Interview transcript:
Terry Gerton I want to start out by sort of asking a stage-setting question. You’re a small business owner. What do you think most people don’t understand about how the uncertainty in our current political environment is playing out for small businesses?
Audrey Roofeh That’s a great question. So, something that’s really important about small businesses is that we rely on the rules that make it possible for us to run these businesses. We rely on those rules being predictable and stable. And right now, what we’re experiencing is a level of uncertainty that’s making it really difficult for us as small business owners, whether we’re government contractors, whether we’re farmers, whether we’re importers, from running our businesses in a way that we can rely on. That’s a huge problem right now.
Terry Gerton So give me some examples about how that affects, specifically, government contracting small businesses. But you mentioned farmers, I’m interested in that too.
Audrey Roofeh Absolutely. So for instance, perhaps the biggest way in which small businesses are being impacted by this unpredictability right now is that money that’s been appropriated by Congress, if it doesn’t get spent, that’s a problem for us. So for government contractors, if you’ve won a contract to provide IT services, and because of a funding freeze, that contract is now gone, that’s a huge chunk of your budget, your expected revenue, for a year that you are left holding the bag for. That’s something that we’re hearing about. That’s just one specific example. But others are funding freeze implications around public-private partnerships with HUD, with USDA conservation grants being pulled. In the end, businesses that need to rely on the predictability of the government to do our work, right now we can’t rely on it.
Terry Gerton And small businesses don’t really have the extensive financial capital that a major corporation would have to weather this kind of shifting unpredictability, right?
Audrey Roofeh That’s absolutely the case. So that makes me think about the way small businesses right now are being impacted by tariffs. I know this is obviously a huge story, but the issue for small businesses is that the tariff power is given to Congress by the Constitution, not the president. And so for us, small businesses rely on knowing that this is something that we can call our Congress people about and say, ‘It’s really going to be tough for us if tariffs go up like they do for imported goods.’ One organization in our cohort here is a toy company, and for them the tariffs on baby toys were zero percent. They went up to 154%, then down to 30%, and the implication for small businesses is that your retailers, the way you’re able to get your product in front of consumers, are going to be these big box retailers and they’re the ones pushing out timelines. And it means that the small businesses or the consumers are left holding the cost.
Terry Gerton That’s a great example. So we’re talking there about supply chain uncertainty and the costs of resupply. I want to bring it back to federal contracting small businesses, especially in the space around DEI, because as the Trump administration has rolled out its reversal of DEI programs, a lot of small businesses are getting caught up in that, especially women-owned, veteran-owned and minority-owned small businesses. Can you tell us a little about what you’re seeing there?
Audrey Roofeh Yes, I can. So I can give my own example. I run a consulting firm, for the last eight years, I’m an attorney and for years have been providing harassment prevention work, workplace culture consulting. And as a vendor for government agencies, that work was happening midstream, was cut off on January 20th with no opportunity for reversal. No opportunity for notice and comment about a process. When businesses like mine and others, when we’re conducting ourselves within the legal and ethical guidelines of our profession, we need to rely on the expectation that there won’t be punishment for what activities you’ve done that were illegal and that are now disfavored and that we’re experiencing bottom line impact on our businesses. Other examples for federal contractors, service-disabled veteran-owned small businesses that provide workplace culture service that is not DEI-specific are hearing, for instance, that they’re being put on a list that there’s no appeal from. But the experience of being told that you are no longer able to provide these services without there being any recourse or understanding of the process by which it happened really makes it hard for us to plan, invest, and grow the small businesses that provide services to the government.
Terry Gerton I’m speaking with Audrey Roofeh. She’s the CEO of Mariana Strategies. So Audrey, tell us about this group that you’re assembling to help raise awareness of the challenges that small businesses are facing.
Audrey Roofeh Sure, Terry. So Integrity Matters is a group of small business owners across the country of all stripes, we’re nonpartisan. And what we’re doing are identifying those ways in which we’re being impacted by unpredictability in economic policy, by executive overreach. And the types of examples of things that we’re experiencing are broken government contracts, broken government grant commitments, tariff uncertainty, unpredictability in immigration policy. And the through line for all of these challenges that we’re experiencing right now is that these are elements of the rule of law that our democracy relies on. For us to run and grow our small businesses in America, we need to have the rule of law. So what we’re doing is advocating for the government to work the way it’s supposed to work, and for us to have the rules that we need to do our jobs. That very simple example of federal government contracts need to be honored. And the executive branch overwriting congressionally passed spending laws puts this at risk for us. We expect the rules to be followed. And when we think about what happens for us, when we break the rules, we would not be given the kind of grace that is being experienced right now for these rules being broken on the other side.
Terry Gerton Well, and there’s a second- and third-order impact to this, right? When small businesses are cut off from grants that they thought they were going to get or contracts that they had been awarded, small businesses are the biggest employers in the country, so talk through the decisions that a small business owner is going to face if they’re suddenly not able to compete or lose a contract that they thought they were working on.
Audrey Roofeh That’s a huge problem. So if small businesses have 500 or fewer employees, we account for about half of private sector jobs. And according to the Chamber of Commerce, we generate 44% of GDP. And our role is an outsized one in rural communities, and we drive innovation. So the implications for us, I think of the examples of the USDA conservation grants that have been frozen since January. And the way that these work is that farmers, ranchers, will invest part of the money down to put in water lines, fences, wells, things that everyone benefits from, but that the government isn’t going to do directly. And for them to invest the money, do this work, and then have the government say, ‘We’re not going to make good on our contract,’ it leaves them holding a bill that other people aren’t going to give them forgiveness for when they say they can’t pay their mortgage. So the implications are layoffs, lost farms, lack of investment. We’re seeing the secondary effects for small businesses that are not directly impacted by tariffs or contract commitments. Hearing people say that folks are tightening their budgets because they’re afraid. So discretionary spending decisions mean I’m not buying flowers, I’m not going out to eat, and that’s not what we need here.
Terry Gerton So, Audrey, you mentioned earlier about engaging with Congress. What do you hope that members of Congress will do with the information you all are sharing?
Audrey Roofeh That’s a great question. So what we need is for Congress to do its job when it comes to oversight, ensuring that the actions of the executive branch are being held to account. We need Congress to ensure that it follows through on its obligation to create tariff policy and have it not be subject to the whims of individuals. We need to ensure that congressionally appropriated funds get spent and hearing from the individuals that are being impacted is hugely important. They need to place a greater priority on protecting their spending authority.
Terry Gerton And what do you wish that government contracting officers who are awarding or managing these contracts know about this situation?
Audrey Roofeh I think it’s really important for them to communicate as best they can in a changing environment. We understand that it may not be up to them to create the decisions around implementation, but being able to support awardees with as much information as they can, keeping lines of communication open and being able to communicate the value of these programs up the chain so that the administration understands that these are beneficial programs, not just for awardees, but for America.
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