, which is to help fund for new workers learn how to grow their businesses. we know that each of these communities should build a new corps of successful entrepreneur

hours. >> thanks. i think i am corrected year myself. >> how would i become an emerging leader if i had a small business? it is fascinating to me. i would like to know how. >> it is a competitive process. we run a curriculum based program, so we come into the class with a cohort. it is designed to work, so there is thought placed on the businesses working together in that cohort. the trains are pretty intensive. we have had good success also in the native american community, where there has been significant unemployment.

we are doing it in culver kirke, phoenix, portland oregon, california, seattle, okla., say louis. >> you are a small business person. you would make applications. >> we put out a call for applications. >> does that -- would that be advertised in the newspaper? how do you put out a call? >> i will find out for you. >> i would like to know. i know a few people that could take advantage of that. i want to know so that we can tell people about these programs. a rather scary report.

there were duplicative of government programs done. several people were yelling at me about this over the weekend. it is surprising that they did not. in economic development, there are about 80 different programs being investigated with you included. i guess you will assess the potential over left and collaborate to achieve a common code. since you mentioned it in your testimony about efforts to es, tell usprocess thes how you coronate this with other agencies to make sure that's

everybody knows the opportunity is available from this and perhaps other areas. after you tell us that, how can you ensure that federal agencies are not duplicating one another. >> we have done an extensive job of collaborating across agencies. we have worked particularly across numerous agencies to make sure that we are leveraged and aligned and not duplicating efforts.

we've made sure every veterans' service operation was also telling the veteran about the loan program. we have counseling operations and we want to make sure that they knew about the access to our programs. we became more educated as to what was available to veterans through -- or how to integrate them backed we have crossed links. a second place that we have a formalized as well is in agriculture. we operate in very close

operation with the usda operation, so that we can find of which loan programs are right for a particular far rarer. -- borrower. we tried to make sure that we are fighting the small business to the one that is right for them. we collaborated extensively across multiple agencies. we coordinate with the bank with joint programs for them. we coordinate on interagency efforts in clusters. i could go on. we are fortunate to represent small businesses and to be a powerful force to ensure that they find their way to the resources that they need.

>> you had extensive and very successful, a very successful professional career in a small business. think about it from the perspective of an entrepreneur o. what recommendations do you have to us as members of congress, how do you figure out what it is and what it is not? you are not working there anymore. fda has the expertise to do small business, anything with regard to small business.

i do not know which agency who does it. the big agency is to do renewable energy. if i were all of those agencies, i would look at how we take this program and leverage it off of each other and streamline it as opposed to having eight different sets of rules and regulations, and we get nothing done. how can you help us do our job better? >> there are many different kinds of small businesses. they have different kinds of needs. they need capital contacting, counseling. it is a different kind of capital. i think the first thing that we have thought about quite

effectively across the federal government is what is the need for the high-growth, high impact. the interagency effort around those moving barriers and providing the tools that a small business needs. the best place to see strong examples of effective elimination duplication and coordinating the assets available are some of these interagency efforts and some of the electronic information one stops that we have been able to do. you can see that we link leverage other agency activities to make sure the small business

gets an opportunity to navigate to what is right for them. we continue to do that to make the pathways even more easy to find for small businesses. we invite them into the work we are doing. >> are there other agencies that try to get in and do what you do? that is what we need to know. harassed other agencies, -- we should work more collaborative. >> we do not sign extensive duplication in the respect that we operate on the craft. we live on the ground helping

small businesses one by one. i think we are able to bring a tremendous set of assets. our role is that we do a lot of the groundwork, the heavy lift in direct contact with small businesses day by day, one by one. i had to take a moment to commend our staff. they have a real love of small business. that is how we help them. >> my staff works extensively with your people on the ground. hopefully other agencies will collaborate well just as fast as you do, so if there is a whole package and you are doing a part of it, they are doing their piece simultaneously. that would be my frustration

having worked in the administration many years ago. there was a lot of into work that had to be done in the agency. that is a very frustrating reality. i have a bunch of questions that -- i also have one from oregon that i am happy to submit a question for. there were questions about loan refinancing, particularly, since you are not asking for any subsidy costs. is there something we should know about in case something happens? these are the questions we will submit. if we can get an answer in 10

days, i would be very grateful. >> [unintelligible] [laughter] >> sometimes the senate is able to -- they frustrate me, because it takes so long to do things. they can bring some balance. >> i am joking. >> given the fact this is on record. >> we have been doing stand-up here and it is on tv.

>> how are the yankees doing? >> they are doing fine. >> you would give your eye to get out of the holes. >> we will not keep you any longer. thanks. >> it is not a small business. >> the front lines. the front lines.