[Senate Hearing 110-209]
[From the U.S. Government Publishing Office]
S. Hrg. 110-209
ASSESSING FEDERAL SMALL BUSINESS ASSISTANCE PROGRAMS FOR VETERANS AND
RESERVISTS
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
JANUARY 31, 2007
__________
Printed for the use of the Committee on Small Business and
Entrepreneurship
Available via the World Wide Web: http://www.access.gpo/gov/congress/
senate
U.S. GOVERNMENT PRINTING OFFICE
37-146 WASHINGTON : 2007
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092104 Mail: Stop IDCC, Washington, DC 20402�090001
COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
JOHN F. KERRY, Massachusetts, Chairman
CARL LEVIN, Michigan OLYMPIA J. SNOWE, Maine,
TOM HARKIN, Iowa CHRISTOPHER S. BOND, Missouri
JOSEPH I. LIEBERMAN, Connecticut NORMAN COLEMAN, Minnesota
MARY LANDRIEU, Louisiana DAVID VITTER, Louisiana
MARIA CANTWELL, Washington ELIZABETH DOLE, North Carolina
EVAN BAYH, Indiana JOHN THUNE, South Dakota
MARK PRYOR, Arkansas BOB CORKER, Tennessee
BENJAMIN L. CARDIN, Maryland MICHAEL B. ENZI, Wyoming
JON TESTER, Montana JOHNNY ISAKSON, Georgia
Naomi Baum, Democratic Staff Director
Wallace Hsueh, Republican Staff Director
C O N T E N T S
----------
Page
Opening Statements
Kerry, The Honorable John F., Chairman, Committee on Small
Business and Entrepreneurship, and a United States Senator from
Massachusetts.................................................. 1
Snowe, The Honorable Olympia J., a United States Senator from
Maine.......................................................... 4
Isakson, The Honorable Johnny, a United States Senator from
Georgia........................................................ 9
Testimony
Oliver, Linda Bithell, Acting Director, Office of Small Business
Programs, Office of the Secretary, U.S. Department of Defense.. 10
Denniston, Scott F., Director, Office of Small and Disadvantaged
Business Utilization and the Center for Veterans Enterprise,
U.S. Department of Veterans Affairs............................ 24
Elmore, William D., Associate Administrator, Office of Veterans
Business Development, U.S. Small Business Administration....... 32
Celli, Louis J., Jr., president, Northeast Veterans Business
Resource Center, Inc., Boston, Massachusetts................... 55
Yahner, Capt. Ann. S. USN (Ret.), president and general manager,
Penobscot Bay Media, LLC, Camden, Maine........................ 60
Hesser, Robert, chief executive officer and president, HI Tech
Services, Inc., and chief executive officer, Allied Technical
Services Group, LLC, Herndon, Virginia......................... 65
Daywalt, Theodore L. Chief Executive Officer and President,
VetJobs, Marietta, Georgia..................................... 84
Alphabetical Listing and Appendix Material Submitted
Akaka, Daniel K.
Prepared statement........................................... 108
Bond, Christopher S.
Prepared statement........................................... 109
Celli, Louis J., Jr.
Testimony.................................................... 55
Prepared statement........................................... 58
Response to post-hearing questions from Senator Thune........ 141
Daywalt, Theodore L.
Testimony.................................................... 84
Prepared statement........................................... 86
Response to post-hearing questions from Senator Thune........ 146
Denniston, Scott F.
Testimony.................................................... 24
Prepared statement........................................... 26
Response to post-hearing questions from:
Senator Kerry............................................ 131
Senator Thune............................................ 133
Senator Liberman......................................... 134
Senator Pryor............................................ 135
Elmore, William D.
Testimony.................................................... 32
Prepared statement........................................... 35
Response to post-hearing questions from:
Senator Kerry............................................ 136
Senator Lieberman........................................ 137
Senator Pryor............................................ 139
Senator Thune............................................ 141
Hesser, Robert
Testimony.................................................... 65
Prepared statement........................................... 68
Kerry, The Honorable John F.
Opening statement................................................ 1
Post-hearing questions posed to Linda Oliver and subsequent
responses.................................................. 114
Post-hearing questions posed to Scott F. Denniston and
subsequent
responses.................................................. 131
Post-hearing questions posed to William D. Elmore and
subsequent
responses.................................................. 136
Isakson, The Honorable Johnny
Opening statement............................................ 9
Lieberman, The Honorable Joseph I.
Post-hearing questions posed to Linda Oliver and subsequent
responses.................................................. 125
Post-hearing questions posed to Scott F. Denniston and
subsequent
responses.................................................. 134
Post-hearing questions posed to William D. Elmore and
subsequent
responses.................................................. 137
Oliver, Linda Bithell
Testimony.................................................... 10
Prepared statement with attachments.......................... 12
Response to post-hearing questions from:
Senator Kerry............................................ 114
Senator Pryor............................................ 119
Senator Lieberman........................................ 125
Senator Thune............................................ 128
Pryor, The Honorable Mark L.
Prepared statement........................................... 113
Post-hearing questions posed to Linda Oliver and subsequent
responses.................................................. 119
Post-hearing questions posed to Scott F. Denniston and
subsequent
responses.................................................. 135
Post-hearing questions posed to William D. Elmore and
subsequent
responses.................................................. 139
Snowe, The Honorable Olympia J.
Opening statement............................................ 4
Thune, The Honorable John
Prepared statement........................................... 113
Post-hearing questions posed to Linda Oliver and subsequent
responses 128
Post-hearing questions posed to Scott F. Denniston and
subsequent
responses.................................................. 133
Post-hearing questions posed to William D. Elmore and
subsequent
responses.................................................. 141
Post-hearing questions posed to Louis J. Celli and subsequent
responses.................................................. 141
Post-hearing questions posed to Capt. Ann S. Yahner and
subsequent responses....................................... 145
Post-hearing questions posed to Theodore L. Daywatt and
subsequent responses....................................... 146
Yahner, Capt. Ann S., USN (Ret.)
Testimony.................................................... 60
Prepared statement........................................... 63
Response to post-hearing questions from Senator Thune........ 145
Comments for the Record
Camacho, Dr. Paul R., director of special projects, the William
Joiner Center for the Study of War and Social Consequences,
University of Massachusetts, prepared statement................ 150
Gatewood, Wayne M. Jr., USMC (RET), president/CEO, Quality
Support, Inc., prepared statement.............................. 152
Hansen, Robert P., Applied Computing Technologies, Inc., business
issues and notes............................................... 155
Krasner, Dave, reservist and small business owner (Expetec)...... 161
White Paper, ``Service Disabled Veteran Owned Small Business,''
submitted by Maj. General John A. Corder, CEO, CymSTAR LLC, and
Beau Witt, vice president, CymSTAR LLC......................... 163
Wynn, Joe, treasurer, Veterans Entrepreneurship Task Force and
legislative liaison, National Association for Black Veterans... 165
ASSESSING FEDERAL SMALL BUSINESS ASSISTANCE PROGRAMS FOR VETERANS AND
RESERVISTS
----------
WEDNESDAY, JANUARY 31, 2007
United States Senate,
Committee on Small Business and
Entrepreneurship,
Washington, DC.
The Committee met, pursuant to notice, at 10:07 a.m., in
room SR-428A, Russell Senate Office Building, The Honorable
John F. Kerry (Chairman of the Committee) presiding.
Present: Senators Kerry, Tester, Snowe, Thune, and Isakson.
OPENING STATEMENT OF THE HONORABLE JOHN F. KERRY, CHAIRMAN,
SENATE COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP, AND A
UNITED STATES SENATOR FROM MASSACHUSETTS
Chairman Kerry. The hearing will come to order.
I know Senator Isakson wants to introduce one of the
witnesses on the second panel, but he is unable because of a
conflict. We actually just both left Secretary Kissinger over
at the Foreign Relations Committee, where we are having ongoing
hearings on the war in Iraq. But needless to say, this is a
very important outgrowth of that war that we are here to
consider today, and so I am grateful to all the witnesses for
coming to share in that.
This hearing is important to me personally, and I am glad
to be able to be in a position to be able to hold it. Hello,
Senator Snowe. I think it is important to every Member of this
Committee. I think all of us really are grateful beyond words
to those who are serving our country under the most difficult
of circumstances. You know, we make some important promises to
people who put on the uniform of our country.
I know that when I served back in the late 1960s in a very
controversial war and a very divided country, veterans were not
particularly treated well. They came back to a country that
really didn't value their service and couldn't have cared less
in many ways in many parts of the country. But that scar, that
impact was lasting and we saw an awful lot of impact on the
ability of the armed forces. It took longer for the armed
forces to sort of come back and be able to keep the promises
and convince people that they would keep the promises. And part
of that was due to the level of unemployment and the difficulty
a lot of veterans had in reintegrating into society.
One of the promises we--I am not going to spend a lot of
time going through it all except to say that one of the
promises we all made ourselves after that was that never again
were we going to allow that to happen, and it was critical. And
I think that the country ought to be very proud right now of
most of the ways in which the troops are receiving support.
There is an incredible sense of national gratitude and
incredible welcoming that goes on. In Maine, you have these
greeters who send people off and welcome them home. It is
really quite remarkable. There are a lot of other
manifestations of this feeling in the country of gratitude.
Just yesterday, or the day before down in Texas, they opened an
incredible rehab center, which I might add was put together by
private funding rather than taxpayer dollars, which is its own
statement about some of the things we are and aren't choosing
to do.
What I want to make certain is that whatever is under my
jurisdiction, we are going to pay attention to and make sure is
done, and this Committee is under that jurisdiction and there
are mandates with respect to veterans within the small business
world and we want to make sure that those mandates are met.
As we sit here today, there are more than 128,000 of our
men and women who are in Iraq and another 21,500 in
Afghanistan. They are doing their duty because they are
committed to serving our country. We need to do our duty, which
is to serve them in keeping our promises that we have made to
them. They are part of a long line of men and women who have
been called to serve their country, from the Revolutionary War
until today. The only thing that they ask of us is that we keep
our promises, we support them while they are there, and we
support them when they come home.
The reason this hearing is timely is that at last count,
more than 22,000 of our military personnel had been wounded in
combat. Furthermore, there are more veterans returning each day
because of the War on Terror. Eight-hundred-thousand veterans
were discharged between 2002 and 2005. We need to ensure that
these folks have a secure financial future, that they don't
come back to a country that somehow in one way or another,
inadvertently or sometimes through negligence or other ways,
spurns them.
The treatment of our troops ultimately affects our
country's ability to be able to recruit troops in the future
and to retain those who are already trained and serving. This
hearing is an attempt to ensure that we are doing all that we
can.
We want to find out what agencies are doing to meet their
obligation to veteran business owners and how they can be more
effective in those efforts. We are not trying to do this in a
sort of ``gotcha''-slash retributive way. We really just want
to see what can we do to help those Reservists and Guardsmen
who are small business owners keep the doors open when they are
deployed.
I have talked to a lot of folks, some of whom had to shut
their businesses, some of whom have been recalled, enough that
when they came back and thought they got it going again, all of
a sudden, they have to interrupt that process. It is
particularly expensive and costly to them and in many ways
demoralizing to them.
There are presently 3 million veteran small business
owners. In addition, 22 percent of the veterans in the United
States are either purchasing or starting a new business or
considering purchasing or starting one. The facts tell us that
we need resources to help those veterans in many cases,
disabled veterans and Reservists, as they open and maintain
small businesses.
This hearing is going to look at the Government's response
to supporting services to disabled veterans who want to start
those small businesses or who have started them. Service-
disabled veterans are regrettably growing in number. We now
have the most we have seen since Vietnam. And unemployment for
the recently discharged veteran remains high, at 11.9 percent.
That is more than double the overall national unemployment rate
of 4.6 percent.
We are also going to look at the strain that frequent and
sustained call-ups have had on our Guard and Reservists who are
small business owners. Over the past decade, the Department of
Defense has increased its reliance on the National Guard and
Reserves. During the Persian Gulf War, they accounted for 46
percent of our total forces. This has intensified since
September 11, and increased deployments are expected to
continue. These call-ups hurt small businesses and Reservist
small business owners. So how to mitigate the financial
distress to Reservists who are fighting and the small
businesses who employ them is a question that we want to
address here today.
I have been working on legislation that I believe can help
with the strain of call-ups, and today, Senator Gordon Smith
and I are introducing the Active Duty Military Tax Relief Act
of 2007, which provides a tax credit to small businesses with
less than 100 employees and the self-employed to help with the
cost of paying the salary of Reservist employees when they are
called up for active duty. So we try to mitigate against that
disruption and cost. This legislation provides an additional
tax credit to help offset the cost of hiring a temporary
replacement employee so the business can keep functioning.
Many Reservists who own their own business return to a
business that is floundering, so disruptive that it is like
starting over in some cases. That is a hell of a sacrifice to
ask people to make in addition to the time away from family and
the risks that they endure. So these tax credits, we hope, will
help Reservists who own their own business, hire temporary
replacement folks when they are called up, and mitigate against
the impact.
In addition, it will include tax provisions to help ease
the finance burden that military families face because they
have to borrow and undertake other steps to try to survive.
Finally, we want to look at the problem of contracting. The
Federal Government does more than $376 billion in purchasing,
and it did so in 2005 alone. Veterans only get the crumbs.
Service-disabled veterans get even less. The Federal Government
has a goal of 3 percent contracting with service-disabled
veterans, but guess what? They got less than 1 percent, .6
percent in 2005, which incidentally is up from .383 percent in
2004. So obviously we are glad to see it go from .383 to .6,
but it ought to be at 3 or above. We really need to understand
what is so hard about doing business with the men and women who
have sacrificed so much for our country.
I know we can do better by these men and women and I hope
this hearing will help us identify what is working and see what
we can do better, and resolve all of us to make sure that we
do. So I thank the witnesses for their testimony here today and
happily turn to Senator Snowe.
OPENING STATEMENT OF THE HONORABLE OLYMPIA J. SNOWE, A UNITED
STATES SENATOR FROM MAINE
Senator Snowe. Thank you, Chairman Kerry. I certainly
commend you for your first hearing as Chair to address a most
critical issue, particularly because our veterans and service-
disabled veterans are on the rise, as are the call-ups of the
Guard and Reserves. We have to explore ways in which we can
minimize the impact on these courageous individuals and what
the Government can do. Certainly the Government can do much in
terms of increasing the opportunities when it comes to small
businesses, whether they work for small businesses or whether
they own their own small businesses. So it is absolutely
crucial.
There is no question, when a Guard or Reserve is called up
it can be devastating to their own business, to their family,
to the people they employ, or to the surrounding community, and
we need to address and explore the government's effectiveness
and its ability to make sure that the Federal small business
and entrepreneurial programs are available for these veterans
and the service-disabled veterans. These are critical resources
that we have to make available so that they can maintain, grow,
or start a small business.
So I appreciate your insights, because you obviously
represent critical agencies that can really have an impact on
how we turn around the contracting goals that Chairman Kerry
spoke to, and I am going to show a chart in a minute that will
show what the shortfalls are and how pronounced it is and why
we have to do better. Certainly, our veterans deserve to have
it done better by the Federal Government, so it is absolutely
essential.
I welcome a constituent from Maine, Captain Ann Yahner, who
is the president of Pen Bay Media Company. In fact, I had the
opportunity to tour that facility and see her innovative
approach in helping to meet the contracting goals for Federal
buyers and meeting contracting goals under the procurement
program for veterans. It is really a state-of-the-art facility,
and in fact, it is a successful woman-owned, service-disabled
veteran-owned small business. She is an example of the
entrepreneurial spirit that has been brought about by so many
who have served in uniform, so I am pleased she is going to be
able to testify here today.
As Chairman Kerry indicated, there are more than 3.7
million veterans who have taken on the challenge of owning
their own small business. So it clearly is in our economic
interest to make sure that they are able to be reintegrated
into the mainstream of our economy. It is a national interest
and it should be our singular goal to make sure that that can
happen.
In my home State, in Bangor, Maine, at the Bangor Airport,
they have greeted every group of returning troops from the
front. They did that in the Persian Gulf War and they are doing
it in the Iraq War and the Afghanistan War. It doesn't matter
what time of day, they are there to greet the troops on the
ground at the airport.
My State has had one of the highest Guard and Reserve
deployments in Iraq and Afghanistan. In fact, 50 percent of the
Guard and Reserve have been deployed either to Iraq or
Afghanistan. So it has had a singular impact on a very small
State.
Back in 2003, I commissioned a CBO report which found that
35 percent of the Guard and Reservists worked for small
businesses or are self-employed. In addition, the small
businesses that employ them obviously bear a disproportionate
share of the burden of increased Guard and Reservist call-ups,
which is happening, as we well know, and a change in policies
at the Department of Defense is making our country increasingly
reliant on the Guard and Reserves, both for Iraq and
Afghanistan. So the burden is further magnified when a small
business owner happens to be a key employee or the owner and
happens to be deployed. Obviously, all combinations have had a
unique impact.
I have introduced several initiatives that have been
supported by the Committee that were actually part of the
reauthorization that we enacted here in the Committee
unanimously and also supported by the full Senate.
Unfortunately, it wasn't passed in the House of
Representatives, but there are two initiatives that I think go
to some of the fundamental issues.
One, of course, is doubling the funding for the SBA's
Office of Veterans Business Development. That is absolutely
crucial because it is at static funding of $750,000 for the
last 5 years. And I also introduced the Patriot Loan Act to the
Military Reservists Economic Injury Disaster Loan, which gives
these loans top priority processing. But in addition to that,
it allows loans up to $25,000 without requiring collateral as
another way of easing the process and providing them with much-
needed assistance.
Finally, on the issue of Federal contracts and
subcontracts, which is disturbing in terms of the fact that no
agency has met the minimum 3 percent goal of contracting in
2005. That is unfortunate for firms that are owned by service-
disabled veterans, so that the agencies have not accomplished
that goal. In October of 2004, the President issued an
Executive order again requiring the agencies to achieve that
goal, to lay out the steps in order to accomplish it, and to
increase and to maximize the efficiencies of these agencies in
order to make sure that the 3 percent goal is met. That hasn't
happened. As a result, we have seen that our veterans have been
shortchanged by $7.5 billion in fiscal year 2005 alone.
Now, I understand that the preliminary data for 2006 shows
that agencies have met this goal. I am concerned from what I
hear that these numbers may have been achieved due to the fact
that large contractors are actually receiving the contracts
that are targeted for small business. So that would be
disturbing if, in fact, that is true and that is the case, and
that is something I would also like to ask you about here
today.
So we can get serious about making sure we meet these
goals, and if you look at this chart, let me just show you for
a moment, because I see where the 3 percent required agency
goal is, and where the shortfalls are. You can see from 2003,
2004 and 2005. VA has obviously come up considerably in that
time, but we have a long ways to go in meeting the 3 percent
goal by both the SBA and the Department of Defense and even the
Veterans Administration has come up, but obviously still is not
meeting the 3 percent goal.
So I think it is important for us to understand that where
we are seeing the shortfalls that exist as a result, and so I
think that sort of illustrates the problems we are facing. But
this should be one easy way of helping our veterans and our
service-disabled veterans in particular who own small
businesses. So I hope we can get to the bottom of that today in
this hearing.
Again, Chairman Kerry, I thank you very much.
[The charts referred to by Senator Snowe in the above
paragraphs follow:]
[GRAPHIC] [TIFF OMITTED] T7146.001
[GRAPHIC] [TIFF OMITTED] T7146.002
Chairman Kerry. Senator Isakson, thanks so much for being
here. I know you want to introduce your Georgia constituent.
OPENING STATEMENT OF THE HONORABLE JOHNNY ISAKSON, A UNITED
STATES SENATOR FROM GEORGIA
Senator Isakson. Thank you very much, Mr. Chairman. Like
you, I am on the Foreign Relations Committee, so will be going
back and forth, and I apologize to the first panel if I jump up
and leave before you testify, but I have to get back there for
a few minutes before I return back here.
But when the Chairman's staff notified the Members of this
hearing, which I commend him on holding, and asked if we had
any suggestions on individuals that might be good to testify, I
immediately jumped at the opportunity to call Ted Daywalt, my
friend and my neighbor in Georgia, who is going to appear on
the second panel with the lovely lady from the prettiest town
in North America, Camden, Maine, I might add. I did that for
Madam Snowe, to let her know I was paying attention.
[Laughter.]
Senator Isakson. Ted Daywalt is uniquely qualified to
testify at this hearing. He retired from the Navy after 30
years of active and reserve duty as an intelligence officer. He
served our country as an intelligence officer in London, the
Middle East, and in Africa in his years of active duty
employment. In 1999, Ted founded a company called VetJobs.
VetJobs has placed thousands of American veterans in meaningful
employment, I would guess--I haven't asked Ted this, but the
vast majority, probably in excess of 80 percent of those, in
small businesses, maybe even more than that.
VetJobs is a very unique company. It is a small business
that was recognized last year by the WEDDLE's Users' Choice
Award as one of the top 30 job placement sites on the Internet,
out of 40,000 job boards on the Internet. I think that is a
pretty outstanding record.
I have watched Ted and his activities in our Chamber of
Commerce and in our State of Georgia and his many trips to
Washington to testify and advocate on behalf of employers and
Reservists and active duty personnel who return to see to it
that we have meaningful employment for those veterans and that
placement of that employment is, in fact, as easy as possible.
To serve that end, Ted is the president of the Employers United
for a Stronger America organization, whose sole purpose is to
ensure that veteran placement is important and that businesses
and the needs of businesses who hire our veterans are
understood.
He was recently published in the Military Times, and I have
already read his statement that he will make today and I
commend it to all of you as an insightful statement on the
current challenges that face veterans, the current challenges
that policies of the Department of Defense place on employers
and on veterans, and I think his insight will be important to
this Committee. I appreciate, Mr. Chairman, the opportunity to
introduce my good friend and a great veteran of the U.S. Navy,
Mr. Ted Daywalt.
Chairman Kerry. Thanks so much, Senator. We appreciate your
introduction and we appreciate your participation in the
Committee and your concern about this issue, so thank you very,
very much for that.
Senator Isakson. Thank you.
Chairman Kerry. Our first witness panel this morning is
going to feature testimony from various Federal agency
representatives. We are going to hear from Ms. Linda Oliver,
the Acting Director in the Office of Small Business Programs in
the Department of Defense. Next, we will hear from Mr. Scott
Denniston, the Director of the Office of Small Business and
Center for Veterans Enterprise in the Department of Veterans
Affairs. And finally on the first panel, we will hear the
testimony of Mr. William Elmore, the Associate Administrator of
the Office of Veteran Business Development of the SBA.
If I could ask each of you, so that we have time to get to
the questions, if you could--your full testimony will be
submitted into the record as if read in full. We do ask you to
try to summarize in about 5 minutes or less, if you can, and
that will give us time for a little bit of exchange. Thank you
for being here.
We will start off with Ms. Oliver. Thank you.
STATEMENT OF LINDA BITHELL OLIVER, ACTING DIRECTOR, OFFICE OF
SMALL BUSINESS PROGRAMS, OFFICE OF THE SECRETARY, U.S.
DEPARTMENT OF DEFENSE
Ms. Oliver. Thank you very much, Chairman Kerry and Senator
Snowe, for inviting me to this hearing. I appreciate having the
opportunity to testify about service-disabled veteran-owned
small business and their relationship to the Department of
Defense, for two reasons. One is because I am always happy to
spread the word, and the second reason is I do think we have
good news stories.
A hearing is always very helpful, I think, to the people
who are working in the field because of the guidance we get,
and I appreciate the guidance we have gotten so far and look
forward to the guidance that will come out from the questions.
Senator Kerry, when you talked about never letting things
get the way they were after Vietnam in terms of how people felt
about veterans, I have to say I agree and that the people who
have been trying to keep our servicemen and veterans held in
high esteem have been mighty successful. As you probably know,
in the Department of Defense, we focus every day on what is
good for the soldiers, sailors, marines, and airmen. The
touchstone of all of our decisions is, ``Will it help them do
their job better?''
In our personal careers, in our personal lives, the
military members are our colleagues, our brothers and sisters,
our children, our neighbors, and our friends. So when they
transition from being military members to becoming veterans,
they don't really leave the family. And as a result, the
Department of Defense--the people in the Department of Defense
in general, are very receptive to doing business with veterans,
and particularly with service-disabled veteran-owned small
businesses.
My testimony actually talks about our strategic plan, takes
it point by point. But rather than do that, I wanted to show
you some illustrations of what has resulted from our efforts in
the Department of Defense and with our strategic plan. Behind
me is Frank Beaty. Frank? Frank is the vice president of Oak
Grove Technology.
Chairman Kerry. Vice president of what?
Ms. Oliver. The vice president of Oak Grove Technology. The
president of Oak Grove Technology, who was the service-disabled
veteran, is ill today. He sent along his vice president from
South Carolina. This is a wonderful and a representative
company and it is representative of the earlier crop of
veterans. This is such a good company that they have been
nominated--they were the first company who came into the Mentor
Protege Program, which was a result of Senator Snowe's
amendment to the Department of Defense Mentor Protege Program--
they were the first company in and they have been nominated for
the prestigious Nunn-Perry Award, which will be awarded in
March. We will see what happens with that. They are a great
company in terms of what they do professionally, but they are
also a really great company in terms of setting an example to
other service-disabled veteran-owned small businesses.
Oak Grove Technology actually is mentoring, sort of
unofficially, another small business, and that small business
is owned by Dawn Halfaker, who is also here. Dawn served in
Iraq, lost her arm to a rocket-propelled grenade, came back,
teamed up with another West Point graduate, has opened a small
business that is a security business which is just booming and
is under the mentorship of Oak Grove Technology.
Also here today is Tracy Reep. Tracy was also injured by a
rocket-propelled grenade, a different one, in Iraq. He lost an
eye and part of a hand, was in the Texas National Guard, shut
down his business to go to Iraq when called up, came back, was
rehabilitated, and has started a new business and, among other
things, sells product to Oak Grove Technologies.
My point of all of this is, the world has changed for
veterans. It is not like it was after Vietnam. They are loved
and respected within the Department of Defense and I don't
think this part is new--are wonderfully helpful to each other,
reaching down to help the younger people.
That concludes my remarks and I am ready for questions.
Chairman Kerry. Thank you very much, Ms. Oliver. Thank you,
each of you, for coming in here today. We really appreciate it.
Thank you very, very much.
[The prepared statement of Ms. Oliver follows with
attachments:]
[GRAPHIC] [TIFF OMITTED] T7146.003
[GRAPHIC] [TIFF OMITTED] T7146.004
[GRAPHIC] [TIFF OMITTED] T7146.005
[GRAPHIC] [TIFF OMITTED] T7146.006
[GRAPHIC] [TIFF OMITTED] T7146.007
[GRAPHIC] [TIFF OMITTED] T7146.008
[GRAPHIC] [TIFF OMITTED] T7146.009
[GRAPHIC] [TIFF OMITTED] T7146.010
[GRAPHIC] [TIFF OMITTED] T7146.011
[GRAPHIC] [TIFF OMITTED] T7146.012
[GRAPHIC] [TIFF OMITTED] T7146.013
[GRAPHIC] [TIFF OMITTED] T7146.014
Chairman Kerry. Mr. Denniston.
If I can get you to say a few words afterwards, you will be
an unexpected witness, if you are willing to.
Thanks. Go ahead, Mr. Denniston.
STATEMENT OF SCOTT F. DENNISTON, DIRECTOR, OFFICE OF SMALL AND
DISADVANTAGED BUSINESS UTILIZATION AND THE CENTER FOR VETERANS
ENTERPRISE, U.S. DEPARTMENT OF VETERANS AFFAIRS
Mr. Denniston. Chairman Kerry, Ranking Member Snowe, thank
you so much for holding this hearing today. I am honored to
represent Secretary Nicholson and the dedicated workers in the
Department of Veterans Affairs who serve our veterans daily.
Based on our preliminary numbers, I am also pleased to
report that VA achieved 3.38 percent of our fiscal year 2006
dollars to service-disabled veterans. We also spent
approximately 6.35 percent of our total procurement dollars to
veteran-owned small businesses. Keep in mind that VA's
procurement budget in 2006 was $10.3 billion.
Our Department has a work unit dedicated to supporting
veterans in business and those who want to become business
owners. This is the Center for Veterans Enterprise. This office
has 17 employees, 13 of whom are veterans. Two of these
veterans served in Operation Iraqi Freedom. Permit me to
introduce to you Mr. Omar Morel, a proudly serving former
Marine who saw duty in the Battle of Ramadi, and also Tech
Sergeant Patricia Gould, who serves with the Maryland Air
National Guard as an emergency medical technician. Since
joining CVE in September 2005, she has also been deployed to
New Orleans, Bosnia, and just returned in January from Iraq.
Our mission is to connect veterans with community resources
who will help them with their business development needs. I am
proud to report that our work is well received. Last September,
the Veterans Business Journal conducted its first readers'
survey. CVE was voted the organization that provides the best
support to veterans in business. We appreciate this vote of
confidence and will strive to repeat this honor in 2007.
What did we do to deserve this distinction? First, we
leveraged VA's considerable resources to spread the word about
entrepreneurship opportunities for veterans. Once the veteran
calls us, we determine their needs. Then we refer most calls to
a partner organization, such as the local Small Business
Development Center, Veteran Business Outreach Center,
Procurement Technical Assistance Center, or one of the
corporate or government advocates for veterans' enterprise who
have volunteered to assist veterans.
CVE maintains a robust Web portal which enables veterans to
quickly link to our partner organizations. We are grateful for
the generosity and resources of the Air Force and the Army's
Small Business Program Offices. We have conducted road shows
with the Air Force and have been guests on their cable
television program several times. With the Army, we have twice
co-sponsored the National Veterans Business Conference, which
we will do again this June.
The General Services Administration has executed a formal
partnership with VA to promote opportunities for service-
disabled veterans. CVE offers free market research, training,
and other services as may be requested by our Federal partners
and their prime contractors.
On our Web portal, we host the VetBiz.gov Vendor
Information Pages database. Here, browsers can easily locate
more than 13,000 veteran-owned small businesses. At all of our
outreach events, we distribute the Tool Kit for Veteran-Owned
Small Businesses, which was jointly developed and co-branded by
GSA and VA. It contains legislation and policy documents,
information on how to market to Federal agencies, a list of
Federal veteran business advocates, and templates to assist
business owners. The tool has proven to be so successful it is
now in its fourth edition.
To promote awareness and utilization of veterans and
business, CVE distributed more than 3,000 posters to prime
contractors and Government offices last October. To expand
awareness of start-up assistance, we dispatched Operation
Business Ownership DVDs for use in Transition Assistance
Program briefings.
Both SBA and CVE are highlighted under ``Small Business
Resources'' in the Vocational Rehabilitation and Employment
Program pocket guide. In the annual Federal Benefits for
Veterans and Dependents' book, information about CVE appears
under ``Transition Assistance.'' Army Knowledge Online's Web
site reaches 660,000 personnel. Our Web portal link is
prominently displayed on that site. We are also prominently
displayed on military.com's site, and also the VetBiz.gov link
appears on USA.gov and the OSDBU.gov web portals.
We teach business owners that business is about successful
relationships. We think we have built some good ones.
In the commercial marketplace, more than 300 franchisors
have joined the VetFran program, which VA and the International
Franchise Association refreshed in 2002. Currently, more than
600 veterans have opened franchises under this program. In
VetFran, veterans are eligible for reduced franchise fees and
other support.
In closing, I know that you are interested in what more
needs to be done. I would recommend increased attention to
conducting and documenting training of Federal agency personnel
and using the tools available through the Federal Veterans
Entrepreneurship Program. Agencies are required to post their
strategic improvement plans for enhancing achievements with
service-disabled veterans. Veterans who call us want to see
these plans in the annual reports posted in an easy-to-identify
location.
Many contracting activities are still struggling with a
lack of capable businesses in specialized industries. A method
to incentivize prime contractors to incubate new small
businesses in these under-represented fields will benefit all
parties.
I hope you agree that opportunities for veterans in
business are abundant and there is widespread support for the
program.
Chairman Kerry, thank you again for convening today's
hearings. We will submit our written testimony and be able to
answer any questions you may have. Thank you.
Chairman Kerry. Thank you very much, Mr. Denniston.
[The prepared statement of Mr. Denniston follows:]
[GRAPHIC] [TIFF OMITTED] T7146.015
[GRAPHIC] [TIFF OMITTED] T7146.016
[GRAPHIC] [TIFF OMITTED] T7146.017
[GRAPHIC] [TIFF OMITTED] T7146.018
[GRAPHIC] [TIFF OMITTED] T7146.019
[GRAPHIC] [TIFF OMITTED] T7146.020
Chairman Kerry. Mr. Elmore.
STATEMENT OF WILLIAM D. ELMORE, ASSOCIATE ADMINISTRATOR, OFFICE
OF VETERANS BUSINESS DEVELOPMENT, U.S. SMALL BUSINESS
ADMINISTRATION
Mr. Elmore. Chairman Kerry, Ranking Member Snowe, and other
distinguished Members of the Committee, thank you for your
request to appear before you today. I am Bill Elmore, the
Associate Administrator for Veterans Business Development,
representing SBA Administrator Steven Preston.
As expressed in our January 24, 2007 Memorandum for Heads
of Departments and Agencies, jointly issued by Administrator
Preston and Office of Federal Procurement Policy Administrator
Denett, the Administration is broadly committed to enhancing
all of our programs and services for service-disabled veterans,
for veterans, and for Reservists, especially those veterans and
Reservists returning from duty in the Global War on Terror, or
those injured or disabled in service to America.
SBA's efforts go beyond the activities of SBA's Office of
Veterans Business Development. Each SBA program is tasked to
expand and improve their services for veterans and service-
disabled veterans. Thus far, the results have been good. The
number of loans made to veterans has increased from 4,800 in
fiscal year 2000 to approximately 8,000 loans in fiscal year
2006. In fiscal year 2006, our business counseling training and
outreach programs reported more than 108,000 veterans and
Reservists assisted.
In October 2004, the President issued Executive Order
13360, and in our effort to lead by example, we do believe that
SBA exceeded our 3 percent SDVOSB goal for the first time in
fiscal year 2006. We also believe the Federal Government
increased its achievements in fiscal year 2006. However, final
data is not yet available to confirm this. But it does point to
steady and significant growth towards achieving the 3 percent
goal. Federal agencies are working very hard to achieve this
goal and the numbers of SDV small businesses registered in CCR
shows that the veterans themselves are doing their part, as
demonstrated by the significant growth in those numbers.
CCR, in the last 6 months, the number of SDVOSB small
businesses have grown by approximately 11 percent, to over
12,500, while the total number of small businesses registered
in CCR has grown only by approximately 2 percent. SBA and our
many Federal partners' outreach to the SDVOSB market is
contributing to this growth. However, we have also noted that
the average size of the CCR-registered SDVOSBs continue to be
the smallest of all SBA procurement programs. This points to
weaknesses in our targeted outreach, to gaps in the SDVOSB
understanding of how to succeed in the Federal marketplace, and
perhaps to the capacity of the identified SDVOSB business
community itself.
This is why we are strengthening the full range of SBA
programs in support of SD veterans and veterans, including our
SBDC program, SCORE, Women's Business Centers, Veterans
Business Outreach Centers, our District Office outreach, our
7(a) and 504 loan programs, our Surety Bonding Program, our
matchmaking program, and the use of our PCRs and CMRs, all in
an effort to improve the knowledge, availability, and
applicability of all of our services and programs for both
service-disabled veterans and veterans.
I am going to jump to the part that now addresses
Reservists, since my time is short. In this last year, I
increased OVBD staff by 50 percent. We have improved SBA
contracting with service-disabled veterans' small businesses
through that process.
Let me talk to the Reservists and Guard, and I have to
diverge for just a second. I thank you both for referencing the
data that SBA has been able to coalesce and create and gather
over these last 5 years. I think that is one of the most
important things we could do because there was a striking lack
of data, and I thank Advocacy for their work.
We implemented the Military Reservists Economic Injury
Disaster Loan in August 2001 and continue to promote that. We
think it is a tool of great assistance to those small
businesses that it is helpful with, but we also recognize that
as a disaster loan, it is constrained by its very design. It is
a disaster loan. It is not a business loan. And for those
reasons, it doesn't always hit the mark and we realize that.
We have enhanced our outreach counseling training and our
lending programs to assist Reservists by offering pre- and
post-mobilization business counseling, e-counseling and
planning. SBA initiated and continues to lead the Federal
effort to develop and offer assistance to small business owners
at risk of economic damage when activated. In addition to
internal SBA coordination, we have produced comprehensive
program guides and business planning materials providing a
broad range of information while coordinating many of our
activities with various elements of the Department of Defense.
You have most of the things I was going to touch on.
Because I have run out of time, all I can tell you is that we
continue to work as diligently as possible with the Department
of Defense in their efforts, because these are their soldiers
and airmen and marines, when activated. They have a certain
responsibility in this. The best I think arguably we can do is
try to promote, offer, refine, define, and deliver our
services.
The biggest issue, if you will, that I hear from our
service delivery partners is they can't find these Reservists
who need assistance. I believe, like you do, that there is a
very significant problem occurring, but without the Reservists
themselves stepping up and utilizing the services that we do
offer, to a degree, we are stymied. You have referenced, Madam,
that my budget is what it is. I think we have done an enormous
amount to reach out to this community, but the community has to
engage with us, as well.
If there are some solutions in there, perhaps that is
really where it lies, in how the Reservists and Guard members
themselves are directed to utilize the resources and services
we have, and through that, how we improve and dramatically
improve, really at the direction of my Administrator,
Administrator Preston, how do we improve and deliver our
services in the most effective way.
Thank you. I appreciate the opportunity to be here today
and I welcome your questions.
Chairman Kerry. Thank you very much, Mr. Elmore. We
appreciate it.
[The prepared statement of Mr. Elmore follows:]
[GRAPHIC] [TIFF OMITTED] T7146.021
[GRAPHIC] [TIFF OMITTED] T7146.022
[GRAPHIC] [TIFF OMITTED] T7146.023
[GRAPHIC] [TIFF OMITTED] T7146.024
[GRAPHIC] [TIFF OMITTED] T7146.025
[GRAPHIC] [TIFF OMITTED] T7146.026
Chairman Kerry. I thank all of you for sort of holding it
in that timeframe. That is helpful to all of us.
I am glad to welcome Senator Tester here, a new Member of
our Committee. We are delighted to have him aboard because he
brings a lot of personal small business experience.
Senator, do you have any opening comment you want to make?
You don't have to.
Senator Tester. No.
Chairman Kerry. All right. Thanks.
Let me proceed, then, to a few questions initially, if I
can. I want to pick up, Mr. Elmore, because we just sort of
ended with you and while it is fresh, in your testimony and you
were just chatting about this difficulty of sort of finding
people and what happens. I would like to get at this a little
bit with all of you, if we can.
The Disaster Loan Program which we passed here, which I
authored in 1999, basically then we were focused on Haiti,
Iraq, Bosnia, and Kosovo after those conflicts, but your
judgment is that something is, I think you have labeled it as
onerous in the testimony, and that there are some constraints
within the formulation of the program itself, which obviously
we don't want to create. So the question is, help us understand
those, if you would. What are those constraints and what can we
do about them to make that more effective?
Mr. Elmore. The constraints include, for example, it is not
a business loan. It is a disaster loan. Eligibility occurs
after activation, and I think we all understand that the
majority of Reservists who have been activated since September
11, 2001, have generally had very short notice for activation,
so they can't really arguably make application until after they
have returned. By that time, the damage is done.
So what we have tried to do with our outreach is to move to
a preemptive step and try to put our services and programs in
front of Reservists before they get called. So on one hand,
through our business counseling and training, they can prepare
for the activation, because they now know they are going to be
activated, certainly sooner or later and sometimes more than
once.
The second is if we can move the ability of that loan
program to be available prior to activation, that would be a
suggestion that I would make and I have made in the past.
Third is----
Chairman Kerry. Is it limited by the mere designation as
disaster, or is it limited because of further formulation in
the language?
Mr. Elmore. I think it is really both. Because it is in our
disaster program----
Chairman Kerry. You can't do it until there is, in effect,
the downside?
Mr. Elmore. Well, you can't consolidate debt with a
disaster loan, for example. Now, that is a typical business
approach, perhaps, to lending and borrowing, but in a disaster
loan, we can't really do that. So in that sense, where it sits
doesn't allow what is a normal business process of growing,
planning, and arguably even how one prepares for----
Chairman Kerry. We need to refine the definitional
language, sort of the permissive language?
Mr. Elmore. And there is another impediment, I think, as
well, and that is on the 90 days that you have to apply after
you return.
Chairman Kerry. The question is, is that enough time or
isn't it?
Mr. Elmore. I think you said it, sir. The loan----
Chairman Kerry. Would you----
Mr. Elmore. We would change that. But you said it yourself.
The loan was really designed for when we were in Kosovo and
Haiti, and now we are in Iraq and Afghanistan, and the level of
activations is way disproportionate, five times higher than it
was in 2000, maybe six times higher. So the scale of what is
happening with those self-employed Reservists out there, I
mean, we recognize this and we know this. This is why we
started working in September 2001, bluntly, to try to organize
our ability to reach out and offer these services.
So I think, certainly in my discussions with Administrator
Preston, we would like to engage with the Committee to discuss
how to improve and enhance our programs for veterans and for
Reservists, and I assume--and I think that includes the
military Reservists loan.
Chairman Kerry. Well, let me come back to this a minute,
because when we wrote it, we created a fairly open assistance
program, and you were the folks who came here and said we have
got to limit this. Specifically, you added the word
``substantial'' to economic harm so that they would have to
show a greater level of harm. You reduced the application
period. We had allowed 180 days. You reduced it down to 90. In
addition, you sort of pressed for the ability to be able to
make it easier to show a link between the Reservist's absence
and economic injury. So to the degree it is constrained, you
folks constrained it.
Mr. Elmore. If I can try to answer, sir, all I can tell you
is that in 1999, I wasn't working for SBA at that point. There
wasn't an Office of Veterans Business Development, and I----
Chairman Kerry. You must understand that the agency's view
of this was delimiting.
Mr. Elmore. OK, and I didn't realize that. I didn't know
that the agency then had come back to you with those
recommendations or suggestions.
Chairman Kerry. They came back with more. They restricted
us because we were--they substituted the term ``essential
employee'' for ``owner, manager, or key,'' because that
restricted again who might or might not get it, because an
essential employee was exempt from call-up. So the result was
it became, again, more delimiting.
So basically, look, I am happy to go back to the way we
were trying to help people, which was to be pretty broad and
encompassing. I hear you. Is the 90 days too short a time?
Mr. Elmore. I believe it is.
Chairman Kerry. I am glad to hear you say that, because
that is why we put 180 originally. So we will come back and see
if we can't reverse that and fix it up.
What about the complaint by some people that I hear that it
is not marketed? A lot of Reservists don't even know this
exists. They go in, they come out, and nobody proactively says,
hey--we don't hand them something saying, we want you to know
here are the following things that will be available to you to
try to help cushion your business. Boom, they are given it
proactively.
I think in your testimony, Mr. Denniston, I heard you say
it, because I wrote it down, you said, once the veteran calls
us, we determine their needs. Is it only upon initiation by the
veterans' call?
Mr. Denniston. No, sir. We are very active in outreach
ourselves. Our staff does about 100 conferences a year. The
partners that I mentioned in my testimony, we are very active
with them to get the word out to veterans. Again, our focus is
on the Federal procurement arena and most of the veterans that
contact us are people that are interested in starting small
businesses, and again, that is not our focus, but that is why
we have the partners that we do so that we have people that we
can refer veterans to in the local area.
But given the staff we have, between the Web site that we
have and the activities that we have in the outreach area, we
think we do a pretty good job of reaching veterans. We also
have information now in all the Transition Assistance Programs,
so that when veterans get out of the military and think about
starting small businesses, they have references so they know
where to go so that we can help them.
Chairman Kerry. Here is the thing. I hear from veterans--I
hear what you are saying and appreciate your point of view. But
often in the bureaucracy, and it is not--I am not suggesting it
is willful, but it is just a fact of bureaucracies, there is
sort of a breakdown between the program and the intention and
what really happens out there.
What I hear from a lot of veterans is, and we have heard
it, I think each of the Senators have heard it, is they don't
get this information. It just doesn't somehow reach them. They
don't know proactively this is really there. It is put to them
maybe at odd moments. I mean, I can remember when I was getting
out and they said, you have got to sign this and do this and
this, and I didn't care what it was. I signed it and I got the
hell out. That is sort of a reaction. People are tracking.
The question is, can there be a more effective way of
putting this information in front of people and making certain
that they have it?
Mr. Denniston. I think the best that we can do, because you
are right, we face the same thing. I remember when I got out of
the Army, the only thing I wanted to do is go get a job and
leave the military behind, and I didn't pay attention to all
those documents that I was given. But we still think that the
Transition Assistance Program is one of the best ways to leave
information with veterans, because what we are finding at the
Center for Veterans Enterprise, we get contacted by thousands
of veterans a month, 2,000 or 3,000, that are thinking about
starting a small business. What is interesting is the vast
majority of them have been out of the military for 5 to 10
years. They have worked for a large business. They have worked
for the Government. They have worked for a small business and
now they have this entrepreneurial vision that they want to
implement.
So our issue becomes what can we put in front of veterans
today that they will remember 5 to 10 years from now, and quite
frankly, that is a challenge. That is why we think between what
we do with the Transition Assistance Program, what we do with
the outreach or the partners we have, with using resources, as
I mentioned, like the Air Force cable television programs, we
are doing, we think, a pretty good job. But obviously, we are
open to any other suggestions that we can that would help in
this outreach effort, because it is definitely a challenge.
Chairman Kerry. Do you run any PSAs on it?
Mr. Denniston. We have done some PSAs, probably not as many
as we should. We have been more active on the Internet and the
Web sites and the links to military.com, the Army Knowledge
Network, because we are finding that particularly with the
younger veterans, they are very computer savvy, and where us
older veterans may wait for a PSA, these folks are aggressive
and are using the Internet to get the information that they
need to fulfill their goal.
Chairman Kerry. Let me ask you something. When a veteran is
called up, when a Reservist is called up, do you know at that
time--do you know their occupation?
Mr. Denniston. We don't get involved in the call-up of
Guard and Reserve. That is an SBA and DOD----
Chairman Kerry. Is there coordination between DOD----
Mr. Elmore. There is a level of coordination. Let me go to
your first question, sir. DOD just in the last couple of years
has put together a database of the employers of Reserve and
Guard members, and they had to go through all the processes
because of privacy concerns to be able to do that and they have
fairly recently completed that. We have continued to work with
offices in DOD on some of the research they are doing to try to
identify not only the employers, but more importantly, what has
been the effect of these activations.
Chairman Kerry. What if you did this. What if DOD, when DOD
sends them their call-up notice--they get a formal notice,
correct? What if it had an accompanying letter that says very
simply, if you are a small business owner or an essential
employee in a small business and this may be disruptive, the
following options are available to you, right there.
Ms. Oliver. It makes sense.
Mr. Elmore. If I might, sir, if you really--I support that
kind of an idea, but I would like to accelerate that beyond or
before, if you will, they actually get their orders. They are
in the Reserve and Guard now, and what I would suggest, and
this is what we try to do through my office, because we sent
our Reserve and Guard kits to Reserve and Guard units
themselves. These men and women should know about the services
and resources available to them simply because they are in the
Reserve and Guard, and it is not just for purposes of planning
their business for their eventual activation, but it also ought
to address if they are interested in creating a business, the
services and resources available to them, as well.
Chairman Kerry. But is there today someone actually
coordinating this between your three agencies?
Mr. Elmore. [Shaking head negatively.]
Chairman Kerry. Wouldn't it make sense to actually have
sort of a coordinated effort here, since you are all players in
this happening? You are the provider, you are the convener, and
you are the service industry on the back end. So, I mean, if
you get together, then you have got much more capacity to be
able to make certain you are really going after people and
reaching them aggressively, at the right moments, and
repeatedly, probably.
Mr. Elmore. If I can, sir, my office has been coordinating
with the Assistant Secretary for Reserve Affairs inside DOD, so
we have tried to coordinate the SBA side of this. We haven't
talked with VA specifically about their role in this, but that
is the approach we have taken.
Chairman Kerry. One last question, because I want to get my
colleagues in on this, but Ms. Oliver, incidentally, we are
delighted that obviously in the last year, the agencies have
come up in their procurement. But the question is large in DOD
above all. How can DOD be so far behind on this?
Ms. Oliver. I am torn here, because I don't want to sound
smart--smarty--but this is actually a pretty graphic
explanation and I will tell you the details of it in just a
second. You can't put nine pregnant women in a room for a month
and have a baby come out. It just doesn't work that way, and we
have a history of that same sort. Some things can't be hurried
up in the Department of Defense.
Now, I can tell you a lot of the reasons. One is you can't
be looking at contracting with different people on a contract
until that contract has expired. There are training issues.
There is the complexity of the contracts. Probably most
difficult for us is the product mix. There are so many things
in the Department of Defense that there is no hope at all that
a small business be able to produce, including a service-
disabled veteran, or maybe particularly a service-disabled
veteran-owned small business.
Our history is really clear. I think there are some charts
that show the direction that we are going in all these areas.
That is a history typical of all the other special programs
that we have had.
Chairman Kerry. Let me just----
Ms. Oliver. Sure.
Chairman Kerry. Nobody is asking DOD to let a contract to
somebody who isn't qualified to perform it.
Ms. Oliver. Right.
Chairman Kerry. We understand that.
Ms. Oliver. Yes.
Chairman Kerry. But what we hear--what I hear, anyway, and
I will speak for myself, is that there are service-disabled
veteran-owned businesses ready and willing to take on some of
these contracts and they either just don't get them or they
find it too much of a maze to be able to walk through. But they
are there. They are waiting. They want the opportunity. And
there are all kinds of other things besides sophisticated--I
mean, there are all kinds of service----
Ms. Oliver. Yes, there are. That is right, Senator.
Chairman Kerry. Huge, stunningly huge budget----
Ms. Oliver. Yes, that is correct. I agree with that.
Chairman Kerry. There really should--I mean, it seems to me
of all the agencies that ought to be sensitive to this and able
to do it, it is DOD itself.
Ms. Oliver. It is interesting. I mean, that is right. As I
said in my testimony, it is----
Chairman Kerry. So what is the bar?
Ms. Oliver. What is--I am sorry----
Chairman Kerry. Why doesn't that happen? I mean, are there
those service-disabled veteran-owned businesses ready and
willing? Is it your judgment that they are there?
Ms. Oliver. Here is the problem. The Competition in
Contract Act requires that we compete contracts unless there is
a specific exemption to it, which means that maybe the answer
is: We need to train service-disabled veteran-owned small
business owners about how to compete better--which we have
tried--I mean, we are working on. It just takes time.
Bill pointed out that these tend to be very small
businesses. That is a second kind of a problem.
Chairman Kerry. Let me stop you there for one second.
Ms. Oliver. Sure.
Chairman Kerry. SBA, don't you help these people to be able
to compete?
Mr. Elmore. Yes, sir. Yes, sir, through our training and
counseling and through our Small Business Development Centers.
Chairman Kerry. Where is the gap here?
Mr. Elmore. Well, the gap is--if you look at the data, sir,
and this is from my perspective, 0.7 percent of the businesses
in America that have employees are owned by service-disabled
veterans. That is what the 2002 Survey of Business Ownership
tells us from Census. So we have a three percent goal, but we
have a 0.7 percent population to achieve it.
I think we are fairly close to the 0.7 percent, but we are
nowhere near the 3 percent goal. We have to build the capacity
of the businesses that are presenting themselves----
Chairman Kerry. That doesn't make sense. Those are apples
and oranges that you are comparing there. It doesn't matter.
Whatever the percentage is in terms of the total population,
because they are veterans and service-disabled, they are
supposed to get a higher piece of the pie. That is the
equation.
Mr. Elmore. We are----
Chairman Kerry. So if 80 percent of them are getting a
contract because that is what it takes to get the 3 percent,
that is what they are supposed to get, and it is because they
are veterans. It is not a relevant percentage.
Mr. Elmore. If I can, sir, because I am glad we are talking
about this because this is in many ways central to this whole
discussion, what has happened, and I applaud Congress for doing
this and you know this, I was part of the effort to make this
happen before I came to SBA. What we have done is we have
plugged the moral imperative of how we as a Nation contract
with service-disabled veterans into the Federal procurement
system, but yet the Federal procurement system isn't geared to
mandate contracts. It is geared to mandate opportunity to
compete and there is a gap there. So all of these things that
we have touched on from the capacity----
Chairman Kerry. What do you mean by geared?
Mr. Elmore. We cannot----
Chairman Kerry. We have a goal of 3 percent.
Mr. Elmore. We cannot just award contracts to service-
disabled veterans simply because they are service-disabled
veterans. They have to provide the best value to the Government
in that process. So there is a process----
Chairman Kerry. So what you are effectively saying is that
they are not capable of winning the competitions.
Mr. Elmore. No, that is not what I am saying. What I am
saying is we have to build----
Chairman Kerry. Aren't you duty-bound to provide it to
them?
Mr. Elmore. We have to build the capacity of those
businesses that are presenting themselves. If you look at the
size of the businesses in CCR----
Chairman Kerry. You are losing me.
Mr. Elmore. I am trying to explain this, sir.
Chairman Kerry. No, let me just--you have to build the
capacity. Does that mean they lack the capacity?
Mr. Elmore. I think many of them do.
Chairman Kerry. OK, which means they can't compete.
Mr. Elmore. It means they can compete, but they have as a--
--
Chairman Kerry. They can't win.
Mr. Elmore. Many of them can't win, no. I don't believe
they can, not as they are presently structured and the size
that they are and the arenas that they are trying to compete
in----
Chairman Kerry. A lot of them disagree with that, and I
think we will hear from some of them, that that is not the
judgment of a lot of them in terms of what this fairness of
competition is.
I don't want to dominate this. Let me let Senator Snowe ask
some questions. We will come back afterwards and follow up.
Senator Snowe. Thank you, Chairman Kerry.
Just getting back to the entire question, which really
needs a solution as to how we achieve these goals. The law has
been in place since 1999. So why is it that the agencies can't
get together to accomplish the 3 percent goal? I was talking to
my colleague, Senator Coleman, who was telling me about someone
who is serving in the National Guard and has been deployed to
Iraq, lost his business, not aware of any of the resources
available. It seems to me that you all have a database, so
can't there be an interagency council to coordinate so that
they are made aware before they are called up, what are the
resources, is there a contracting pamphlet so that they can
review their options? Isn't there a way to get around all this?
In the final analysis, we need a solution to this problem,
because obviously, it is not working. I just wonder, is it
possible to do that, because it is a requirement under the law,
and the President had to issue an Executive order in 2004 to
lay out the criteria for achieving this, and yet it is still
not happening. Now, I will get to 2006 because I want to
address the question that was raised as to whether or not large
businesses were getting contracts that were intended for small
businesses.
But Ms. Oliver, let us start with you. Is there a
possibility, and I would like to hear from the three of you, to
create an interagency council, because as has been identified
here, we have a problem. It isn't rocket science to coordinate
and have a single database, to share the information. I
understand SBA has some information on some service-disabled
veterans, others do not. There has to be a way of doing this.
Ms. Oliver. Yes, I agree with you, Senator Snowe. I will
tell you one of the problems, because I have seen--we have
tried to work toward the solution of this before. The Privacy
Act, and this is appropriate, is very careful about having
people have private information collected by the Government
used for any purpose other than that for which it was
collected. That has been a stumbling--that actually has been a
stumbling block in, for example, going to VA and getting from
VA a list of all their service-disabled veteran-owned small
businesses, or all their service-disabled veterans. There may
be ways around it, but that is definitely a problem.
Senator Snowe. Have you gotten a ruling on that? Is that
something anybody has pursued?
Ms. Oliver. The Department of Defense attorneys, and we
didn't get a--we don't have--I don't have a written opinion,
but it was the opinion of the Department of Defense attorneys
when the Veterans Corporation wanted information to reach out,
they said, we can't give it to you.
Chairman Kerry. Or as Shakespeare said, kill all the
lawyers.
[Laughter.]
Ms. Oliver. Well, I can't be in favor of that.
Senator Snowe. Well, then if that is the case, I would like
to hear as to why. Now, I would like to hear from each of you
if that is the same response that you are going to give----
Mr. Denniston. No.
Senator Snowe. OK. Mr. Denniston.
Mr. Denniston. First, let me say that I think we are
confusing two issues here, so I would like to separate them, if
I can. I think the issue of the Guard and Reserve call-up is
one issue. I think the goals that we are talking about, the
procurement goals, are very different. So I would like to focus
on the second one, if I can.
Two things. We have a database of veteran-owned and
service-disabled veteran-owned businesses that want to do
business with the Federal Government. That is the Vendor
Information Page. That is those 13,000 companies that I talked
about. That is available to all Government agencies. It is
available to all prime contractors, and government agencies and
prime contractors are using it.
The issue of the privacy comes in with someone getting a
list of the 2.5 million veterans that we have on our rolls as
service-connected disabled veterans. But one of the things that
we do every year is those veterans get a letter from the VA
telling them what their compensation check is going to be,
because we have the inflation factor so it changes every year.
Every year that that letter goes out, we tell them of the
services available from the Center for Veterans Enterprise and
from the Small Business Administration if, in fact, they have a
small business or are interested in starting a small business.
So that is how we get around that privacy thing. We can't give
them the information out, but we let the veterans know what is
available.
Let us go back to the issue of the goals. My opinion is
that this is a cultural issue, because we face this in the
Department of Veterans Affairs, this is a new program.
Contracting officers have been so--what is the right word--I
don't want to say ``brainwashed,'' but to focus on the 8(a)
program and the other small business programs that have been
around longer that, quite frankly, what we are doing is we are
talking about a change in culture.
To us, the two ways that we have worked on this, number one
is education, is to make sure that every VA contracting officer
and every person in the VA that holds a purchase card knows of
the Department's responsibilities to service-disabled and
veteran-owned small businesses.
The other thing that we have pushed very hard is that
Public Law 108-183 gives us mechanisms through set-asides,
particularly, to limit competition only to service-disabled
veteran-owned businesses, and one of the ways that we have been
successful to reach the 3 percent goal is by instilling in our
contracting officers the need to use that mechanism.
The other thing that has helped us is when GSA, the General
Services Administration, under the Federal Supply Schedules
came out with a determination that said you can limit
competition on Federal Supply Schedules based on the socio-
economic category of business. So now our contracting officers
can use the Federal Supply Schedule as a mechanism and limit
competition to service-disabled veterans.
So to me, the issue is about changing culture, and that is
why, as one of our recommendations, we said we have to do a
better job of educating contracting officers, and particularly
program officials, in the Government as to what goes on. The
other thing that is important is to get people----
Chairman Kerry. Do you mind if I just ask----
Mr. Denniston. No, go ahead.
Chairman Kerry. What is happening with respect to that now?
This has been a known problem for a long period of time, this,
quote, ``education'' of the officers. What directive and
specific effort does take place to do that?
Mr. Denniston. After the President's Executive order was
signed, one of the things that the Department of Defense did
very quickly through the Defense Acquisition University, was
put a course online about the service-disabled veteran program,
and that is available for contracting officers throughout the
Government. But the issue----
Chairman Kerry. I am not talking about what is available. I
am talking about what is happening mandatorily to make them
aware that they have got to do this.
Mr. Denniston. Well, that is the issue. It is the issue of
compliance and it is the issue of follow-up. One of the things
that we did in the VA to show our seriousness to this is after
the Executive order and our requirement for strategic plan, we
made our Deputy Secretary Gordon Mansfield the chief executive
responsible for implementation of the plan so that it got the
attention of people within the management structure of VA. The
other thing that we did was we put the accomplishment of the
goal on everybody's performance plan so that now this is one of
the things that they are rated on if they want to get a bonus.
The other thing that we did was every month in the senior
managers' meeting that we have, I used to report on what the
accomplishments were. We have changed that around, and rather
than my doing it, so they are not my numbers, now we have each
of the administrations and the buying offices to report to the
Deputy Secretary on how they are doing. So that now becomes
ownership that is theirs rather than mine, because the one
thing we know about the small business programs, to make them
successful, we have got to have buy-in from everyone, top
management, the contracting officers, the program officials,
and the Small Business Office.
Senator Snowe. Mr. Elmore.
Mr. Elmore. Yes. I will touch on what Scott was talking
about and then I will come back to the Reserve and Guard, if
that is OK, kind of like Scott divided the two.
What we are doing inside SBA is we are working with our
PCRs and CMRs and the Administrator has directed that we are
prioritizing our services and our goals internally for women,
HUB Zone, and service-disabled veterans. So we are trying to
increase the profile and the use of our PCRs and CMRs across
the Government structure to push for and try to deliver some of
these same things that we are talking about here today, use of
the set-aside and sole source authority, understanding of how
to identify and find service-disabled veteran small businesses,
those kinds of things.
On the Reserve front, I would agree with you. I think that
there should be some cross-government process, not just SBA,
not just DOD, and not even necessarily just VA. I would suggest
that perhaps Treasury has a role in this, as well, that there
has not been an across-government process to tackle this and
take this on the right way. I have been frustrated by that like
the members in the Reserve and Guard have been.
Now, I may risk myself when I say this, but it does take
leadership that comes from beyond my office. I can tell you
that my Administrator is dead-on serious about doing this right
and doing this as well as we possibly can, and I applaud him; I
support him and we are working very hard to try to do that. So
if there is any leadership that the committee itself can exert
in this arena, I would applaud that, as well.
Senator Snowe. Well, I appreciate that, Mr. Elmore, and I
say that to you, Mr. Chairman, because I do think we have to
get to the core of the issue here and see what we can do to
serve as a catalyst for standardizing this process, because
inevitably, there are going to be rationales as to why it can't
work. I mean, there is just not going to be the motivation
there. I think we have to create it.
The President did in the Executive order and said
``shall.'' That was very definitive. It is obviously not
happening. So I think we have to get beyond, and I appreciate
your straightforward response to that request, and I think we
have to work it out and figure out how best to work this out.
That is something this Committee can work on, Mr. Chairman,
because I truly think it is going to happen. I mean, it is too
large. There is too much of an opportunity there that is
natural, so why not take advantage of it to help our service-
disabled veterans? There has to be a way. I think that that is
critically important.
A couple of other issues. In 2006, is it true about meeting
the goals or not?
Ms. Oliver. We don't know yet.
Senator Snowe. You don't know yet.
Mr. Denniston. For VA, 99.9 percent certainty that we have
met the goals. The 3.38 is going to be the final number that we
certify to SBA. Now, keep in mind that with our ten-point-some
billion dollar procurement budget, that equates to about a
million contract actions. We have gone through that data
several times to ensure that there are no large businesses
reported in that data.
One of the dilemmas that we have government-wide is that we
don't have a centralized database that talks to the size
standard of the small businesses. One of the reasons for that
is because for every NAICS code that we use, you can be large
in one and small in the other. Some of the other reasons, it is
just poor clerical work on the part of the contracting officers
who input the information in the Federal Procurement Data
System. But we have cleansed our data and I will tell you today
that there are no large businesses that are in that 3.38
percent.
The other thing I would like to mention, too, to get at
this idea of interagency cooperation, after the President
signed the Executive order, we put together a working group of
all the Federal agencies to share best practices, to share a
standard strategic plan. We, the VA, took the lead for that.
And the agencies that chose to participate, I think you will
find, have the best strategic plans and their accomplishments,
even though they haven't met the 3 percent goal, are trending
up better than the agencies that didn't choose to take part in
that, because one of the things that we know in the small
business program is the more we can share best practices, the
better off we are all going to be.
Mr. Elmore. Tell me the question again, please. I got so
engrossed in listening to Scott----
Senator Snowe. Whether or not for 2006 you are able to----
Mr. Elmore. Large businesses, OK. We, like VA, we have
scrubbed our data, and in fact, we looked at it again last
night or else I wouldn't have been able to come up here and say
what I said. We believe that we have, in fact, exceeded 4
percent.
Now, we are very sensitive to this question of whether or
not there is any large businesses involved in our data.
Clearly, you understand that. I can't sit here and tell you
with all certainty, like Scott can, because I just bluntly
don't know. But I would be flabbergasted if any of the
contracts that we let with service-disabled veterans in 2006
went to any large business.
Senator Snowe. Just to follow up, and this will be my last
question, last summer, I was really surprised when the GAO
determined the SBA regulations, that, if there was an
ineligible contract that was issued and it wasn't challenged
before the contract was issued that the ineligible contractor
could keep the award. Is that true? Why is that?
Mr. Elmore. I think----
Senator Snowe. That just seems so ludicrous. It is almost
hard to believe.
Mr. Elmore. And what I would ask is, if you have a specific
question, please get it to me and we will get you a detailed
answer back, but I will tell you----
Senator Snowe. Yes, there is a specific case.
Mr. Elmore. OK.
Senator Snowe. The Veterans Enterprise.
Mr. Elmore. I would have to go back and look at that
because I am not privy to all the detail----
Senator Snowe. These were contractors who did not have
service-disabled veterans. I mean, it was not owned by service-
disabled veterans and yet received--the Veterans Enterprise
should have had it and some other contractor got it, and
because it wasn't challenged before the contract was issued,
then they could keep it. So the eligible contractor was not
remunerated, wasn't compensated for the loss and didn't receive
the award, obviously.
Mr. Elmore. I haven't looked at that particular case. I can
tell you that I have looked at how our protest process works
and I can give you the numbers and those kinds of things. But
again, if you have a specific question, please get it to me and
I will make sure we get you the answer back----
Senator Snowe. Well, we will, because I think it is
obviously something that needs to be addressed.
Mr. Elmore. Yes.
Senator Snowe. Thank you.
Mr. Elmore. Thank you.
Senator Snowe. Thank you, Mr. Chairman.
Chairman Kerry. Senator Tester.
Senator Tester. Thank you, Mr. Chairman.
Chairman Kerry. That was an important line of questioning,
and I agree completely with the Ranking Member about the
follow-up piece and we are going to work on that.
Senator Tester. Thank you, Mr. Chairman. I want to thank
the panel, also. I also appreciate Scott segregating the issues
because we were talking on several different levels there. The
level I want to talk about for right now is Guard and
Reservists who go off and there are programs out there to help
them, and it kind of dovetails in with what the Chairman was
talking about.
Are folks working together now, and does that include DOD,
as far as education, allowing folks to know what programs are
out there, what services are available, and is DOD part of the
equation?
Mr. Elmore. Yes, sir.
Senator Tester. It seems to me there was a statement made
earlier, and I think it was you, Mr. Elmore, that made it, that
folks don't know that the services are out there. If there is a
concerted effort between all working parties, the VA in
particular and Small Business in particular and the DOD, why is
that occurring?
Mr. Elmore. What I can tell you, sir, is the work that we
have done, and maybe this will help answer that, the materials
that we produced that are directed specifically to Reserve and
Guard, we have provided to Military Family Support Centers, we
have provided to State Adjutant Generals, we have provided to
the State committees of the Employers' Support of the Guard and
Reserve, and we have sent out to Reserve and Guard units
themselves.
What steps DOD may have taken to communicate with their
particular service members, I honestly can't give you that
answer. I think you would have to ask the Department of
Defense.
Senator Tester. It would seem to me that if they haven't
asked you to come do any sort of workshops, in-service while
they are----
Mr. Elmore. In fact, I will be participating in a--and let
me make sure I get the name right for you----
Senator Tester. That is all right.
Mr. Elmore. There is a summit that is going to be held this
next month over in Arlington, I believe it is, with the
Military Family Support Center System, and as far as I know, we
are the only agency, my office, to come over and participate
and be part of this summit. So those kinds of things have been
occurring and continue to occur.
Senator Tester. As far as procurement goes, I will just
give you my perspective and then we will move on. I think it
deals with the size of the contracts when you are dealing with
small business more than anything, and if you are talking about
allowing service-disabled veteran small businesses to be able
to compete, the size of those contracts are critically
important, any Federal contract. I know a lot of small
businesses that flat don't pay any attention to Federal
contracts because they don't have the wherewithal, they don't
have the infrastructure to be able to supply the kind of
supplies they need, and I will give you a personal example.
If I wanted to go buy a beef, it is much easier to buy it
from one outfit. If I want to bring other people into the fold,
I might want to buy it a quarter at a time. And that is what
folks need to understand with Federal contracts. For the most
part, with my definition of small business, there is no way
they can even possibly begin to supply what is there.
The last thing I want to ask, and this is open to anybody,
I have a small business and I am called off, and quite frankly,
that business shuts down. Any time there is a void in business,
it is filled pretty quickly. By the time I get back from my
duty in any war, there is already a business sitting there that
took the place of my business and so I am out of business.
Assuming I know every program that is out there, what is
available for me?
Mr. Elmore. What we can offer is, we can offer access to
the full range of our business loans as a businessman or woman
before you are even aware that you may be activated, and that
is what we try to do. We do offer the Military Reservists
Economic Injury Disaster Loan after the effective call-up and
generally after they have returned.
Senator Tester. What is the interest rate on that loan?
Mr. Elmore. The average is about 2.9 percent and the terms
can go up to 30 years. Actually, it is a very good loan in that
context, but as we talked earlier, it is not a business loan,
it is a disaster loan. It is in our disaster portfolio.
Senator Tester. And so to qualify for that, the business
has to be shut down or what?
Mr. Elmore. No, they have to be able to demonstrate that
there has been some economic damage that is attributable to the
activation.
Senator Tester. How long does it take to get that loan
approved, on average?
Mr. Elmore. I think it is probably about a 2-week process,
but don't hold me to that, please, because I don't run that
program, but we can get that answer for you.
Senator Tester. OK.
Mr. Elmore. We have approved about 70 percent of the
applications that have gone through the entire process, I can
tell you that.
Senator Tester. All right. And there are plenty of dollars
available?
Mr. Elmore. Yes, sir. Those are our direct loans. We are
generally--our loan products are primarily guaranteed, but that
is a direct loan program.
Senator Tester. What else is available?
Mr. Elmore. What else is available is the thousand or so
Small Business Development Centers, the 400, approximately,
SCORE chapters, including e-counseling, the 5 Veterans Business
Outreach Centers that my office funds, and the Veterans
Business Development Officers stationed in every SBA District
Office to try to help these men and women understand where that
technical assistance and business planning assistance is
available.
Senator Tester. Is there any money for retraining?
Mr. Elmore. No, sir, not from us.
Senator Tester. Is there any money that you know that is
out there for retraining?
Mr. Elmore. The only retraining funds that I am aware of--
--
Senator Tester. Specifically focused on----
Mr. Elmore [continuing]. Are not in the American
government, it is our British allies.
Senator Tester. OK. Thank you. Thank you.
Mr. Denniston. If I could just jump on your question about
Government contracts being too large, in a lot of respects,
that is very true, but I would also submit to you that there
are opportunities for small businesses to play. As an example,
we have VA medical centers in Montana that need construction,
renovation. We buy a lot of services locally, ambulance
services, things like that.
The issue for a small business that has never played in the
Federal marketplace, in my opinion, is they are overwhelmed by
what they perceive to be the red tape. The best resource and
the way that we help small businesses understand the Government
process is by DOD's Procurement Technical Assistance Centers.
You have got several in Montana that do a great job at teaching
the local businesses how to do business with the Federal
Government and we rely on their services all the time to teach
local businesses how to break into the Federal marketplace and
particularly how to provide us services with VA in Montana.
Senator Tester. I applaud those efforts, make no mistake
about it. It is not all failure. I am just saying that if you
are really concerned--I am not implying that you are not, but I
know the size of the contracts impacts a lot of folks. That is
all. I am not saying you do all bad work. You do some darn good
work, and I want that on the record.
Chairman Kerry. Thank you, Senator. Those were good
questions and important ones, I think, and if I could just
follow up on one and then we are going to switch to the next
panel. Are you all going to stay to hear some of these business
folks, because I think it would be good for you to hear what
they have to say.
Ms. Oliver. Yes, sir.
Mr. Denniston. Yes, sir.
Mr. Elmore. Yes, sir.
Chairman Kerry. Secondly, I heard you say that you have the
Internet. You put packages out. All of that is well and good,
but I have to tell you from human experience, that is
absolutely no guarantee anybody knows what is in them or that
it gets to people. And so what you have to think about here is
this coordinated, in-your-face effort to be proactive that
actually sits with people and gets in a personal way in touch
with them, because everything else gets lost. It really does.
That coupled with what Senator Snowe raised, and I think we
have got to really follow up on that, which is sort of the
contracting process per se, and we are going to look at that
very, very hard.
I will leave the record open for the submission of
questions by Members of the Committee for a week and we look
forward to your responses to those. There will be some follow-
ups to our own questions. We just don't have time. Thank you
very much.
If I could ask the members of the second panel to come up.
Let me introduce them as they come up. They are all small
business owners, so we particularly welcome them to this
reality check.
We have a Boston native. I am pleased to welcome Mr. Louis
Celli, Jr., who is a veteran and the president of Northeast
Veterans Business Resource Center.
Then we will hear from retired U.S. Navy Captain Ann
Yahner, who is the president and general manager of Penobscot
Bay Media out of Maine.
We will also hear testimony from Mr. Bob Hesser, who is the
president and CEO of HI Tech Services, Inc., as well as the CEO
of Allied Technical Services Group.
And finally, we will conclude with the testimony of already
introduced by Senator Isakson, Mr. Ted Daywalt, president and
CEO of VetJobs.
So welcome to all of you. Thank you very much for your
patience. We really look forward to your testimony today. Why
don't you lead off, Mr. Celli. Thanks for being here.
STATEMENT OF LOUIS J. CELLI, JR., PRESIDENT, NORTHEAST VETERANS
BUSINESS RESOURCE CENTER, INC., BOSTON, MASSACHUSETTS
Mr. Celli. Thank you, Senator Kerry. Boy, this seat is
really warm.
[Laughter.]
Chairman Kerry. Well, it should be.
Mr. Celli. Good morning, Senators. Thank you for the
invitation to come before you and share my experiences and work
within the veteran business owner community.
Senator Kerry, like you, I, too, am from Massachusetts, and
like you, I left the service to start my own business. I am a
22-year veteran of the U.S. Army, a service-disabled veteran,
and I started two businesses. My company, the Northeast
Veterans Business Resource Center, is headquartered in
Massachusetts and we have recently opened up an office in the
Walter Reed Army Medical facility.
We are a nonprofit organization that teaches, coaches, and
mentors veterans to start and grow micro-enterprises and small
businesses. Over the past 4 years, we have trained over 2,000
veterans through formal training and have served over 4,000
veterans through counseling, seminars, and formal classes.
I serve as the vice chairman for the American Legion's
Veterans' Small Business Task Force and have recently been
elected to serve as the Chairman of the Small Business
Administration's Advisory Committee on Veterans Business
Affairs.
I have been asked for my opinion and to relate my
experiences regarding the challenges that veterans experience
while trying to start small businesses, and specifically
examples of Guard and Reserve business owners who have suffered
damages to their business as a result of military deployment,
and what recommendations I might have to help our veteran
community.
One of our clients owns a computer repair store in Boston.
His story is probably the most common. He received notification
that he was being deployed about a week prior to his
activation. His wife was the principal owner and she couldn't
afford to replace him during his deployment at the going rate
for a senior engineer of $70,000 to $80,000. So what they
decided to do was to close the business until he returned. Like
me, he believed that when he returned, there would be some kind
of Government program in place to assist him which would give
him--which gave he and his wife a sense of solace while he was
gone. It is what made them comfortable while he was away.
While he was away, the bills kept coming in because he
still owed the money that he had taken out to support this
business, and his income from the military was significantly
lower than his small business income. He and his wife began to
fall behind on their payments. They suffered credit damage when
he was deployed, and when he returned, he tried to get a loan
from every available disaster and commercial loan program, but
was denied due to poor credit.
Another one of our clients faces a different problem. He
and his partner started a business together. Our client
deployed for more than a year. When he returns, the business
partner had incurred debt due to his absence while trying to
sustain the business. The partner who had remained was growing
the business based on the existing clients and then that year's
worth of recruiting efforts, and now the question that faces
them is who owns what? How do they reconcile an equal division
of that business with one person gone and the other person
working for a complete year? Who has what debt?
Senator Kerry, Senator Snowe, Congress and specifically
this committee have been working on veterans' business owners'
issues for years--Public Law 106-50, 108-183, Executive Order
13360, and most recently Public Law 109-461. In my opinion, I
don't think we need more laws to try to help veteran business
owners. I think we just need to enforce the ones that we have.
More funding will definitely help. We don't nearly have the
funding needed to serve the veterans who require services now
that we see.
And Public Law 106-50, it was complicated. It was
intricate, but it was very well written. I have had many
spirited discussions with my colleagues, many of whom are here
today, and basically there are 7 parts to 106-50 which were all
designed to work independently while working toward a common
goal. Each of the entities created by 106-50, the SBA Office
for Veteran Business Development, the VA Center for Veteran
Enterprise, the SBA Advisory Committee, the Veterans
Corporation, the Veterans Representative for SCORE, and all of
the others were all supposed to work cooperatively together for
the common goal of assisting veteran business owners. They were
supposed to support each other while working together.
Public Law 106-50 set in motion a four-year plan, that at
the pinnacle of the 4th year, all of these agencies were
supposed to coalesce and be working together, supporting each
other so that they might have a greater population of veterans
as a team. Instead, none of these entities worked together.
None of them worked as a team and they simply just coexisted,
going in their own way. If there had been an administrator or
some kind of oversight to 106-50, a single entity with the sole
purpose of making sure that the separate entities and
organizations not only complied with the letter of the law but
also the spirit and intention, as well, I believe that these
separate parts would have been thriving by now rather than
individually struggling along.
In my opinion, again, we just don't necessarily need more
laws. We need to enforce the ones we have and work harder--that
you have worked hard to produce in the first place. And by the
way, I did mention funding, right? Funding is important.
As you seek to assist veteran business owners, I ask only
that you consider adequate funding for training and assistance,
as was mentioned earlier, implement a veterans' direct loan
program to assist veterans who wish to start businesses, and
invest in a Guard and Reserve deployment business care program
that will train, prepare, and support veteran business owners
who are called up by our country to defend our Constitution of
the United States of America.
I would be happy to assist with any detailed suggestions
for these recommendations should your Committee request to
pursue them further, and I stand ready with myself, my company,
and any of my resources to support this Committee in any way
necessary. Thank you for the time today.
Chairman Kerry. Thank you, Mr. Celli. We appreciate it.
[The prepared statement of Mr. Celli follows:]
[GRAPHIC] [TIFF OMITTED] T7146.027
[GRAPHIC] [TIFF OMITTED] T7146.028
Chairman Kerry. Captain Yahner.
STATEMENT OF CAPT. ANN S. YAHNER, USN (RET.), PRESIDENT AND
GENERAL MANAGER, PENOBSCOT BAY MEDIA, LLC, CAMDEN, MAINE
Capt. Yahner. Good morning, Senator Kerry, Senator Snowe. I
am Ann Yahner. I am the resident and majority owner of
Penobscot Bay Media. We are an IT company with strengths in
geographic information systems, Web development, interactive
distance learning, and film and video, and we are located on
the magnificent coast of Maine.
In addition to other contract vehicles that we have in
place, we are one of the 43 prime contractors that was awarded
the Veterans Technology GWAC, and we are the only company that
was awarded in New England. Our Vets GWAC partners, many of
whom are veterans and disabled veterans, come from all over the
nation, including the same States as five Members of this
Committee.
I want you to know that because of this contract that we
have been awarded, I finally feel confident that as a company,
we can provide a benefits package to our employees that they
need and deserve, especially in the areas of medical, dental,
and short-term disability insurance. And also because of this
contract, I anticipate that our workforce will probably double
in the next 12 to 18 months.
Senator Kerry, like you, I, too, served my country
honorably in the Navy, and as it happens, I was in Vietnam the
same year that you were. As you know, it was a very busy year
and a difficult year----
Chairman Kerry. Are you sure I was there? According to some
people, I wasn't.
[Laughter.]
Capt. Yahner. Oh, you were there. You were there. It was a
particularly difficult year, I am sure for you, and it
certainly was for this very young, naive, idealistic 23-year-
old nurse who got a real wake-up call real quickly.
Because my husband and I are both veterans, my partners and
I have started a program where we are hiring qualified veterans
and include many of the people, Maine National Guard and
Reservists, who are returning from Iraq and Afghanistan. In
fact, there are four soldiers right now that if they come back
in April, they have interviews for one of our initiatives.
In conjunction with other IT companies in our area, we are
working with the University of Maine to develop training and
certification programs to align skill sets with current needs
of information technology. We have also developed a really nice
relationship with many of the State agencies, as well as the
local town council of Camden, to work toward meeting some of
these goals with economic development. The Reservists and the
National Guard that I am particularly looking at in our company
are those that are in engineering battalions because they have
the background for GIS and mapping and we have a very strong
initiative in spatially intelligent robotic areas and they
would be good to work in that area.
Now, as it pertains to this hearing, once I saw what the
topic was, I canvassed the SDVOs and veteran-owned companies to
try to find out what two major obstacles we all felt we had to
do business with the Federal Government.
First, the Congress, led by this Committee, needs to make
SDVOs equal to 8(a) businesses by making it possible for a
contracting officer to award sole-source contracts to qualified
SDVOs on the same grounds as is currently permitted for 8(a)
businesses. A contracting officer may make a sole-source
contract noncompetitive award to an 8(a) business without
completing any justification paperwork. He need only believe
the 8(a) is capable of performing the work
In addition, an award to an 8(a) cannot be protested.
However, in the case of an SDVO, the contracting officer must
investigate and determine that there are no other SDVOs that
claim they can do the work. Otherwise, a time-consuming
competition must be conducted. He must complete a justification
and approval document and consider the risk of potential
protests of the award and take whatever necessary precautions
to ensure he can withstand such protests.
I might also add that we have found that when we talk to
contracting officers, we are educating the contracting officers
because they know very little about the set-aside program at
all. That is a little discouraging and, I think, needs to be
corrected in that area of training about this program.
And the other thing I might add that I didn't have in my
testimony, I went through and looked in the past 2006 all of
the contracts that were awarded to SDVOs. It is a little
discouraging for me as an IT company to sit here and see that
most of these awards are going to construction, roof repairs,
medical equipment, custodial and janitorial services. I don't
see a lot of things going to IT, and hopefully the Vets GWAC
will solve that problem.
The second area that I want to bring up is accountability,
and this has been touched on a little bit. Mr. Chairman, first
of all, I am a very practical business woman. When I and my
management team fail to achieve our business objectives, we
don't expect to get a bonus or any kind of accolades. Likewise,
when the senior management team of any agency doing business
with the Federal Government does not even come close to meeting
their goals, they need to be held accountable, and that
accountability must have negative consequences. It must have
some teeth--be it an entry in a performance evaluation or a
fine. I don't really care as long as there is some
accountability. When there is no accountability and there is no
enforcement of regulations that are already in place, then it
is just business as usual and the SDVO set-aside program will
continue to suffer.
So in my opinion, if these two major points are not
corrected, all the initiative and hard work and support of the
various veterans groups, the GSA and the SBA will be for
nothing and a great opportunity for veterans and disabled
veterans could be lost.
Now, Penobscot Bay Media is like a thousand other small
companies that are the backbone of my State and the Nation's
economy. My understanding, as has been pointed out, is this
program was put in place to help the veteran who chose to wear
a uniform and was injured in the defense of this Nation. It was
to help small businesses grow, partner with other small
businesses, hire more employees, provide good salary and
benefits, bring Federal money into communities, and increase
economic development in our States. If you don't give the
service-disabled veteran an equal playing field with other set-
aside programs, one of this will happen and the program will
not be successful.
And finally, the service-disabled veteran deserves at the
very least to have parity with the other set-aside programs.
Unlike all the others, the service-disabled set-aside is the
only program that is earned. It is earned by long separations
from our family, missing important life events, lost income
from our business, and literally fighting and many times being
injured in our service to our country. And as one man quoted,
``Veterans deserve consideration above and beyond anyone else
in America,'' and I think that is extremely poignant right now.
I, too, will take any questions anybody has.
Chairman Kerry. Thank you very much for important
testimony. We appreciate it. Thank you for your service, also.
[The prepared statement of Capt. Yahner follows:]
[GRAPHIC] [TIFF OMITTED] T7146.029
[GRAPHIC] [TIFF OMITTED] T7146.030
Chairman Kerry. Mr. Hesser.
STATEMENT OF ROBERT HESSER, CHIEF EXECUTIVE OFFICER AND
PRESIDENT, HI TECH SERVICES, INC., AND CHIEF EXECUTIVE OFFICER,
ALLIED TECHNICAL SERVICES GROUP, LLP, HERNDON, VIRGINIA
Mr. Hesser. Morning, Chairman Kerry, Ranking Member Snowe.
Let me first thank you for the opportunity to come before you
today to share my views of Federal procurement policy. I am an
executive member of the Vet Force, formerly the Task Force of
Veteran Entrepreneurship. However, my comments today are mine.
While the framers of Public Law 106-50 did a good job on
setting up the program in 1999 to assist all veterans
interested in starting or expanding their own small businesses,
it wasn't until the Veterans Benefits Act of 2003, section 308,
that a Federal Procurement Program for Veterans was created.
Under Section 308, contracting officers were to be given
authority to restrict competition or make sole-source awards
for procurements to service-disabled veteran-owned businesses.
Nonetheless, today, the simplified procedures used to sole
source and set aside 8(a) and HUB Zone procurements do not
exist for SDVOBs.
I believe that the FAR Council's and the SBA's joint
efforts to effectuate section 308 did, in fact, cause greater
confusion. They created additional subparts of the CFRs and
FARs that do not reflect what is in Public Law 108-183.
To encourage greater Federal agency participation in the
SDVOB procurement program, the President issued 13360, which we
have heard about here. Executive Order 13360 did heighten the
awareness throughout the Federal Government and to large
business contractors, I think sometimes to the contractors more
than to the government.
My entire adult life has involved service to the Federal
Government. I am a retired Navy Master Chief. I was a senior
Federal Government employee, left as a GM-14, and a Government
contractor. During my involvement, I have learned that a very
high percentage of Government employees possess a collective
mindset supporting the corporate good. I think they are good
people. They try to help us.
Government employees working with contractors build
business relationships like anybody else. Some of their
relationships last many years. Of course, each contracting
officer knows the contractor who is timely, the contractor with
reasonable prices, and in what action each contractor is at
their best. The CO contracts the contractor to get what their
agency customer needs.
When a new requirement is brought to their attention that
is not within the scope of existing contracts, the CO wants to
use the most efficient, effective, and lowest-cost means to put
a new contract in place. Their customer needs a contract
created in order to carry out the mission. If the required
product or service can be provided by a small business, the CO
will first consider the scope of existing small business
contracts.
Second, they will consider contractors with whom they
already work. This includes large business with an existing
subcontracting relationship with a small business capable of
fulfilling the requirement.
Third, they are likely to consider inquiring the GSA
schedule system, known as GSA Advantage. They will not consider
a service-disabled veteran-owned business, sole source or set-
aside. They will work with SDVOBs also certified as 8(a)s or
HUB Zone businesses. Why? Because they can award to the other
two without any hassle or additional work and can take credit
through double- or triple-counting of goal accounting. I
believe the goals, if you actually look at the statistics on
the Web sites and the pdf's from GSA, you can identify
contracts that this $5 million contract was awarded to a
service-disabled veteran, they are identifying exactly the same
contract number down here awarded to a SDVOB. Whoosh, $10
million.
I have spent thousands of dollars and thousands of hours
over the past 6 years chasing leads, creating new markets,
educating government employees on new technology, and trusting
that new legislation will end inequities within the procurement
system. These inequities still exist.
Several opportunities have been created by our marketing or
were identified for us by prospective Federal customers. When
the customer took the requirement to a contract office, the
contracting officers have, in every case, found reasons for not
awarding as a sole source or not setting it aside for SDVOBs.
All contracts awarded to us have been full and open, small
business simplified acquisitions, or GSA delivery orders. We
have three GSA Schedules and are service-disabled veteran-owned
small business subcontractors on nine extremely large contracts
held by large Federal contractors. We have concentrated on
opportunities with us being the prime. In most cases,
subcontracting work from a large business comes from the small
business finding the Federal work and using the prime's
contract. We do not pay a prime contractor a percentage of our
work if we can possibly get the contract ourselves. We do not
believe in the small contractor always waiting for the big
contractor to give it to them.
I have included a written request to Congress to close
loopholes in the GSA Schedule process wherein large businesses
are allowed to take away business intended for small
businesses. This has existed for many years.
There are some Congressional actions that will streamline
the Federal Procurement Program for Veterans. In summary,
assist the Vet Force and veterans' service organizations in
changing legislation critically needed so we can move forward.
Get rid of the ``Rule of Two.'' This has been mentioned a
couple of times already.
Two, program oversight is vital. Ensure the SBA, OMB, GSA,
and other pertinent agencies report to Congress each agency's
quarterly actions taken in support of the Federal Procurement
Program for Veterans, their compliance with reporting
requirements such as 106-50 and 108-183. We know there in 106-
50, there are several things that haven't been done from GSA,
from SBA.
Program execution must be simple. If contracting officers
are to be held responsible, they should be given the authority
and not burdened by poor policy.
Since I have a couple of seconds left here, I wanted to
point out one thing. I work a lot with service-disabled
veteran-owned businesses. They call me because I have been in
the business for a long time, et cetera. There are some, like
myself, who really can't work 40--I cannot work a 40-hour week.
I work 60 to 80 hours, but I work in the middle of the night
and everything else. I have had 24 operations since 1982. I am
continually in the hospital, out, in, out. I am still managing
my company, and my HI Tech Services, the only employee in there
is me, and I don't always get a salary. My other company I work
with, I am CEO. We have contacted about 400 service-disabled
veteran-owned companies and we have an understanding with them
that they can provide break fix on PCs, et cetera within 30
minutes' driving time of every VA hospital. We are trying to
help them get going. We have been somewhat successful.
So I have two companies. It sounds great. One is by myself
and the other one, we now have, I think, nine employees that we
are providing to the Government. I just want to say for myself,
it is sometimes difficult to work for a service-disabled
veteran. We do need some good parity with the 8(a)s and with
the HUB Zone, and I am more than willing to help with anybody,
help write similar legislation.
Chairman Kerry. Well, we will do that. Thank you very, very
much.
[The prepared statement of Mr. Hesser follows:]
[GRAPHIC] [TIFF OMITTED] T7146.033
[GRAPHIC] [TIFF OMITTED] T7146.091
[GRAPHIC] [TIFF OMITTED] T7146.092
[GRAPHIC] [TIFF OMITTED] T7146.093
[GRAPHIC] [TIFF OMITTED] T7146.094
[GRAPHIC] [TIFF OMITTED] T7146.095
[GRAPHIC] [TIFF OMITTED] T7146.096
[GRAPHIC] [TIFF OMITTED] T7146.097
[GRAPHIC] [TIFF OMITTED] T7146.098
[GRAPHIC] [TIFF OMITTED] T7146.099
[GRAPHIC] [TIFF OMITTED] T7146.100
[GRAPHIC] [TIFF OMITTED] T7146.101
[GRAPHIC] [TIFF OMITTED] T7146.102
[GRAPHIC] [TIFF OMITTED] T7146.103
[GRAPHIC] [TIFF OMITTED] T7146.104
[GRAPHIC] [TIFF OMITTED] T7146.105
Chairman Kerry. Mr. Daywalt.
STATEMENT OF THEODORE L. DAYWALT, CHIEF EXECUTIVE OFFICER AND
PRESIDENT, VETJOBS, MARIETTA, GEORGIA
Mr. Daywalt. Good morning, Mr. Chairman, Senator Kerry,
Ranking Member Senator Snowe, staff members. It is a pleasure
to be here before the Committee. You will have to excuse my
voice. I just had a major neck operation, and unfortunately,
they put the plate right behind my vocal cords. Some days are
good, some are bad.
Chairman Kerry. If you hadn't have said anything, we
wouldn't have known.
Mr. Daywalt. Well, thank you. It is an honor to be here. I
would ask that my written testimony be entered into the record.
I appreciate your doing that. In my written testimony, I
present----
Chairman Kerry. Let me correct myself. We are going to
leave the record open for two weeks, so I stand corrected.
Mr. Daywalt. In my written testimony, I present some
suggestions from the position of being a businessman for nearly
30 years as well as a drilling Navy Reservist. The most
important of my suggestions, which you have already heard
several times here today, is the Rule of Two needs to be
eliminated and Federal contractors need to have the ability to
sole source directly to small veteran-owned businesses.
However, I want to bring to your attention the second half
of my written testimony that discusses the new DOD policy
extending call-ups for the Guard and Reserve. Corporate America
is not going to put up with this. I have been in corporate
America. I have run billion-dollar operations, million-dollar
operations. It is not going to happen.
At a press conference on January 11, Dr. David Chu, the
Under Secretary of Defense for Personnel and Readiness, was
quoted as saying, ``The fact that some with previous Iraq
experience will end up spending more than 24 months on active
duty is no big deal.'' It is a big deal.
Since the announcement of the new policy, I have had the
opportunity to talk to dozens of HR managers, senior executives
from different corporations throughout the United States, and
many of them brand-name companies, but they want to remain
confidential because of the USERRA and other laws, but
uniformly, they say they cannot support the new policy because
it puts their human resource managers and their recruiters in a
very precarious situation. It is a quandary that they have got
to face.
One senior HR executive in a major company commented that
in light of the new policy, they will continue to support
current employees who have been activated, but will no longer
hire members of the Guard and Reserve, and that is pretty
uniform. All seem to agree with that position.
Another explained it to me this way. If I have three final
candidates for a position who are all equally qualified and one
mentions that they are a member of the Guard or Reserve, I now
have two final equally qualified candidates.
You see, companies have a fiduciary responsibility to their
shareholders to run an efficient and profitable operation and
they can't do that if they cannot count on having their
employees, their human capital, present, readily available to
work. While for many this is just common sense, those making
the decisions on how to utilize the Guard and Reserve at DOD
seem to have missed the point of what corporate America is
saying.
This week, I received an e-mail from a Master Sergeant who
is a recruiter for the National Guard in Fort Lee, Virginia.
Here is the concern this recruiter expressed.
As an AGR soldier with a spouse that is a TPU member, I find this
new policy very disturbing. How can our government ever conclude that
it is okay to add more uncertainty to serving in the Reserve? I
recently interviewed a soldier who chose not to affiliate with the
Guard because of her fear that her employer would not support her
service.
And that is just the tip of the iceberg.
Last week, I met a Navy Reserve Commander who had 7 years
active duty and the rest of it in the Navy Reserve, a total of
16 years' service, and he is going to resign his commission
because of this new policy. He is a financial analyst with a
major corporation and he is up for a promotion. He can't take
that promotion if he is going to be called up for 24 months. In
fact, when I used to be president of different companies, I
would have had to quit the Navy Reserve because my board would
never have tolerated me being gone for 24 months. I couldn't
have been the president.
This is appalling, but more appalling is what corporate
America is quietly saying. Following the policy announcement,
Workforce Magazine, which is read by a lot of senior executives
and HR managers, ran a poll the week of January 15 that asked,
``If you as an employer knew that a military Reservist or
National Guard member could be called up and taken away from
their job for an indeterminate amount of time, would you still
hire the citizen soldier?'' The results are staggering. Only 29
percent said yes. Fifty-four percent said no and 17 percent
said, don't know. I think the 17 percent were afraid they might
be identified, so they said, ``don't know.'' But the fact that
there is even one employer that would say no disturbs me.
This new policy will hurt veteran-owned companies, because
guess where a lot of the service-disabled veterans work at, and
the ones that get called up, the Guard and Reserve. They work
in veteran-owned companies.
This policy is the straw that is going to break the back of
corporate America's support for our Guard and Reserve system,
which has worked very well for the last 100 years. Without
corporate America's support, the citizen soldier system cannot
work, and that is a big deal.
That concludes my testimony. I appreciate your time. If you
have any questions, I would be more than happy to answer them.
Chairman Kerry. That is very important testimony.
[The prepared statement of Mr. Daywalt follows:]
[GRAPHIC] [TIFF OMITTED] T7146.037
[GRAPHIC] [TIFF OMITTED] T7146.038
[GRAPHIC] [TIFF OMITTED] T7146.039
[GRAPHIC] [TIFF OMITTED] T7146.040
[GRAPHIC] [TIFF OMITTED] T7146.041
[GRAPHIC] [TIFF OMITTED] T7146.042
[GRAPHIC] [TIFF OMITTED] T7146.043
[GRAPHIC] [TIFF OMITTED] T7146.044
[GRAPHIC] [TIFF OMITTED] T7146.045
[GRAPHIC] [TIFF OMITTED] T7146.046
[GRAPHIC] [TIFF OMITTED] T7146.047
[GRAPHIC] [TIFF OMITTED] T7146.048
[GRAPHIC] [TIFF OMITTED] T7146.049
[GRAPHIC] [TIFF OMITTED] T7146.050
Chairman Kerry. I think Senator Snowe and I really take to
heart what you have just said and I couldn't agree with you
more. I mean, I have heard this from people all over the
country. It is just a terrible burden being placed on folks
right now and it is really complicating a whole bunch of
things, not the least of which is how you sort of deploy
properly to meet the security needs of the country without
unraveling all the rest of this fabric.
Mr. Daywalt. To add to what you said, Senator, I have
talked to several TAGs. In fact, this afternoon, I fly out for
the National Guard Bureau's Family Service Conference out in
Phoenix. I am a speaker out there. Several of the TAGs told
me--that is the Adjutant Generals--they are already receiving
resignations from their junior officers because they can't be
called up for 24 months and still maintain a meaningful career.
Dr. Chu at DOD said there are a lot of people that get
called up the second or third time voluntarily, and I agree,
that technically is a very true statement. But they volunteer
for the second and third time because corporate America won't
hire them so long as they are eligible for recall time and time
again, and that is why they volunteer. We are getting career
part-timers because they can't get a decent job with businesses
in this country, and that is wrong. I feel that because I did
23 years in that system, but that was a different environment.
If the rules today applied, I would have quit, too.
Chairman Kerry. Let me ask each of you--Captain Yahner, do
you want to say something?
Capt. Yahner. I just want to look at this from a different
angle. The Congress made a decision after Vietnam to put a lot
of support troops into the Reserves because of troop reduction
requirements, and it wasn't a problem with the Reserves as it
is now because they didn't get called up that much prior to
Desert Storm. Now that we see that this is really creating a
big problem across the board, why don't they increase the
active duty number of people----
Chairman Kerry. Well, we are about to. We are----
Capt. Yahner [continuing]. And bring some of these things
back into the active service so you don't have this bottleneck.
Chairman Kerry. We are going to do that. We are going to do
that. I mean, I recognize--you may recall, I proposed--maybe
you don't recall in the course of these things, but I proposed
in 2004 as part of the campaign that we needed an augmentation
in the Marines and Army by at least 40,000, and of course I was
deemed wrong and it was a ridiculous concept. Now I see we are
talking about 90,000 and they are finally admitting what
everybody knew back then. So hopefully, we are going to get
that job done, but look, rest assured, that is not going to
solve this immediate problem.
Capt. Yahner. No, it isn't. No, it isn't----
Chairman Kerry. That is a long-term piece, because it is
going to take us time to bring them in, time to force it up,
time to----
Capt. Yahner. Absolutely.
Chairman Kerry [continuing]. Time to do it, and you are not
going to see those folks in the service for a couple of years.
Capt. Yahner. Absolutely, but I doubt very seriously that
we are going to have world peace, either, so----
Chairman Kerry. We are going to have a long----
Capt. Yahner [continuing]. This is probably going to
continue to go on.
Chairman Kerry. Well, it is going to be very difficult for
it to continue to go on even in that context with the current
Reserve structure.
Let me ask each of you very quickly, and when I say
quickly, because we are going to have to break up here in a
couple of minutes, and I want to get--let me just ask Dawn,
Tracy, Omar, and Patricia, do any of you want to share anything
quickly about your experiences? Is there something you want to
say based on what you have heard here? You don't have to. I am
not pressing you into being a witness, but I want to give you
the opportunity since you took the time to come here today.
You did want to say something? Sure. We can find a chair
for you, I think, can't we? Just identify who you are so the
record has that.
Ms. Halfaker. My name is Dawn Halfaker. I am a small
business owner, service-disabled veteran business owner. I
would just like to echo what the panel said. I mean, I was very
impressed with all of your testimonies. I would just like to
reiterate, there was a question that came up, I think it was in
the first panel, and it was something about the nature of: Are
these businesses capable of performing the services that the
Federal Government needs, and particularly let us look at DOD.
I would just like to reiterate the fact that not only are
we capable, but we are the ones doing it right now. A lot of my
classmates--I was a 2001 graduate at the U.S. Military Academy,
and a lot of my classmates right now are getting out of the
service. They have done three, possibly four tours in Iraq now,
and I have lost a lot of friends. I have seen a lot of my
classmates die, unfortunately.
So what we are faced with is a situation where we are
getting out and we want to continue our service, but we don't
know how to do that. So what I have created is a small business
which I really think is a vehicle to enable them to continue to
serve--to enable any veteran who wants to continue to serve,
and so we are really targeting our business within DOD.
But I would just like to say on that note that we do have
the experience and the skills and the abilities, the motivation
and the sense of duty to perform these services for the Federal
Government and right now particularly DOD. So just to reiterate
what all they have said and to answer your question, sir, yes,
we do have the skills and we are ready. We just need the
ability to get our foot in the door and get access to these
Federal contracts.
Chairman Kerry. Dawn, just quickly, what is your business?
Ms. Halfaker. Sir, we are a national security consulting
firm.
Chairman Kerry. How many people are in it?
Ms. Halfaker. Right now, we have nine people.
Chairman Kerry. You started that?
Ms. Halfaker. Yes, sir.
Chairman Kerry. How long has it been going on?
Ms. Halfaker. We have been going since March of 2006, so
just 10 months.
Chairman Kerry. March of 2006. That is great. What was your
initial capitalization funding? Where did that come from?
Ms. Halfaker. It came from me.
Chairman Kerry. OK. And are you interested in trying to get
either SBA involvement in this routine or do you want to just
go straight for the contract and stay free and clear of that?
Ms. Halfaker. Well, I think right now, we are really having
to strategize where we spend our time and energy. Do I spend my
time and energy at the SBA office, which does have a lot of
resources, or do I leverage off of other contacts that I have,
my network, and try and get in and start actually going after
contracts while trying to create my infrastructure and get all
those necessary things like the GSA Schedule, all those things
that take quite a bit of time, and actually, you are supposed
to have been in business for a certain period of time before
you can even apply for those things.
So, I mean, there really are a lot of obstacles, and not to
say that there is not a lot of hard work on the initiatives
being done to overcome those, but I just really believe that we
need to somehow bridge this gap.
Chairman Kerry. We could facilitate it, in your judgment,
considerably?
Ms. Halfaker. I believe so.
Chairman Kerry. What year were you at West Point?
Ms. Halfaker. Two-thousand-one.
Chairman Kerry. Two-thousand-one. Where were you serving?
Ms. Halfaker. I served over in Korea, and then I was
stationed at Fort Stewart, Georgia, and deployed with Third
Infantry Division to Iraq.
Chairman Kerry. Where in Iraq?
Ms. Halfaker. Bakuba. Military police officer.
Chairman Kerry. Well, thank you so, so much for your
service and for the comments this morning. That was really
very, very helpful, very important.
Ms. Halfaker. Thank you. Thank you all for your time.
Chairman Kerry. It is very important.
Senator Snowe. I, too, want to express my admiration and
gratitude for your service to our Nation, and now you are doing
it in another dimension and we want to make it easier for you.
Thank you for your very important testimony.
Ms. Halfaker. Yes, ma'am.
Senator Snowe. Thank you.
Chairman Kerry. Thanks a lot.
Do you want to add something, I gather, Tracy?
Mr. Reep. Yes, if I could, please.
Chairman Kerry. Sure. Please.
Mr. Reep. Is the seat hot?
Chairman Kerry. She cooled it down.
[Laughter.]
Mr. Reep. Yes, she did. My name is Tracy Reep and I am the
president of Disabled Veterans Office Suppliers. I want to--I
agree with many things that have been stated here today, but in
particular as a Texas Army National Guardsman and previously a
corporate HR person, a recruiter specifically, a lot of what
Mr. Daywalt said rang true to me in my personal experience
prior to being called up.
Obviously, as a Guardsman, we speculated that that was
going to happen in late 2002 and I was beginning to feel the
heat in my corporate position and therefore made a decision to
step away from that corporate position and start my own
recruiting firm in hopes that that did not come to fruition,
and also in the instance that it did, I didn't want to leave my
company in a lurch. I wanted to be able to prepare my
replacement and then attempt to move on in my own endeavor and
hopefully not leave that company in a negative position.
In hindsight, I don't necessarily think I should have been
put in that position. I was. I think I made the right decision
at the time and don't regret that, but I do think there was a
lot of pressure early on prior to the beginning of the
conflict. I can only imagine what it is like now within the
corporate world.
Chairman Kerry. Thank you for that observation. It is
helpful.
We are going to have to wrap up in a moment or two. Let me
ask each of the panelists, your testimony is important and we
have it, but give us sort of the shorthand, you know, 30
seconds, 1 minute, the biggest obstacle that you see to SDVOBs
getting at these contracts, or veterans getting their
businesses going one way or the other. Just a short hit. What
is our biggest priority here in this Committee, in your
judgment? Let me go down. Mr. Daywalt, why don't you lead off.
We will just go down the table.
Mr. Daywalt. Personally, you have a mentality that has to
be corrected within the Government bureaucracy. You have got to
get rid of the Rule of Two, allow sole sourcing.
The other biggest problem with people starting a company up
is called capitalization, and for the Government to step in and
say, I am going to help you 6 months, 12 months, 18 months
after you are out, that isn't when we need the help. When I
capitalized this company, I put my own money into it because
there wasn't anybody else. Then I got investors later on. But
getting financial help right up at the front is when
entrepreneurs need the help. After we are up for 18 months, I
really don't need Government help if I have been up for 18
months. I have already succeeded.
Chairman Kerry. OK. Mr. Hesser.
Mr. Hesser. Ditto on the Rule of Two. It is the number one
biggest problem. The other one is I really believe that
oversight, had we had the oversight on 106-50 from the very
beginning, you even commented: Is there any one thread, any one
person, any one thing for all three of them getting together
for DOD? That is what is really needed, is----
Chairman Kerry. The coordination between----
Mr. Hesser [continuing]. Coordination and the fact, are
they doing it?
Chairman Kerry. Thank you. Captain.
Capt. Yahner. To understand----
Chairman Kerry. Where did you serve? Where were you?
Capt. Yahner. I was on the hospital ship Sanctuary, spent a
little time getting bombed at, shot at in Danang for a while. I
was up in the DMZ with the Third Med Battalion until we got
bombed and my CO wanted me back. And I spent 2 weeks in an Army
MASH unit, believe it or not, nothing like the television
show----
Chairman Kerry. That is too bad.
[Laughter.]
Capt. Yahner [continuing]. Where I was promoted Lieutenant,
and I had the honor, I suppose, of saying that I was promoted
with Army Captain's bars.
Chairman Kerry. Good for you.
Capt. Yahner. Anyway, it was an interesting year.
Chairman Kerry. Good for you. Congratulations.
Capt. Yahner. I guess. I would say reduce the restrictions.
Understand that SDVOs are as capable as any other set-aside.
And then hold people accountable for meeting those goals, and
if they don't, put some teeth behind them, but make them meet
the goals.
Chairman Kerry. Got it. Mr. Celli.
Mr. Celli. Thank you, Senator Kerry. First, I want to say
it has been an honor to be here today, and if I could leave
with some parting comments, training, cooperation, planning,
and funding. I think that the planning on the part of the Guard
and Reserve member needs to start 18 to 24 months prior to them
even being notified that they are getting ready to leave. If a
business owner makes a commitment to become a Guard and Reserve
member or vice-versa, they need to start to prepare early and
they can only do that with the support and funding from
Congress and organizations such as have already been created
can carry that plan out.
Chairman Kerry. I want to thank all of you. I don't know if
Senator Snowe has questions or comments. Let me just for myself
close out by saying to all of you that I want to join with
Senator Snowe, and I am sure she wants to do this, to respond
to each of those things that you have just put forward. We will
put together legislation. I am confident we can pass it in
short order out of here. We will do everything we can to
respond to those concerns that you articulated. I think they
are legitimate. I think they will have an impact. It is
imperative that we facilitate this, that we make it as simple
as possible.
We have a lot of folks who are going to be coming back, and
ultimately, a whole bunch of folks. But there are more yet to
go over. This thing is not over. It is not going to end in the
near term and the War on Terror itself is going to go on for a
long time, and so the demand is going to be there. We have got
to get this right and we are determined to do that and we will
do our part here in this Committee.
Senator Snowe.
Senator Snowe. Thank you. I, too, want to express my
appreciation for the collective testimony. I think it is going
to be very useful in helping us to shape a package to address
these particular concerns. I mean, it has been an ongoing
challenge on the 3 percent.
And also, I think, the prejudice within the agencies in how
they evaluate and how they approach small business, I think
that has been, unfortunately, one of the dimensions to this
problem. There has been a natural tendency to resist in opening
the doors for small business within the agencies, which it
seems to me would be the most useful path to assisting those
who have served our Nation so honorably, as demonstrated here
today by these men and women, and it is just such an impressive
group. Thank you all for your service to our Nation, as well.
We certainly can do better.
I know that Senator Kerry and I will be working along with
the Members of the Committee. I think there won't be much
difference or disagreements with respect to how we should
proceed to overcome some of these barriers.
I know on the sole source, we had included it in the last
reauthorization, but as I said, it didn't get beyond the
Senate, regrettably. So we are going to go back and try to work
through these issues, but I truly appreciate--and Mr. Daywalt,
you mentioned about the National Guard and that 24-month call-
up. I deeply regret that it was characterized as no big deal. I
can tell you, in my State, it is a big deal and it is a real
hardship. So I am just sorry that that was conveyed and that
statement was even uttered.
Chairman Kerry. I concur and we thank you all very, very
much, and for all the veterans here, we thank every single one
of you for your service. Take care. God bless.
We stand adjourned. Thank you.
[Whereupon, at 12:15 p.m., the Committee was adjourned.]
APPENDIX MATERIAL SUBMITTED
Prepared Statement of Hon. Daniel K. Akaka, U.S. Senator from Hawaii
I first thank Senator Kerry for his kind invitation to
participate in this important hearing. Senator Kerry and I have
worked together in the past on issues related to veterans--
especially service-connected disabled veterans--and small
business. I very much look forward to continuing our efforts in
this area.
In 2003, Congress recognized that Federal agencies were not
meeting the 3 percent governmentwide goal, established in
Public Law 106-50, for procurement from service-disabled
veteran-owned small business. As a result, Congress enacted
Public Law 108-183 to provide additional opportunities for
service-disabled veterans to contract with the government by
authorizing a Federal contracting officer to award sole source
contracts to small businesses owned and controlled by service-
disabled veterans.
However, the government has not come close even once to
meeting that 3 percent goal. This hearing, which will review
the Administration s efforts to comply with the law, should
give us a good understanding of how we can increase Federal
contracting opportunities for small businesses owned and
controlled by service-connected disabled veterans.
We must make certain that we are doing everything within
our power to provide contracting opportunities for service-
disabled veterans. These veterans selflessly set aside their
lives in service to the Nation. The Federal Government must
fulfill the minimal goal established by Congress to give them
opportunities to advance their small businesses.
It is also important that we look at the needs of the brave
men and women now serving on active duty, especially those who
have been mobilized from the Guard and Reserves. The economic
impact on the Guard and Reserve members who own and operate
small businesses is immense. I will be particularly interested
in learning what is being done to help these individuals.
We have a tremendous obligation to those who serve in our
armed forces. Entrepreneurial education for disabled service
members who are transitioning from military to civilian life
and want information on starting a small business is critically
important. We must make certain that each servicemember is
receiving high quality assistance.
One phrase that is used repeatedly in this area is
``seamless transition.'' I understand this to mean that, for
the servicemember, the shift from military to civilian life
should be as smooth as possible. Achieving this result should
always be an important outcome, but never more so than during a
time of war when so many servicemembers need assistance in
dealing with the impact of military service on their lives. All
soldiers, sailors, airmen, and Marines, including the men and
women who are coming back from Iraq and Afghanistan, should
have nothing less than a seamless reintegration into civilian
society.
I look forward to reviewing the testimony of all of those
presenting today. I will be particularly interested in the
input we get from the panel of veteran small business owners.
Their firsthand experience will help us understand what best
might be done to serve the needs of our Nation's veterans.
[GRAPHIC] [TIFF OMITTED] T7146.053
[GRAPHIC] [TIFF OMITTED] T7146.054
[GRAPHIC] [TIFF OMITTED] T7146.055
[GRAPHIC] [TIFF OMITTED] T7146.056
Prepared Statemet of Hon. Mark L. Pryor, a U.S. Senator from Arkansas
I'd like to thank Chairman Kerry and Ranking Member Snowe
for having this hearing today which will assess small business
programs for veterans and reservists. Your leadership on this
Committee and this issue are highly valued. The topic of this
hearing is quite timely and it is important that we review our
small business programs to ensure services for our veterans
remain intact and robust. With thousands of veterans re-
entering the workforce and looking for an appropriate spot in
the marketplace, it is vital that we evaluate the current state
of our outreach and support to them to ensure that we are
providing the greatest benefit to these honorable men and
women. I am pleased that the Committee has brought together so
many leaders in the government and private marketplace that can
provide us with better insight into the effectiveness and/or
ineffectiveness of our current small business programs for
veterans. I look forward to hearing from these witnesses today,
and working together in a bipartisan fashion to provide the
best remedies and methods to serve our veterans.
----------
Prepared Statement of Hon. John Thune, a U.S. Senator from South Dakota
Mr. Chairman, thank you for holding this
important hearing to consider the effectiveness of the Federal
Government's small business assistance programs for our
veterans and reservists.
Our veterans have served and sacrificed for their
country, and they deserve their government's help in finding
meaningful and productive employment as they transition from
military to civilian life.
Likewise, those reservists who are self-employed
small business owners who've been called to active duty deserve
the help needed to keep their businesses established while
they're deployed.
I strongly support the programs Congress has
enacted to help spur entrepreneurial activity among our
veterans, particularly through awarding Federal contracts to
small businesses owned by service-disabled veterans, and I'm
committed to making sure these programs are strong and
effective.
I look forward to the insights and expertise on
these programs provided by today's panelists, and I hope that
we will be able to translate what we learn today into effective
results for our veterans and reservists. Thank you, Mr.
Chairman.
[GRAPHIC] [TIFF OMITTED] T7146.059
[GRAPHIC] [TIFF OMITTED] T7146.060
[GRAPHIC] [TIFF OMITTED] T7146.061
[GRAPHIC] [TIFF OMITTED] T7146.062
[GRAPHIC] [TIFF OMITTED] T7146.063
[GRAPHIC] [TIFF OMITTED] T7146.064
[GRAPHIC] [TIFF OMITTED] T7146.065
[GRAPHIC] [TIFF OMITTED] T7146.066
[GRAPHIC] [TIFF OMITTED] T7146.067
[GRAPHIC] [TIFF OMITTED] T7146.068
[GRAPHIC] [TIFF OMITTED] T7146.069
[GRAPHIC] [TIFF OMITTED] T7146.070
[GRAPHIC] [TIFF OMITTED] T7146.071
[GRAPHIC] [TIFF OMITTED] T7146.072
[GRAPHIC] [TIFF OMITTED] T7146.073
[GRAPHIC] [TIFF OMITTED] T7146.074
[GRAPHIC] [TIFF OMITTED] T7146.075
Response by Scott F. Denniston to Written Questions from
Senator John F. Kerry
Question 1. We all know that with the current conflict,
services for veterans and disabled veterans will be under an
increasing strain. The VA has admirably attempted to meet those
needs over the years and I'm sure they will continue to do so.
With that in mind, I have a few questions about how the VA is
responding to the needs of this new group of veterans as small
business owners.
Question 1a. What are the current needs of veterans in
small business and how are the needs of these veterans
different than previous veterans?
Answer. America's business base has shifted from
manufacturing to a service economy. Veterans of earlier eras
often returned to civilian life and accepted employment with
private industry, many times this was lifetime employment. The
older generation of veterans often had 10 years or more of
industry experience before starting their own businesses, and
therefore often have more detailed knowledge of how the process
works from the start.
However, the newer generation of veterans is returning home
to a challenging employment reality. Today's 20-year-old may
expect to have many different jobs for many different employers
during their productive work years. Job instability is a
reality for this generation. While their basic information
needs remain similar to previous generations' (access to
capital, and management and technical support), this generation
differs in how they access information; using the Internet,
instant messaging and other electronic sources is common for
them.
Our younger veterans need guidance in how to get their
businesses started and in how to go about learning the ropes of
Federal procurement. The small business development centers
(SBDC) and the procurement technical assistance centers (PTAC)
are good organizations for helping these young veterans with
their questions and in guiding them through the process. We
make frequent referrals to these organizations so that the
veterans can get a leg up on how to do business. The challenge
is ensuring that veterans are aware of these services and know
how to easily access these services. The Center for Veterans
Enterprise (CVE) has created a data base of assistance centers
to facilitate easy retrieval of this information by veterans
seeking to start or expand a business.
Question 1b. In general, what veteran or reserve needs do
you see that are not currently being met?
Answer. The majority of small businesses are frequently
capitalized initially through the owner's savings or through
family members. For veterans, frequent changes of station,
combined with lower pay, leaves them without the substantial
savings or the support network necessary for starting a small
business. The most commonly expressed unmet need for
enterprising veterans is access to equity capital funding,
other than loans. Many veterans served by CVE have little or no
credit. They do not have access to the capital necessary to
start their businesses. They do have the technical training and
a strong drive to be successful if they are able to overcome
the capitalization problem.
Question 1c. What authority, programs or funding would you
need to address them?
Answer. A veteran's venture capital type fund could make
the difference in whether or not a veteran-owned or service-
disabled veteran owned business could be viable. Another area
of improvement is a coordinated effort to identify the 22
million existing veterans, who've been out of uniform for
awhile and who could benefit from learning about the Federal
veterans entrepreneurship program. It's difficult to locate
these veterans. Last, we need to effectively engage the current
generation of uniformed personnel. The traditional lines of
communication have not been successful. The Department of
Veterans Affairs (VA) does not seek to become the Small
Business Administration (SBA) for veterans. We want to work
with SBA, with the Department of Defense (DoD) and with the
Department of Labor (DoL) to create an effective communications
strategy that meets the needs of today's younger, ``wired''
veterans.
Question 2. You testified that the VA will exceed the
SBVOSB contracting 3 percent goal. You have gone from 1.361
percent of Federal contracts going to SDVOSB 2 years ago to an
estimated over 3 percent contracting last year.
VA:
FY 04: 1.361 %
FY 05: 2.151 %
FY 06: over 3 %, estimated
Question 2a. What did VA do to create greater contracting
opportunities for SDVOSBs?
Answer. With the final numbers for fiscal 2006 now
available, we are pleased to announce that VA exceeded the 3
percent goal, for fiscal 2006, 3.39 percent of VA's total
procurement dollars went to Service-Disabled Veteran Owned
Small Business (SDVOSB) contracts. Numbers for subcontracting
are not yet available for fiscal 2006. VA hopes to see
improvement in subcontracting. VA's Office of Small Business
(OSB) programs and CVE worked directly with the prime
contractors in outreach programs and to publicize SDVOSB
opportunities. Our continuous outreach efforts through meeting
with the prime contractors, veteran business conferences and
targeted mailings seem to be having a positive effect for
SDVOSBs interested in contracting with VA.
Question 2b: What steps were most effective in bringing
about this phenomenal change?
Answer. Our phenomenal results between fiscal 2004 and 2006
are due to a two pronged approach. First, and foremost, we have
to give credit to the exceptional support we have received from
VA leadership. Without this support, our efforts would not be
seen as either necessary or important. VA leadership believes
strongly in helping veterans in all aspects, and this includes
placing an importance on contracting with veteran owned
businesses.
Secondly, VA's OSB programs played and continue to play an
important role in contracting decisions. OSB often acts as an
advocate for veteran owned small businesses (VOSB) and SDVOSBs
to the contracting officers. Without this intervention and
participation, these goals could not have been achieved.
Question 3. In the last Congress, we passed new VA
procurement procedures that will significantly increase
opportunities for veterans and service disabled veterans at
your department. For the first time, an agency will have the
ability to sole source and set-aside for 2 SDVOSBs on an equal
par with other disadvantaged groups. Veterans will also receive
a preference in contracting.
Question 3a. How will this legislation make it easier for
veterans and SDVOSBs to contract with your agency?
Answer. Public Law (PL) 109-461 is an important milestone
for both VOSBs and SDVOSBs in contracting with VA. This
legislation establishes an order of precedence within VA in
which veterans are first priority and it strengthens the sole
source authority. Additionally, the requirement in the law that
all VOSBs/SDVOSBs in the vendor information pages (VIP) data
base should be verified to ensure that they are who they
represent themselves to be will make that listing an important
tool for all agencies and contractors wishing to do business
with veteran owned companies. It will become a reliable source
of businesses that agencies, prime contractors and the general
public can use to find veteran owned businesses to fulfill
their needs.
Question 3b. Do you believe that this legislation should be
extended to other agencies?
Answer. While VA has no Administration-cleared position on
doing so, it is obvious that extending the requirements in PL
109-461 to other Federal agencies would increase opportunities
for VOSBs and SDVOSBs. Under PL 106-50, procurement goals are
set for SDVOSBs, while veterans without disabilities who
valiantly served our country are given no preferences in
Federal contracting. Extension of PL 109-461 would open new
doors for VOSBs.
Question 3c. Do you have any additional ideas for
legislation which would aid this effort?
Answer. The Department has not yet implemented PL 109-461
so it is too soon to suggest other ideas. Some ideas have been
proposed in pending bills. Among these are House Resolution
(H.R. 109, the Disabled Veteran Small Business Eligibility
Expansion Act of 2007, and Senate (S) 117 the Lane Evans
Veterans Health and Benefits Improvement Act of 2007. Under HR.
109, SDVOSBs would achieve parity in contracting with the SBA's
8(a) program. S. 117 would help to provide access to capital
for veterans in being able to choose between the housing loan
guarantee and a small business loan guaranty. Other suggestions
often raised by owners include establishing set-asides in the
General Services Administration (GSA) Federal supply schedules.
Question 4. The Center for Veterans Enterprise, which you
lead, is ``designed to assist veteran entrepreneurs who want to
start and expand their businesses in the Federal and private
marketplace.'' The center also works with SDVOSBs trying to do
procurement with the Federal Government. The SBA, Department of
Defense and other agencies also strove to do this. What are you
doing to make sure that your efforts are being coordinated with
the efforts of other agencies?
Answer. CVE coordinates and communicates with other Federal
agencies both formally and informally. CVE has partnered with
SBA, DoD, GSA, and other Federal agencies to present veterans
business conferences, to train contracting personnel, and alert
veterans to upcoming activities.
In 2006, regional conferences were held in Albuquerque,
Colorado Springs, Ann Arbor, Boston, Indian Wells, New York
City, St. Louis, Washington, DC, and a National Veterans Small
Business Conference was held in Las Vegas. Planning for the
2007 national conference is well-underway with an even greater
number of agencies co-sponsoring the event. These conferences
have given small business owners opportunities for training and
counseling, and matchmaking with VA and other Federal
customers. In addition, they have afforded VA and other Federal
agencies the opportunity to meet with and advise prospective
contractors. Volunteers from Federal agencies and Federal prime
contractors have offered to man an answer desk for veterans
interested in procurement opportunities with their
organizations. CVE maintains lists of these volunteers on the
VetBiz.gov Web portal.
------
Response by Scott F. Denniston to Written Questions from Senator John
Thune
Question 1. I know in my state, local economic development
boards are always looking for economic development
opportunities to expand a small town's tax and employment base.
I know they'd like nothing more than to help local veterans
establish businesses in their small towns. Are there any
initiatives out there to encourage a town's economic
development boards to reach out to veterans in the community to
inform them of the opportunities that are available to them
through Federal contracting, or at least informing people who
walk in the door of an economic development corporation with a
business idea that, if they're a veteran, these tremendous
Federal contracting opportunities are out there for them?
Answer. VA reaching out to SBDCs throughout the United
States. This past Fall VA mailed posters to all the SBDCs and
to all PTACs to display in their offices to inform veterans and
others of the opportunities available to veteran owned
businesses and how to contact CVE. Additionally, VA refers a
large number of veterans who call regarding starting a small
business to the SBDCs in their local areas. VA has engaged the
Council of Better Business Bureaus in discussions about how to
access their network of centers and business owners. In
addition, we hope to establish a partnership with the U.S.
Chamber of Commerce to further expand VA's reach.
Question 2. I represent a state with a large number of
Native American veterans, many of whom live on the reservation.
Many of our reservation communities in South Dakota are in dire
need of more economic activity. I know there are certain
programs the SBA has established to help Native American small
businesses. Do you see any Native American veterans taking
advantage of the contracting opportunities available to them?
Answer. There are excellent opportunities for Native
Americans who are also SDVOSB. We have seen some veterans
leveraging their dual status. A good example of a successful
Native American-owned SDVOSB is Metropolitan Enterprises, Inc.
The owner, Tony Jacobs, is a Native American who started out as
a small mechanical, heating ventilation and air conditioning
contractor. Using his status as an 8(a) company he gradually
built up his resume and began some very smart partnering and
teaming contracts. Building on his SDVOSB status, he worked
with CVE to establish a teaming agreement with CCI, Inc., an
Alaska-based company that gave the teaming arrangement the
bonding capacity to bid on a prime contract for building a VA
facility. On October 23, 2006, Metropolitan Enterprises, Inc.
won a $31 million prime contract from VA for the construction
of a VA facility in Menlo Park, CA. VA has also conducted
outreach conferences in Oklahoma and other communities with a
large veteran population who may also be Native Americans.
Question 3. Since the 3 percent contracting goal is a
governmentwide initiative, it seems likely that there would be
a lot of duplicate activity across the Federal Government with
regard to this program, and a commensurate amount of difficulty
for a veteran to gather all the useful information that may be
out there. Are you observing anything to indicate that veterans
are having difficulty due to the vast amount of information out
there that is spread across the Federal Government? Is there an
interagency cooperation initiative that serves as a center for
veteran to be able to gather all the information that they need
to start and sustain a small business based on contracting with
the Federal Government?
Answer. In VA we have worked hard to educate our employees
about the services available to veterans through CVE. Veterans
seek assistance first from VA. CVE's Web portal is identified
on the Department's home page. This Web portal, www.VetBiz.qov
provides links to all partner organizations involved in
supporting veterans in business. Further, CVE maintains a
national call center to serve veterans interested in business
ownership and expansion. VA uses the services of the veterans'
business outreach centers (VBOC), SBDCs and PTACs to assist
veterans, depending upon the nature of their question and the
stage of business ownership. CVE's services are free to the
veterans. SBA funds in part the SBDCs and the VBOCs. DoD funds
the PTACs. We believe this is a sterling example of interagency
cooperation that works to benefit our veterans.
In addition, CVE has established formal partnerships with
key agencies, like GSA, to provide direct support to veterans
interested in obtaining Federal supply schedule contracts. GSA
maintains a toll-free assistance line, a robust Web site and an
extensive outreach conference calendar to ensure veterans
receive timely and courteous response to their questions.
To help solve some of the problems that come with
interagency cooperation, VA formed the Executive Order 13360
working group with representatives from most of the Federal
agencies. This group works on coordinating the annual National
Veterans Small Business Conference, as well as coordinating the
strategic plans for increasing support to SDVOSBs from each of
the agencies. It was instrumental in aligning the content of
the strategic plans so that veterans could easily locate
information in different plans and could also compare the
plans.
More interagency outreach efforts aimed at educating the
Federal workforce will improve opportunities for SDVOSBs. We
need to target acquisition professionals and program managers
to educate them and encourage them to make use of the SDVOSB
set-asides and sole source contract vehicles available to them.
The National VOSB Conference helps fill, in part, this
education need.
------
Response by Scott F. Denniston to Written Questions from
Senator Joseph I. Lieberman
Question 1. Mr. Elmore, Ms. Oliver, and Mr. Denniston: Can
you each outline a plan for your respective agencies to improve
outreach efforts to veterans about small business programs and
loans?
Answer. PL 106-50 requires that the agencies work
cooperatively and that we work with private sector partners as
well. Under this legislation, the Secretary of Veterans Affairs
has a duty to annually inform veterans about the availability
of services that will help them expand their business. This
letter is coordinated with SBA and DoL. Our mutual outreach
efforts have been previously mentioned. There is solid
cooperation in planning outreach programs. Improvement areas
include reaching non-Federal resources, like the Chambers of
Commerce, to locate the non-Federal veteran-owned small
businesses. We believe we have adequately informed the Federal
VOSBs about the program.
On continuing basis, CVE and our Federal partners have
assembled advisory and coaching services for veterans that
provide the veteran business owner with free advice and
assistance, individualized coaching, several small business
conferences each year, periodic e-mail notifications, and other
assistance mostly for free or at very low cost. If these
services did not exist, veterans would have to pay several
thousand dollars a year to obtain them through for-profit
conferences and professional services.
Based on our small business contracting performance and
feedback from veterans, I believe that we have created an
effective outreach design of national conference, regional
conferences and local outreach that allows the small business
owner to obtain information, make initial contacts with
customers, and start marketing their product or service to
Federal agencies. As part of this, CVE, GSA, SBA, and the Army
and Air Force are cooperating today to host the national
conference and the regional conferences and do other outreach.
For example, just last month, CVE and the Army Corps of
Engineers Norfolk District corresponded with construction
companies registered in CVE's VetBiz VIP data base regarding
upcoming construction opportunities being managed by the
Norfolk District. As a result, Norfolk District has a
preliminary list of over 80 SDVOSB construction companies that
are interested in these opportunities, and the SDVOSB community
has sufficient notice to start preparing well before the time
the announcements appear in Federal Business Opportunities
(FedBizOpps).
Results show that we already have an effective outreach
system. More small business conferences will most likely not
materially help the smallest business owners. In fact, they may
have a dilutive effect on the mature small businesses, so we
are not moving in that direction. Instead, we are focusing on,
and relying upon, the local contracting activities to identify
commodities and services to purchase from SDVOSBs and VOSBs. We
recognize those high performing activities in VA's annual
Champions of Veterans Enterprise Awards program.
Question 2. What steps can be taken immediately to improve
the process of informing veterans about these programs?
Answer. We currently have a team at CVE working on
improving the process of informing veterans about the small
business programs available to them. We have conducted focus
groups on how to best reach out to veterans and how to improve
the services of CVE for veterans. The results will be available
at the end of March. Further, CVE's communications' team is
conducting market research on the best methods to touch
veterans and how to efficiently disseminate information in the
most cost effective method.
Question 3. Have you begun to work on coordinating a plan
between the SBA, Department of Defense and Department of
Veterans Affairs to implement these improvements?
Answer. VA shares information with our veterans business
advocate volunteers in the Federal agencies. These volunteers
include SBA, the Office of the Secretary of Defense, and the
respective military services. We are also organizing an
education conference in conjunction with our annual awards
program in June to go into detail on the results of the focus
groups. Also, on an as needed basis, VA convenes meetings of
the Executive Order 13360 strategic plan work group.
------
Response by Scott F. Denniston to Written Questions from
Senator Mark L. Pryor
Question 1. Mr. Denniston, I understand the difficulty it
may be to facilitate interagency cooperation, but I would like
to applaud the VA and all these agencies for coming to task
when looking for needed solutions to serve our service-disabled
veterans who have served our country so well. I would like to
ask you a few questions regarding the cooperation of these
three agencies here today. How effectively would you assess the
cooperation of these agencies to achieve the goals to serve our
service-disabled veterans and their small businesses?
Answer. The cooperation of the agencies in achieving SDVOSB
goals is having a positive effect on results for most agencies.
It is imperative that we have buy-in from all the agencies that
use Federal procurement dollars because veteran-owned
businesses represent the full spectrum of types of businesses
that are created. Federal procurement dollars are spent on
virtually every consumer item by one agency or another. In
order to help all agencies meet their 3 percent goal, there
must be cooperation and top down buy-in from all agencies. We
have seen solid commitment from the agencies that co-sponsor
the national VOSB conference and those which participate in the
Executive Order 13360 strategic plan working group.
Question 2. Are there any programs or activities that you
would like to mention regarding interagency cooperation?
Answer. CVE is holding its 6th annual champions of veterans
enterprise awards ceremony on June 14, 2007. In conjunction
with this, we are planning a 1-day accountability conference
where we will hold those who hold the purse strings accountable
for their actions in helping or not helping meet the agency and
prime contractor goals. Agencies and prime contractors who have
met/exceeded their goals or have made great improvements in
meeting their goals can show how they achieved their success.
Those that have not made the progress expected will be held
accountable for why progress has not been made. Further,
several agencies were specifically identified in the testimony
as having outstanding programs for veterans. They include the
Army, Air Force and GSA. The Army organizes the national VOSB
conference. The Air Force hosts the business opportunities
showcase, a cable television program. GSA organizes regional
events, created flexibility in Federal supply schedule
competitions and recently awarded a very large Government-wide
contract for information technology (IT) services which is
limited to SDVOSBs.
Question 3. Are there any new initiatives that have been
created to facilitate these processes?
Answer. While not new, the Veterans Entrepreneurship Task
Force has been instrumental in ensuring that Federal agencies
remain focused on creating opportunities for service-disabled
veterans, veterans and surviving spouses. They are very
effective monitors of agency actions. They scrutinize
FedBizOpps announcements and question the accuracy of data in
the Federal Procurement Data System--Next Generation. When they
identify concerns, they go straight to the agency to get
resolution while the problem is fresh.
Question 4. What assistance could Congress provide to
facilitate greater interagency cooperation and, as a result,
our veterans?
Answer. Regular congressional oversight of the Veterans
Entrepreneurship Program and Federal agency implementation of
Executive Order 13360 will deliver the message that this
program is important. Town hall meetings would be valuable in
informing congressional leadership if the program is really
working.
Question 5. In your opinion, what resources have been the
greatest resources for our service-disabled veterans as they
seek to enter the small business marketplace or utilize Federal
procurement programs?
Answer. Readers of the Veterans Business Journal voted VA's
CVE as the most effective organizational provider of services
in a recent survey. CVE's Web portal, VetBiz.gov, is recognized
as the first place to seek information about this program. Our
volunteers in Federal agencies and contractors are a tremendous
asset to veterans seeking information about specific
requirements and procedures. SBDCs and PTACs are tremendous
resources for a wide variety of support. In conjunction with
individual agency small business development offices help,
VOSBs and SDVOSBs navigate the waters of starting or expanding
their small businesses and gaining access into the Federal
procurement arena.
----------
Response by William D. Elmore to Written Questions
from Senator John F. Kerry
Question 1. In the hearing, we discussed some of the
problems in the Military Reservist Economic Injury Disaster
Loan program. Last Congress, I introduced a bill that would
provide grants to military reservist-dependent small businesses
that are able to demonstrate a plan for sustainability. Senator
Snowe also proposed non-collateralized loans for these
businesses.
Do you think that these programs would be helpful
to reservists?
Are there additional assistance programs that the
SBA could be marketing or pursuing that would help returning
reservist business owners prosper economically?
Answer. Given the individual circumstances each activated
self-employed reservist may face, a range of services and
programs are now available to assist and support them.
Regarding proposals to add grants or other new loan products
added to our authorities, if these authorities are provided to
SBA by Congress, we will implement them.
We are always exploring means to improve our efficiency and
effectiveness in supporting self-employed reservists. As I
indicated in my Testimony, Administrator Preston is open to
working with Congress to improve our ability to assist
reservists and veterans.
Question 2. We have heard you state in your testimony that
the SBA is expected to meet the SDVOB contracting 3 percent
goal. You have gone from 0.00 percent of Federal contracts
going to SDVOB 2 years ago to an estimated over 3 percent
contracting last year.
What did SBA do to create greater subcontracting
opportunities for SDVOBs?
What steps were most effective in bringing about
this phenomenal change?
Based on SBA experience, what can the SBA do to
help other agencies attain this goal?
Answer. First, we consolidated additional responsibility
for SDVOSB contracting into the Office of Veterans Business
Development to enhance our effectiveness, and the staff and I
worked with procuring officials at SBA to ensure that they were
aware of capable SDVOSIs interested in doing business with SBA.
Following the leadership from top officials within the Agency,
we were able to match capable SDVOSBs with contracting
opportunities within SBA, and subsequently awarded SDVOSBs
contracts. SBA created a specific position in the Office to
address procurement issues, and we are supporting that person's
effort with other members of the staff. We are working to
identify best practices, and the effective tools being utilized
by other agencies, and are engaging in specific discussion with
other agencies to support their efforts for SDVOSBs.
Question 3. Please list SBA's SDVOB contracts and the
companies which received them in fiscal year 2006.
Answer. That information is being compiled into a list
which we will provide under separate cover as soon as it is
completed.
Question 4. In 2005, .605 percent of Federal contracting
was done with SDVOBs up from .383 percent in 2004. For those
service disabled veteran business owners we must improve these
numbers. SBA also plays a role in helping SDVOB contract with
all Federal Government agencies.
What can SBA do to help SDVOB contract with other
Federal agencies?
Does the SBA have the resources that it needs to
effectively help other agencies meet the 3 percent goal?
Answer. We are reviewing all of SBA's procurement programs
to explore means for maximizing participation by SDVOSBs and by
VOSBs. We intend to use all tools at our disposal to improve
contracting opportunities and success for veterans. The Small
Business Act statutes, along with the Presidents Executive
Order 13360 provide us the tools and authorities necessary to
achieve the goal.
Question 5. You mentioned that SDVOBs are the smallest of
small businesses that SBA tracks.
What do you think accounts for this disparity in
size?
If SDVOB's small size is hindering their ability
to perform on Federal contracts, what can be done to address
the size issue?
Answer. A combination of factors appear to contribute to
the size disparity of SDVOBs. SBA's Office of Advocacy has
conducted research that has found that not all SDVOSBs report
their status. With the significant marketing that SBA and our
partners have been and continue to do, the number of SDVOSBs
registered in CCR are increasing. However, as you and SBA have
noted, many of the registered businesses are very small. We
believe we can begin to tailor our outreach to try to encourage
more mature SDVOSBs to enter the Federal marketplace, as these
more mature SDVOSBs will be past their startup phase and more
capable of securing and performing on contract opportunities.
Additionally, providing technical assistance or other resources
to help the small firms currently registered in the CCR grow
and mature so they can better compete in the Federal
marketplace.
Question 6. I was very disappointed to hear about the SBA's
decision to move Teresa Lewis from her position as Assistant
Administrator for the Office of Federal Contract Assistance to
Veteran Business Owners. However, I am gratified to learn that
you have hired a new veteran contracting official.
When will the new person start?
What accounted for this lag in finding someone
new?
The procurement point person started in this new position
in December 2006, The lag is attributable to going through the
process of securing the authority to add a position to the
office. We spent time and effort designing the job description,
advertising the availability of the position and going through
a rigorous selection process to ensure that the position was
offered to the very best candidate available. We are pleased
that we offered the position to our first choice, and he
accepted.
Question 7. We have heard about a number of initiatives
that you are undertaking to help veterans and reservists.
Do you see any veteran or reserve needs that are
currently not being addressed?
Answer. We have strengthened program agreements and
improved our data collection processes to support and track
reservists' participation in our Entrepreneurial Development
programs. If there is a gap, it is the inability to identify
and correspond directly with every self-employed small business
owner in reserve components to ensure they are aware of and can
take advantage of our services and programs significantly prior
to their anticipated activation(s).
Question 8. Lastly, the goal of this hearing is to improve
the services that the government offers to veterans, service
disabled veterans and reservists. With that in mind:
What authority, programs or funding would you
need to improve the present programs or to address issues that
are currently not being addressed?
Answer. DOD indicates that reserve components have
transformed from a strategic to an operation force in the
Global War On Terror. We are constantly reviewing our programs
as to how they may best benefit reservists, veterans and
service-disabled veterans. As we identify recommendations for
improvement that would require additional Congressional
authorities, we will communicate those recommendations to our
authorizing Committees.
------
Response by William D. Elmore to Written Questions from
Senator Joseph I. Lieberman
Question 1. Mr. Elmore, Ms. Oliver, and Mr. Denniston: Can
you each outline a plan for your respective agencies to improve
outreach efforts to veterans about small business programs and
loans? What steps can be taken immediately to improve the
process of informing veterans about these programs? Have you
begun to work on coordinating a plan between the SBA,
Department of Defense, and Department of Veterans Affairs to
implement these improvements?
Answer. SBA is constantly reviewing our programs and
services in an effort to improve our efficiency and
effectiveness. Regarding coordination with DOD, and DVA and
other Federal partners, my office presently coordinates
outreach and access to SBA programs and services with the DOD
Office of the Assistant Secretary for Reserve Affairs and other
offices as necessary within DOD, including the National
Transition Assistance Program. We also coordinate and
collaborate with the National Committee for Employer Support of
the Guard and Reserve, the DOL Office of Veterans Employment
and Training Service, the Presidents National Hire Veterans
Committee, the DOL Office of Disability Policy Initiatives, and
the Employment and Training Administration. We coordinate and
collaborate with the DVA Office of Small and Disadvantaged
Business Utilization and their Center for Veterans Enterprise,
the DVA Vocational Rehabilitation and Employment Services
program, and other DVA programs as necessary or appropriate. In
addition, we conduct outreach to and with a number of
Congressionally Chartered Veterans Service Organizations,
including the American Legion, the VFW, the Disabled American
Veterans, the Military Order of Purple Heart, Vietnam Veterans
of America and over 100 other VSOs. We also provide materials
to State National Guard Adjutants, State Veterans Affairs
Departments, Military Family Support Centers and numerous
others.
Question 2. Ms. Oliver and Mr. Elmore: According to Mr.
Elmore's responses to Senator Kerry's questions, veteran owned
businesses are encountering difficulties winning defense
contracts. Why are veteran and service-disabled veteran owned
businesses not winning these contracts at a higher rate? We
need a solution to this problem. How can we start moving in the
right direction?
Answer. At SBA we believe we are moving in the right
direction in supporting the success of SDVOSB contracting with
DOD and other Federal partners. As I indicated in my testimony,
Census Bureau data shows that approximately 0.7 percent of
small businesses in America, with employees other than the
owner, are owned by Service-Disabled Veterans. We believe that
by growing the capacity of existing SDVOSBs utilizing all of
SBA programs and services, along with a more tailored outreach
effort directed to more mature SDVOSBs that have thus far not
entered the Federal market place, we can and will achieve the 3
percent goal.
Question 3. Mr. Elmore, I am concerned about the status of
the Advisory Committee on Veterans Business Affairs, which was
established in Public Law 106-50, the Veterans Entrepreneurship
and Small Business Development Act. This law created an
advisory body within the Small Business Administration that
could actively participate in relevant policymaking that
concerns veteran-owned small businesses. I am dismayed by
reports that the SBA has not utilized the resources of this
committee--comprised currently of ten veterans--to its fullest
capacity. I would like some clarification about the role of the
committee.
Question 3a. What is the SBA's strategic short-term and
long-term plan for the Advisory Committee on Veterans Affairs?
Answer. Under the extension of SBA authorities, SBA has
continued to support this Committee and hosted the first 2007
meeting late in January 2007.
SBA supports what this Committee is doing and is working
with the Committee to set up future meetings.
Our short term and long term plan is to follow the statutes
regarding this Committee.
Question 3b. Does the SBA consult the Advisory Committee
prior to developing initiatives designed to promote small
businesses owned by veterans?
Answer. Consultation occurs at meetings of the Committee
hosted by SBA in our Headquarters at least three times per
year, and on an ad hoc basis. Some of the initiatives we have
undertaken have been based in part on recommendations provided
by the Committee. We consider the initiatives developed by the
Committee as recommendations in our efforts to improve our
programs for veterans and reservists.
Question 3c. How will the SBA implement the recommendations
of the committee's most recent 2006 report?
Answer. We consider them as recommendations in our efforts
to improve our programs for veterans and reservists.
------
Response by William D. Elmore to Written Questions from
Senator Mark L. Pryor
Question 1. Mr. Elmore, I applaud your agency, the Small
Business Administration, as well as the Department of Veterans
Affairs for exceeding the 3 percent Federal procurement goals
outlined by PL 106-50. Though sensibility would direct us to
the benefit these goals provide our veterans, the stories we
will hear today truly attest to the differences being made.
However, there are a few issues I would like to address
regarding the Federal procurement goals.
Question 1a. Do you have current or the most recent figures
tracking where service-disabled veteran procurements should be
to meet the 3 percent target?
Answer. We are awaiting final fiscal year 2006 numbers from
the Office of Federal Procurement Policy. When we receive them,
we will study them in our ongoing efforts to improve all of our
programs and services for veterans, service-disabled veterans
and reservists.
Question 1b. What are the most recent figures of actual
Federal contracts being awarded to these veterans?
Answer. The most recent final figures have been reported
for fiscal year 2005. Please see attachment provided.
Question 1c. Which agencies have improved the most in
recent years?
Answer. SBA, DVA and the Department of State.
Question 1d. What agencies are the furthest from meeting
these goals?
Answer. There are a number of agencies that have not
achieved the same success as those agencies in #1c above.
Please see attached fiscal year 2005 list.
Question 1e. In your opinion, what initiatives should
Congress undertake in order to assist the agencies in achieving
this goal and to help the veterans take advantage of the
program?
Answer. The opinions expressed to me by SDVOSBs include
concerns with the disparity of language between the various
procurement programs, including the SDVOSB program. In
addition, the latest authority recently provided to only the
Department of Veterans Affairs could be considered for
implementation across the Federal Government and clarifications
in language and potentially duplicative or replicate efforts
contained in that new law could be addressed as well.
Question 2. The Veterans Business Outreach Centers (VBOC)
mentioned on your website often cover a wide geographical area.
Obviously, the geographical limitations for these centers and
those interested in the services they provide can cause
somewhat of a disconnect or inability for real person to person
contact.
Question 2a. What programs are in place to reach out to
veterans serviced by these VBOCs?
Answer. We direct the VBOCs to provide internet based
assistance and what we call ``directed referrals'' to local
program services available at SBA and SBA resource partners
closer to where they live. The five centers are promoted in the
Office of Veterans Business Development Outreach Tools, the
VetGazette Newsletter, and in special Outreach Events hosted by
or participated in by our district offices.
Question 2b. Are there any recent initiatives created by
the SBA to facilitate communication amongst veterans and the
centers?
Answer. We continue to conduct comprehensive outreach to
veterans and reservists, and this always includes promotion of
the availability of our five centers. We are also reaching out
to other public and private web sites as a means to promote all
of our services and programs for veterans and reservists,
including a special page on the Presidents National Hire
Veterans Committee web site, and a major internet based
organization with almost 10 million members who are veterans,
service members and family members. This will be announced when
complete.
Question 2c. What assistance or mandates could Congress
provide to further facilitate the process?
Answer. As I indicated in response to an earlier question,
our ability to identify and communicate directly with self-
employed reserve component members is hampered.
Attachment.--Federal Contract Award Figures
1. Smarkeling Business Systems
SBAHQ-06-A-0030 $150,000.00
Office Supplies
2. Smarkeling Business Systems
SBAHQ-06-V-0035 $1,709.99
Office Supplies
3.Video & Telecommunications Inc.
SBAHQ-06-F-0397 $2,223,404.24
Software
4. Video & Telecommunications Inc.
SBAHQ-06-F-0243 $11,414.26
Copier Equipment
5. Intelligence Communications Solutions
SBAHQ-06-C-0035 $398,791.30
Consultant Services
6. Intelligence Communications Solutions
SBAHQ-06-M-0456 $1,469.00
Computer Equipment
7. Ambit Group
SBAHQ-06-0316 $181,701.60
Consultant Services
8. Ambit Group
SBAHQ-05-C-0029 Mod 1 $300,000.00 (FY 6)
Consultant Services
9. K.D. Lions Inc.
SBAHQ-06-M-626 $3,140.79
Office Supplies
10. K.D. Lions Inc.
SBAHQ-06-M-0651 $484.93
Office Supplies
11. K.D. Lions Inc.
SBAHQ-06-M-0649 $7,077.97
Office Supplies
12. K.D. Lions Inc.
SBAHQ-06-M-0647 $467.00
Office Supplies
13. K.D. Lions Inc.
SBAHQ-06-M-0646 $1,296.74
Office Supplies
14. K.D. Lions Inc.
SBAHQ-06-M-0645 $640.00
Office Supplies
15. K.D. Lions Inc.
SBAHQ-06-M-0644 $1,250.00
Total procurement dollors $3,132,847.82
Total Budget $80,000,000.00
Response by William D. Elmore to Written Questions from
Senator John Thune
Question 1. I know in my state, local economic development boards
are always looking for economic development opportunities to expand a
small town's tax and employment base. I know they'd like nothing more
than to help local veterans establish businesses in their small towns.
Are there any initiatives out there to encourage a town's economic
development boards to reach out to veterans in the community to inform
them of the opportunities that are available to them through Federal
contracting, or at least informing people who walk in the door of an
economic development corporation with a business idea that, if they're
a veteran, these tremendous Federal contracting opportunities are out
there for them?
Answer. We are working cooperatively with SBA resource partners and
local small business development programs, and our 504 Loan program,
delivered though Community Development Corporations. The 504 program
includes veterans in their public policy goals. We would be supportive
of engaging with and providing our veterans and reservists business
development tools directly to any state or local economic development
authority. All of our materials and services are available upon
request.
Question 2. I represent a state with a large number of Native
American veterans, many of whom live on the reservation. Many of our
reservation communities in South Dakota are in dire need of more
economic activity. I know there are certain programs the SBA has
established to help Native American small businesses. Do you see any
Native American veterans taking advantage of the contracting
opportunities available to them?
Answer. Yes. My office is coordinating with the SBA Office of
Native American Affairs to identify means to improve our ability to
support Native American veterans, service-disabled veterans and
reservists.
Question 3. Since the 3 percent contracting goal is a
governmentwide initiative, it seems likely that there would be a lot of
duplicate activity across the Federal Government with regard to this
program, and a commensurate amount of difficulty for a veteran to
gather all the useful information that may be out there. Are you
observing anything to indicate that veterans are having difficulty due
to the vast amount of information out there that is spread across the
Federal Government? Is there an interagency cooperation initiative that
serves as a center for veterans to be able to gather all the
information that they need to start and sustain a small business based
on contracting with the Federal Government?
Answer. All Federal agencies with procuring authorities are working
to identify and improve contracting opportunities for veterans and
service-disabled veterans, and most agencies are working together on
joint events. However, as in any marketing effort, there may be some
duplication of effort, but until we achieve and hopefully exceed the 3
percent goal for SDVOSB, we are hesitant to reduce or eliminate efforts
from all the agencies. Regarding a one-stop web site, my office is
developing just such an effort within SBA and further, we are working
with other web based partners to better promote this program as well as
all SBA programs and services for all veterans, including reservists.
__________
Response by Louis J. Celli. Jr. to Written Questions
from Senator John Thune
Question 1. I Know in my state, local economic development boards
are always looking for economic development opportunities to expand a
small town's tax and employment base. I know they'd like nothing more
than to help local veterans establish businesses in their small towns.
Are there any initiatives out there to encourage a town's economic
development boards to reach out to veterans in the community to inform
them of the opportunities that are available to them through Federal
contracting, or at least informing people who walk in the door of an
economic development corporation with a business idea that, if they're
a veteran, these tremendous Federal contracting opportunities are out
there for them?
Answer. Unfortunately not. Most economic development offices that I
have worked with are primarily funded through the Department of Housing
and Urban Development and Department of labor. City and State offices
are run similarly to nonprofit organizations in that they are usually
servicing a grant or funded line item.
I am sure that it is not the case that the leadership or employees
of these offices are not Veteran sympathetic or Veteran friendly
however they are employed to serve the people of their communities as
set forth by the grants they are servicing and neither HUD nor DOL have
issued many (if any) community development grants which mention
veterans (that I am aware of).
That said, any Veteran specific advice offered through community
development offices would be ancillary unless that City or State had a
specific Veteran initiative which has been championed by their
respective leadership.
In some cases, there are grassroots organizations which serve
veterans such as the Northeast Veterans Business Resource Center, our
sister organizations in St. Louis, MO and Flint, MI, and I know that
much has been accomplished by way of veterans procurement initiatives
in other states as well such as California, Minnesota and Nevada but
again, these are all primarily grassroots efforts which are severely
underfunded and overburdened.
Most recently, our organization answered a Request for Proposal
(RFP) to participate in a Community Development Block Grant funded by
HUD in the city of Lawrence Massachusetts where we built our flagship
veterans business resource center. We were encouraged to apply and
encouraged to address the communities veteran low income and homeless
population by building a program which would assist targeted community
veterans with starting microenterprises and enhancing small business
skills and resources. After the City council reviewed our proposal, we
were not considered as the City Council felt that our proposal did not
meet the focus of the grant and that ``Veterans were not a priority''.
While this example does not specifically address your question, it
demonstrates what I explained earlier about how community development
activities are paid and subsequently where their focus is.
I hope this helps you to understand my answer to your question.
Your question is logical and basic and as such it would so reason that
such advice, guidance, direction or counseling would be readily
available. Perhaps a community development outreach grant which seeks
to educate the veteran business owner population might help as the only
such counseling initiative available presently is through the
Procurement Technical Assistance Centers which may or may not have
veteran specific programs and again, this would depend on the sentiment
of the prevailing leadership.
Question 2. I represent a state with a large number of Native
American veterans, many of whom live on the reservation. Many of our
reservation communities in South Dakota are in dire need of more
economic activity. I know there are certain programs the SBA has
established to help Native American small businesses. Do you see any
Native American veterans taking advantage of the contracting
opportunities available to them?
Answer. This is a question that I am not fully qualified to address
as I work in states which do not have large native American
populations. I do however work with colleagues who work extensively
with the Native American population and I have asked their assistance
to help me address your question.
The colleagues which I have asked guidance from are:
Raymond Jardine Jr., PhD
President & CEO
Native Hawaiian Veterans, LLC
3375 Koapaka Street Suite B-286
Honolulu, Hawaii 96819
Vice Chair for ``The National Veterans Business Development
Corporation'' aka The Veterans Corp
Board of Directors for the National Guard Association of the United
States representing the 14 western United States
Dr. Camilla Madden
Department of Veterans Affairs
Anchorage, AK
Formerly Director, Compensated Work Therapy (CWT) program
VA Black Hills Health Care Center
Eagle Butte, SD
Mr. Paul Adams
Chief Operating Officer
Liberty Tree Enterprises
Henderson, NV 89052
Bernie Cournoyer, LRC
Managing Director
Department of Veterans Affairs, Veterans Construction Team
Bedford, MA
These individuals possess a combined knowledge base and expertise
which spans the United States and paints a very clear and consistent
picture of critical lack of outreach and informational resources.
Before I continue, it should be noted that contained within the
question, there are two socioeconomic governmental programs in play,
they are;
(a) The Service Disabled Veteran Owned Business (SDVOB) initiative
which is primarily a contracting initiative.
(b) The Woman Owned (WO) and Minority Owned program, 8(a) which is
a business development program.
Native Americans business owners who also happen to be Service
Disabled Veterans would be eligible to participate in both programs as
well as certify as what is known Super 8(a) status. This is where a
Native American tribally owned enterprise can meet DOD Indian
Incentives Act requirements, provide ``super 8(a) status'' and meet HUB
Zone criteria.
The prevailing opinion among all of my collogues was that the
severe lack of outreach initiatives, Small Business Education and
program advertisement leaves most Native American Business Owners
ESPECIALLY Native American Service Disabled Veteran Business Owners in
the dark. It was commonly agreed that while there are very powerful and
well intentioned programs available to assist Native American Veterans,
there needs to be much more resources dedicated to education, training
and outreach if these programs are to have the effect on the native
American Veteran Population that is intended.
There is little outreach to Native American veterans, even though
there is usually a high percentage of veterans in the Native American
community. As I am sure you are aware, the contracting mechanism for a
Tribal 8 (a), or Super 8 (a) is very powerful, probably more powerful
than any other Federal contracting mechanism. Government agencies must
respond to an unsolicited proposal and there are no dollar limits on
sole source contracts. So, if a reservation wants to use the Tribal 8a
status, the veteran status is in the background.
Another problem is that not all agencies recognize all the
diversity of a bid. In other words, for an award to a team that
consists of a Tribal 8a, a veteran owned SB and a SCDVOSB, many
agencies will only recognize the Tribal 8a. If that is their policy,
then there is no reason to diversify down the chain, so to speak,
because there is no extra credit for hiring a Native American Veteran
over a Native American.
The net result is that there is little incentive for a Native
American Tribe to focus on its veteran population as such, they should
just focus on leveraging their Tribal 8a contracting mechanism or being
certified as a Native American owned SB if not tribally owned. Since
there is no certification program for SCDVOSB and perhaps no extra
credit to an agency for contracting with a Native American SCDV as
compared to a Native American owned SB, the Native American veteran
status is often ignored.
More significantly, many of the Tribes are just not well organized
to attract and retain business. Some do it very well, others do it
poorly. The system of grants for economic studies often does not result
in real economic growth. For example a colleague was working with a
tribe that had conducted a feasibility study for a wind powered
renewable energy facility. I understand they received a grant for the
study and Federal dollars were used to pay for the study. Apparently,
nothing has been done with the study. My collogue approached the tribe
and informed them, through an intermediary that they were quite certain
they could obtain 100 percent financing for their project if they could
see the study. That was in November and to date they have still not
seen the study. I have heard from others that there are a lot of
feasibility studies that have been completed with Federal dollars and
then similarly shelved.
So in addition to training and outreach, business counseling and
mentoring to assist Tribal businesses organize their businesses and
business concerns is also a great need within this community.
Question 3. Since the 3 percent contracting goal is a
governmentwide initiative, it seems likely that there would be a lot of
duplicate activity across the Federal Government with regard to this
program, and a commensurate amount of difficulty for a veteran to
gather all the useful information that may be out there. Are you
observing anything to indicate that veterans are having difficulty due
to the vast amount of information out there that is spread across the
Federal Government? Is there an interagency cooperation initiative that
serves as a center for veterans to be able to gather all the
information that they need to start and sustain a small business based
on contracting with the Federal Government?
Answer. I was completely taken aback by this question. The most
common similarity among Federal agencies is that there is no common
school of thought or commonality of goal or program thus zero
duplication.
PL 106-50 started an era of confusion which continues to plague the
veteran business owner community today. The dreaded ``may'' versus
``shall'' strategically pitted veterans against agencies, contracting
officers against contractors and Americans against their government.
While the intent of the law is clear, the execution and ``letter of
the law'' is in question and subsequently the interpretation is in
constant flux. Some agencies have attempted to develop programs which
comply with the intent, which is to direct that 3 percent of all
federally spend dollars which are used to purchase goods and services
be spent with businesses which are owned and operated by Service
Disabled Veterans, but even with these initiatives, contracting
officers are under no obligation to meet such goals.
The bottom line is that there is no duplication of services or
efforts within our Federal system. Several efforts have been made to
attempt to define, clarify or amplify the language of PL 106-50,
specifically, PL 108-183, Executive Order 13360 and most recently PL
109-461 and while these initiatives were designed to address the
ambiguity of PL 106-50 with regard to Federal contracting goals, it
somehow seems that these subsequent efforts still fall short of
``directing'' Federal agencies to insure that 3 percent of all Federal
dollars spent, be spent with Service Disabled Veteran Owned Businesses.
Regarding the question of information, there is no authoritative
agency, government, public or private which is the defining authority
regarding this issue. While one agency may have one opinion and policy
regarding SDVOB contracting, another agency may have a separate policy,
and while a third may have yet another opinion and policy, all will
argue that the other policies directly conflict with the Federal
Acquisition Regulation (FAR).
More and more pressure have been put on agencies to reach a 3
percent SDVOB contracting goal but for the most part, this program is
not being enforced.
PL 106-50 mandated interagency cooperation yet every agency
specifically addressed in PL 106-50 has summarily ignored this
directive. Each has taken its own program, it's own dollars and its own
interpretation of the law which initiated their respective programs and
have completely gone in their own direction. This is clearly NOT what
Congress had in mind when they passed this law.
I want to be more specific but I don't want to make this answer too
long. If you would like me to work directly with your office regarding
this or any other veteran business or training issue, please consider
my resources at your disposal. Agencies should have a ``mandated'' (not
goaled) amount that must be met. The penalty for not meeting the
mandate should be a reduction of their fiscal budget the next year
equal to the amount they didn't meet the previous year.
Below is an article which I recently wrote for Veterans Business
Journal Magazine.
______
HOW DO LAWS HELP SDVOBS?
Since 1999, there have been a number of legislative initiatives
which have all sought to assist veterans who are and who wish to become
business owners.
PL 106-50, PL 108-183, Executive Order 13360 and most recently the
passage of PL 109-462 are some of the most notable.
The most notable issues addressed by these initiatives can be
boiled down to two things, training and contracting.
Depending on where you are in the business cycle, each may have a
different meaning. It is important to know that the laws you see
published are often very different than the bills which were the basis
of the law in the first place, for instance; PL 109-462 establishes a
mechanism for The Department of Veterans Affairs to authorize something
called ``Noncompetitive Procedures'' (sole sourcing) and effectively
eliminates the dreaded ``Rule of Two'' which has plagued the veteran
contracting community since the passage of PL 106-50.
Also ordered is the freedom of the Agency (VA) to set annual
contracting goals for doing business with SDVOBs which ``will not be
less than the Government-wide goal for that fiscal year'' which is
currently set at 3 percent. Originally, when the language which was the
initial thrust of this law was proposed (HR 3082), the law called for a
minimum ``Contract Requirement'' of 9 percent of contract dollars to be
spent with VOBs and a minimum of 3 percent (of the original 9 percent)
to be spent with SDVOBs.
So what does this mean to you? Advocates are hard at work for you.
Just because you don't see what you think is enough action in the law
doesn't mean that we didn't ask.
Your power is with your lawmakers, let them know how you feel and
what is important to you as a constituent.
__________
Response by Capt. Ann S. Yahner to Written Questions
from Senator John Thune
Question 1. I know in my state, local economic development boards
are always looking for economic development opportunities to expand a
small town's tax and employment base. I know they'd like nothing more
than to help local veterans establish businesses in their small towns.
Are there any initiatives out there to encourage a town's economic
development boards to reach out to veteran's in the community to inform
them of the opportunities that are available to them through Federal
contracting, or at least informing people who walk in the door of an
economic development corporation with a business idea that, if they're
a veteran, these tremendous Federal contracting opportunities are out
there for them?
Answer. I'm not aware of any initiative or agency that is
specifically attuned to informing veterans in their small towns about
the opportunities in Federal contracting. Perhaps the Regional Economic
Development Council who knows the makeup of his constituents, or the
local state representative might be a conduit for this information. In
my state of Maine, there are 160,000 veterans, but most are veterans of
WW II, Korea, or Vietnam, and are not wanting to start a business.
Perhaps in states with younger veterans there might be more activity
through veterans groups. In my case, I personally have not been
educated by any local representative, in fact I have educated them on
what opportunities are available to veterans.
Question 2. I represent a state with a large number of Native
American veterans, many of whom live on the reservation. Many of our
reservation communities in South Dakota are in dire need of more
economic activity. I know there are certain programs the SBA has
established to help Native American small businesses. Do you see any
Native American veterans taking advantage of the contracting
opportunities available to them?
Answer. In Maine we have a small population of Native Americans,
primarily in the northern part of the state. There are a few small
business who have been awarded Federal contracts as an 8(a) (minority
and disadvantaged) set aside. There are also a couple SDVO Native
American SB who have been involved in Federal contracts either as the
prime or as a subcontractor.
Question 3. Since the 3 percent contracting goal is a government-
wide initiative, it seems likely that there would be a lot of duplicate
activity across the Federal Government with regard to this program, and
a commensurate amount of difficulty for a veteran to gather all the
useful information that may be out there. Are you observing anything to
indicate that veterans are having difficulty due to the vast amount of
information out there that is spread across the Federal Government? Is
there an interagency cooperation initiative that serves as a center for
veterans to be able to gather all the information that they need to
start and sustain a small business based on contracting with the
Federal Government?
Answer. PL 106-50 set aside the goal of 3 percent for all Federal
agencies doing business with SDVOSB. Executive Order 13360 re-enforced
meeting that goal. As a small business owned by a Service disabled
veteran, we first went to the Small Business Administration and the
Veterans Administration for information on how to get assistance and
established in the CCR, fedbizopps etc. We then identified which
Federal Agencies we wanted to do business with and contacted their
Office of Small and Disadvantaged Utilization person, Small Business
Specialist and Contracting Officer.
We then looked at GSA and applied for GSA Schedules. From there it
was a marketing effort to establish relationships and show competencies
and experience. It was a lengthy process to break into the Federal
arena. What we found most effective was to be introduced by someone we
had done business with, or to get a subcontracting award. We've found
that once we had done a couple of jobs for Federal agencies, our
credibility and performance spoke for itself. That opened more doors,
and in time the business opportunities grew.
I think it might be helpful if there was a portal or website that
could serve as a central site to assess what assistance the small
business SDVO needs with links to SBA, VA, GSA and others. That way it
would be easier for a small business to fmd the information they need
to get started like a business plan, financial assistance, proposal
writing, various registrations, and know what steps to take to do
business with the Federal Government. However, after that, it's up to
the business to sell themselves to Federal agencies. That can't be
done, nor should it be done any other way. The SDVO needs to decide
what agencies best match its capabilities and look at their forecast
for opportunities. That's a lot of work and takes time.
The one area of difficulty due to the vast amount of information
across several Federal agencies is the need for training the agencies,
their Small Business Specialist and their Contracting Officers about
the SDVO set aside program. We have found that we are educating the
COTRs about the program, how to sole source etc. If they do not
understand the program, and they are not required to use the SDVO set
aside, they will continue to use the vehicles they have been using for
years and the 3 percent goal will never be met. Also, if they used a
Woman owned, SDVO they could get credit toward meeting their 5 percent
goal for women as well.
Ann S. Yahner
__________
Response by Theoddore L. Daywatt to Written Questions
from Senator John Thune
Question 1. I know in my state, local economic development boards
are always looking for economic development opportunities to expand a
small town's tax and employment base. I know they'd like nothing more
than to help local veterans establish businesses in their towns. Are
there any initiatives out there to encourage a town's economic
development boards to reach out to veterans inform them of the
opportunities that are available to them through Federal contracting,
or at least informing people who walk in the door of an economic
development corporation with a business idea that, if they're a
veteran, these tremendous Federal contracting opportunities are out
there for them?
Answer. I am not aware of any such initiative. In checking with
several chamber of commerce economic developers in Georgia, they were
not aware of any such programs.
Question 2. I represent a state with a large number of Native
American veterans, many of whom live on the reservation. Many of our
reservation communities South Dakota are in dire need of more economic
activity. I know there are certain programs the SBA has established to
help Native American small businesses. Do you see any Native American
veterans taking advantage of the contracting opportunities available to
them?
Answer. The SBA has some programs that address this issue (see
http://www.sba.gov/aboutsba/sbaprograms/naa/index.html), but to my
knowledge the programs are not marketed very well.
A good example would be the recent National Guard Bureau Family
Service Conference held in Phoenix, AZ. Over 300 transition assistance
and family representatives from the 54 National Guards were present.
While VetJobs, VA, DOD, VFW, Legion, DAV and DOL had significant
representation, conspicuously missing was the SBA.
Question 3. Since the 3 percent contracting goal is a government-
wide initiative, it seems likely that there would be a lot of duplicate
activity across the Federal Government with regard to this program, and
a commensurate amount of difficulty for a veteran to gather all the
useful information that may be out there. Are you observing anything to
indicate that veterans are having difficulty due to the vast amount of
information out there that is spread across the Federal Government? Is
there an interagency cooperation initiative that serves as a center for
veterans to be able to gather all the information that they need to
start and sustain a small business based on contracting with the
Federal Government?
Answer. From my experience, it is very difficult for veterans to
ascertain what programs are available and how to access the assistance
that is currently provided. I am not aware of any interagency
cooperation initiative per se to get information out, but one needs to
be put into place.
More importantly, the Congress has got to get Federal agencies to
pay attention to the 3 percent rule as was mandated in PL 106-50 8
years ago.
As a classic example of how Federal agencies intentionally subverts
PL 106-50, the March 5 issue of Military Times has a story titled: Web
site will be key to transition. The story elaborates how DOD's
Transition Assistance Program, in conjunction with DOL and VA are
designing a dynamic automated web-based system for delivery of
transition assistance and related information. Details of the site's
features or expected launch date were not immediately available.
I have made inquiries to friends at DOL and DOD and have since
learned that this portal is being developed by Monster.com. The portal
is being developed by DOD's ODUSD, MC&FP/EdOps. This comes under Dr.
David Chu. ODUSD, MC&FP/EdOps gave an exclusive contract to Monster to
develop the site for transitioning military. The contract was not bid
out, but was arbitrarily made part of an existing contract with Monster
in order to get around doing a bid. My sources at DOD and DOL tell me
that the site will be free to employers to search resumes and post
jobs. Monster is being paid a LARGE annual fee to run the site. This is
supposedly in the millions of dollars (actual figure has not been
confirmed to me).
There are several problems with this activity by DOD ODUSD (MC&FP/
EdOps):
1. Why was the work not bid out?
No veteran owned military related job boards were contacted to
develop the portal, but several of the military job boards have the
capability to do this work. This would have been an excellent
opportunity for DOD/DOL/VA to be able to move toward meeting the
mandated 3 percent rule as dictated by PL 106-50, but instead they
chose to subvert the process and violate the spirit and intent of PL
106-50.
2. Why is this being given to a large corporation (Monster.com)?
As was pointed out at the SBE hearings on January 31, DOD is one of
the prime violators of not meeting the 3 percent rule under PL 106-50.
VetJobs, as well as some other small veteran owned companies who run
military related job boards could easily have done the work, and
definitely considerably less expensive than what DOD is paying Monster.
3. Why is DOD competing with what private enterprise sites that for
the last decade have been doing this work very successfully?
It would seem that the activity by DOD will seriously affect many
veteran owned job board companies and could even put some of them out
of business by offering for free what employers now pay a fee, but at
the same time giving millions of tax dollars to a large corporation in
violation of PL 106-50.
Until the Congress can get the Federal agencies to comply with both
the spirit and the intent of PL 106-50, the law remains a joke and
raises serious questions as to whether the Congress really wants to
help veteran owned companies. The failure to enforce PL 106-50 and the
continued practice by DOD to avert compliance as in the case described
above indicates that there is no real concern or truly effective effort
to assist veteran owned companies!
COMMENTS FOR THE RECORD
Prepared Statement of Dr. Paul R. Camacho, Director of Special
Projects, the William Joiner Center for the Study of War and Social
Consequences, University of Massachusetts Boston
Senator John F. Kerry, Chairman,
Committee on Small Business and Entrepreneurship,
Room 428A, Russell Senate Office Building,
Washington, DC 20510
Dear Chairman Kerry: I would like to take this opportunity to
submit a brief letter of testimony for inclusion into the record for
your Committee Hearing, ``Assessing Federal Small Business Assistance
programs for Veterans and Reservists'' to be held on Wednesday, January
31, 2007.
As you are aware one of the most crucial matters in assessing the
progress of any program is the collection of solid statistical data. An
assessment of progress for veterans involved in a small business/
entrepreneurial endeavor is a case in point. Arguments about the
numbers and percentages of veterans as well as Guards and Reservists
was one of the principal difficulties veteran advocates had to confront
during the half dozen years of advocacy preceding the passage of what
eventually became PL 106-50, The Veterans Entrepreneurship and Small
Business Development Act of 1999.
What is needed is the following:
1. The Department of Veterans Affairs must work with the Bureau of
Census to develop a ``universe of population'' of veterans in small
business so that the Bureau has an adequate and representative base
from which to draw appropriate samples of veterans for inclusion in all
future small business studies. This is a very feasible and necessary
task. Confidentiality should not be a concern, since the Bureau of
Census is the ``gold standard'' in terms of trust and confidentiality
of sources and sample sets. If one assumes that the Department of
Veterans Affairs and the Bureau of Census collaborate, then this
project including all the matching of data tables and data cleaning
with IRS, Dun and Bradstreet, resources, etc. should take no more that
18 to 24 months to complete.
2. SBA must be required to include veterans as a unit of analysis
in all future small business studies, including any that might now be
in the planning process.
3. Funding for the development of the universe of population should
be required of the VA.
4. Funding to include veterans as a unit of analysis in all future
small business studies should be required of SBA.
The Congress must make these directives clear to the agencies in
the strongest language possible and the agencies must be held
accountable.
THE CONSEQUENCES OF VETERANS AS A VARIABLE
To date veterans have been only a variable. For example, see Table
7b, p 64-65 of Characteristics of Business Owners, 1992 Economic Census
CB092-1. There you will see the units of analysis: ``All businesses,''
``Hispanic-owned businesses,'' ``Black-owned businesses,'' ``Other
minority-owned businesses,'' ``women-owned businesses,'' and ``non-
minority male-owned businesses''--you will never see Veteran/disabled
veteran-owned businesses!
Despite the risk of oversimplification, it may help to very briefly
summarize the consequential technical problem--the standard error and
variance. Because veterans are only a variable, only the broadest
summary counts and percentages are fairly accurate. However, as a
researcher or committee staff person seeks to ``drill down'' into the
data--take the number of black women veterans in retail trade as an
example--the data is less reliable in that it has a greater variance
and probability of error. The deeper one drills down, the greater the
variance and probability of error. This is primarily because veterans
are a variable not a unit of analysis.
It is the consequences of this distinction between a population
being regarded as a unit of analysis and one that is taken as a
characteristic, i.e. is only a variable that is the issue here. It is
the reason I must emphasize the need for clear and strong language and
action on the part of the Congress.
MY PERSONAL EXPERIENCE AS PRINCIPLE INVESTIGATOR
As you are aware Senator, I worked with your office to gain
cooperation of both the Senate and House Committees: on Small Business
and on Veterans Affairs during the time I was the Principal
Investigator of The Status and Needs of Small Businesses Owned and
Controlled by Disabled Veterans November 10, 2000, SBAHQ-99-C-0001.
This was to be the report required by Congress under Public Law 105-
135, The Small Business Authorization Act of 1997, December 2, 1997.
Section 703 required a study be conducted by the administrator of the
Small Business Administration that provided a report on:
(A) The needs of small business concerns owned and controlled by
eligible veterans;
(B) The availability and utilization of Administration programs by
small business concerns owned and controlled by eligible veterans;
(C) The percentage, and dollar value, of Federal contracts awarded
to small business concerns owned and controlled by eligible veterans in
the preceding 5 fiscal years; and
(D) Methods to improve Administration and other agency programs to
serve the needs of small business concerns owned and controlled by
eligible veterans.
The product of that study was less than what I had hoped for,
particularly in the area of part ``C.'' One of the principal reasons
for lack of success here was that SBA and DVA, as well as OMB were
uncooperative despite the letter with the signatures of both the
Chairman and Ranking members for both the House and Senate Committees
on Small Business and Veterans Affairs (mentioned above) asking for
their assistance. The appendix of that report documents their refusal
to provide assistance to the study.
During that time as the legislation for what became PL 106-50 was
before the Senate Committee on Small Business in 1998, SBA and OMB both
urged the Senate not to pass the bill, but to wait for the completion
of the study (the study I was undertaking and they were hobbling).
Immediately after the committee approved the bill, I received several
phone calls denying my survey instrument. The counsel for OMB for that
overview denied even the possibility that any universe of population
could be developed that was representative of veterans in small
business. If the committee requests a copy of that study with the
appendix and SBA provides it, then my claim will be readily verified.
As a result I had to utilize a focus group methodology that has no
statistical power.
All during that time, and since then, I have pleaded that SBA
include veterans and disabled veterans as a unit of analysis in the
economic census, ``Characteristics of Business Owners,'' undertaken by
the U.S. Department of Commerce, Economics and Statistics
Administration, Bureau of the Census every several years. SBA
continually has refused to do this. Veterans were included as a
variable by the fact that two questions were asked about military
service in the last economic census. However, it should be absolutely
clear to the Committee that this was a result of activists finding out
about the coming economic study. They ascertained that no questions
about military/veterans status were to be included and consequently
sought the intervention of the House Committee on Veterans' Affairs.
That Committee's intervention was the only reason that the two
questions were included.
I hope that these comments will convince you that only the
strongest Congressional language with requirements for accountability
and enforcement will result in veterans being included in future small
business economic studies by the bureau of census. Should you have any
questions or concerns, please do not hesitate to call on me.
Semper Fidelis,
Dr. Paul R. Camacho
Director of Special Projects
The William Joiner Center
For the Study of War and Social Consequences
University of Massachusetts Boston
100 Morrissey Boulevard
Boston, MA 02125-3393
[email protected]
617-287-5853 Voice
617-287-5855 Fax
[GRAPHIC] [TIFF OMITTED] T7146.076
[GRAPHIC] [TIFF OMITTED] T7146.077
[GRAPHIC] [TIFF OMITTED] T7146.078
[GRAPHIC] [TIFF OMITTED] T7146.079
[GRAPHIC] [TIFF OMITTED] T7146.080
[GRAPHIC] [TIFF OMITTED] T7146.081
[GRAPHIC] [TIFF OMITTED] T7146.082
[GRAPHIC] [TIFF OMITTED] T7146.083
[GRAPHIC] [TIFF OMITTED] T7146.084
[GRAPHIC] [TIFF OMITTED] T7146.057
[GRAPHIC] [TIFF OMITTED] T7146.058
[GRAPHIC] [TIFF OMITTED] T7146.031
[GRAPHIC] [TIFF OMITTED] T7146.032
[GRAPHIC] [TIFF OMITTED] T7146.085
[GRAPHIC] [TIFF OMITTED] T7146.086
[GRAPHIC] [TIFF OMITTED] T7146.087
[GRAPHIC] [TIFF OMITTED] T7146.088
[GRAPHIC] [TIFF OMITTED] T7146.089
[GRAPHIC] [TIFF OMITTED] T7146.090