[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


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            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:]

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    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:]

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    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:]

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    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:]

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    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:]

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    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:]

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    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:]

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    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.

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 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.

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       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
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