[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


                  VETS FIRST? AN EXAMINATION OF VA'S 
              RESOURCES FOR VETERAN-OWNED SMALL BUSINESSES

=======================================================================

                                HEARING

                               BEFORE THE

       SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT, AND REGULATIONS

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                              JUNE 7, 2018

                               __________

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            Small Business Committee Document Number 115-075
             Available via the GPO Website: www.govinfo.gov
             
                         
                              __________
                               

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                   HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        TRENT KELLY, Mississippi
                             ROD BLUM, Iowa
                         JAMES COMER, Kentucky
                 JENNIFFER GONZALEZ-COLON, Puerto Rico
                    BRIAN FITZPATRICK, Pennsylvania
                         ROGER MARSHALL, Kansas
                      RALPH NORMAN, South Carolina
                           JOHN CURTIS, Utah
               NYDIA VELAZQUEZ, New York, Ranking Member
                       DWIGHT EVANS, Pennsylvania
                       STEPHANIE MURPHY, Florida
                        AL LAWSON, JR., Florida
                         YVETTE CLARK, New York
                          JUDY CHU, California
                       ALMA ADAMS, North Carolina
                      ADRIANO ESPAILLAT, New York
                        BRAD SCHNEIDER, Illinois
                                 VACANT

               Kevin Fitzpatrick, Majority Staff Director
      Jan Oliver, Majority Deputy Staff Director and Chief Counsel
                     Adam Minehardt, Staff Director
                            
                            
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Trent Kelly.................................................     1
Hon. Alma Adams..................................................     2

                               WITNESSES

Mr. Scott Denniston, Executive Director, National Veterans Small 
  Business Coalition, Centreville, VA............................     5
Mr. Bob Taylor, Founder, Owner, and CEO, Alliant Healthcare 
  Products, Grand Rapids, MI.....................................     7
Ms. Cheryl Nilsson, Chief Executive Officer, First Nation Group 
  LLC, Niceville, FL.............................................     8
Mr. Davy G. Leghorn, Assistant Director, The American Legion, 
  Washington, DC.................................................    10

                                APPENDIX

Prepared Statements:
    Mr. Scott Denniston, Executive Director, National Veterans 
      Small Business Coalition, Centreville, VA..................    20
    Mr. Bob Taylor, Founder, Owner, and CEO, Alliant Healthcare 
      Products, Grand Rapids, MI.................................    32
    Ms. Cheryl Nilsson, Chief Executive Officer, First Nation 
      Group LLC, Niceville, FL...................................    37
    Mr. Davy G. Leghorn, Assistant Director, The American Legion, 
      Washington, DC.............................................    39
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    Coalition To Defend Vets First...............................    64
    Marathon Medical.............................................    71
    TrillaMed....................................................    72

 
                  VETS FIRST? AN EXAMINATION OF VA'S 
              RESOURCES FOR VETERAN-OWNED SMALL BUSINESSES

                              ----------                              


                         THURSDAY, JUNE 7, 2018

                  House of Representatives,
               Committee on Small Business,
    Subcommittee on Investigations, Oversight, and 
                                       Regulations,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 2:23 p.m., in 
Room 2360, Rayburn House Office Building, Hon. Trent Kelly 
[chairman of the Subcommittee] presiding.
    Present: Representatives Kelly, Chabot, Blum, Marshall, and 
Adams.
    Chairman KELLY. All right. We got our Ranking Member here, 
Ms. Adams, who is such a great friend. Good morning. I call 
this hearing to order.
    First of all, I just want to thank my Ranking Member, who 
does such a great job on this Subcommittee and the Committee in 
full. And this is truly one of those committees that is left in 
Congress where I feel like we do a whole lot of bipartisan 
stuff. And I think that is important for America, that we work 
together on issues that affect small businesses. So I am very 
glad that she is here and the rest of our Committee.
    I would also like to recognize our Chairman, Chairman 
Chabot, who is here. And we appreciate the full Committee 
Chairman. And should the Ranking Member show up, Ms. Velazquez, 
I hope I will remember to recognize her, but she also does a 
great job.
    As this Committee is aware, our Nation's veterans make up a 
significant percentage of the American workforce. Many of our 
Nation's heroes exit military service and choose to begin a new 
mission: opening a business. Some even own and maintain a 
business while serving in the military Reserves.
    The majority of veteran-owned businesses are small 
businesses, and these businesses employ approximately 5 million 
workers and account for more than $1 trillion in annual 
business receipts.
    However, as a member of the Army National Guard, I am aware 
that veteran business owners experience challenges that 
nonveteran colleagues do not, such as a potential employer's 
difficulty in understanding a military resume and converting 
that to civilian skill sets or the result of a service-
connected disability.
    That is why programs like the Veterans First Contracting 
Program, or Vets First, at the Department of Veterans Affairs 
is so important.
    The Veterans First Contracting Program was established by 
Congress in 2006 to assist the VA in carrying out their mission 
of serving America's veterans. This program gave the VA a 
unique authority to award direct, sole-source contracts to 
veteran-owned and service-disabled veteran-owned small 
businesses as long as the firm meets three criteria: the firm 
is a responsible source, the award falls between $150,000 and 
$5 million, and the award can be made at a fair and reasonable 
price.
    However, despite this authority, the VA has continued to 
impede its own authority and work against the intentions of 
Congress by creating internal regulations and policies that 
make it harder to award contracts to veteran-owned small 
businesses.
    A striking example of this occurred just 2 months ago when 
the VA filed a justification and approval to move thousands of 
medical products under the control of just four prime vendors 
as part of their Medical/Surgical Prime Vendor Program. Many of 
these products could be and often were purchased directly from 
small businesses.
    Instead, the VA has said that veteran-owned businesses will 
be included at only the subcontracting level, and, 
unfortunately, they have yet to provide any details for a 
subcontracting plan.
    The VA has used many excuses for these actions, the most 
common being that it is too burdensome or too expensive to work 
with veteran-owned small businesses. I hope our panel today 
will help to demonstrate that this is simply not true.
    I thank our witnesses for being here today, and I look 
forward to the conversation.
    I now yield to the Ranking Member, Ms. Adams, for her 
opening statement.
    Ms. ADAMS. Thank you, Mr. Chairman.
    And before I begin, I wanted to just introduce two interns: 
Jameia Booker from Johnson C. Smith University and Tony 
Watlington from North Carolina A&T. These two young people are 
part of the Bipartisan HBCU Caucus that Congressman Walker and 
I do each summer. So I just wanted to thank them for being 
here.
    And thank you, Mr. Chairman, and thank you to our witnesses 
today.
    One of the most important tools that we have to provide 
courageous individuals who served our country with a new life 
after their military service is the contract preferences to 
ensure their participation in the Federal marketplace.
    The Service-Disabled Veteran-Owned Small Business 
Procurement Program disbursed almost $18 billion through over 
17,000 contracts in fiscal year 2017. SDVOSB awards accounted 
for approximately 4.5 percent of Federal contracts, meeting the 
3-percent statutory goal.
    Notably, the government awarded 5.29 percent, or $23.4 
billion, of its prime contracts to VOSBs. And while this 
accomplishment should be applauded, it should also be pointed 
out that it comes with calls for higher utilization of emerging 
veteran-owned small businesses from the Department of Veterans 
Affairs and throughout the government.
    While the SBA's program allows SDVOSBs to receive 
contracting preferences, these businesses do not have priority 
over other small-business preferences. However, recognizing the 
importance of getting contracts to not only SDVOSBs but VOSBs 
as a whole, Congress passed the Veterans Benefits, Healthcare, 
and Information Technology Act.
    Today's hearing focuses on the sole-source authority 
granted to the Department of Veterans Affairs through the 
creation of the Vets First Contracting Program and determining 
what progress has been made to the process since the 
Committee's last hearing on this issue.
    The VA recently issued a justification and approval for 
other than full and open competition on April 12, 2018, to 
allow four prime vendors currently performing distribution 
contracts under the Medical/Surgical Prime Vendor-Next 
Generation Program to choose potential suppliers.
    This presents cause for concern for the SDVOSB community, 
as many of them rely on doing their business with the 
government. This particular approach from the VA shrinks the 
industrial base by limiting opportunities and possibly 
circumvents their Vets First sole-source authority, cutting out 
many small, veteran-owned businesses.
    The VA says they plan to negotiate subcontracting plans 
with the prime vendors to include as many small businesses as 
possible, but this is also concerning given the government's 
overall lackluster enforcement of subcontracting plans.
    Previously, the GAO has found that non-SDV firms have won 
SDV contracts. This included front companies posing as 
veterans, pass-throughs, and outright fraud. As a result, 
millions of dollars were diverted away from legitimate SDV 
businesses.
    Diverting business opportunities away from our veterans by 
assuming subcontracting is enough to supplement the loss of 
prime contracts through vehicles such as this is a strategic 
sourcing approach that has been proven to unfairly hit small 
businesses the hardest.
    Addressing these failings and ensuring SDV procurement 
programs work as intended is long past due. So, with the 
current employment environment for veterans of the wars in Iraq 
and Afghanistan, it is essential that all veterans' resources 
are properly managed and existing opportunities protected.
    Given that entrepreneurship remains a viable career path 
for many of these men and women, programs like Vets First are 
critical to reduce the unemployment rate for veterans. I think 
I can speak for all the members here today in saying that we 
will do whatever it takes to help service-disabled veterans 
overcome the challenges they face in today's economy.
    And, with that, I want to thank the witnesses again for 
appearing before our Subcommittee today, and, Mr. Chairman, I 
yield back.
    Chairman KELLY. Thank you again to our Ranking Member.
    If Committee members have an opening statement prepared, I 
ask that they be submitted for the record.
    I would like to take a moment to explain the timing lights 
for you. You each have 5 minutes to deliver your testimony. The 
light will start out as green. When you have 1 minute 
remaining, it will turn to yellow. And, finally, at the end of 
your 5 minutes, it will turn to red.
    I ask that you try to adhere as close as possible. Don't 
make me bang on this gavel, okay? No.
    And now I would like to introduce our panel of witnesses.
    Our first witness is Scott Denniston, executive of National 
Veterans Small Business Coalition in Centreville, Virginia. He 
is also the president and chief executive officer of the Scott 
Group of Virginia, LLC. Prior to those roles, he directed the 
Office of Small Business Programs and the Center for Veterans 
Enterprise at the Department of Veterans Affairs. Mr. Denniston 
also served our country in the Army.
    Thank you for your service and for testifying today.
    Our next witness will be Bob Taylor, the founder, owner, 
and CEO at Alliant Healthcare Products in Grand Rapids, 
Michigan. Mr. Taylor served in the United States Air Force as a 
navigator for 17 years and, after leaving Active Duty, held 
multiple positions within the medical device industry for the 
past 26 years.
    Thank you for your service to our country and being here 
today.
    Our third witness is Ms. Cheryl Nilsson, chief executive 
officer of First Nation Group, LLC, in Niceville, Florida. 
First Nation Group is a service-disabled veteran-owned small 
business, woman-owned small business, and a HUBZone company. 
Ms. Nilsson is a retired Air Force officer.
    And we thank you for your service and for testifying today.
    I now yield to the Ranking Member, Ms. Adams, to introduce 
our next witness.
    Ms. ADAMS. Thank you, Mr. Chairman.
    It is my pleasure to introduce Mr. Davy Leghorn, assistant 
director of the National Employment and Education Division for 
The American Legion, the largest veterans service organization 
in the country.
    In his current capacity, Mr. Leghorn oversees the 
employment and small-business portfolios and administers The 
American Legion's National Veterans Hiring Initiative.
    Prior to joining The American Legion, he served in the 
United States Army as both a mortar infantryman and a civil 
affairs specialist.
    Welcome, Mr. Leghorn, and thank you for your service, sir.
    Chairman KELLY. We will now do 5-minute questions, and we 
will try to adhere to that too.
    Thank you for your service, Mr. Leghorn. And I also got to 
visit--oh, I am sorry. We will start with Mr. Denniston. Sorry.

  STATEMENTS OF SCOTT DENNISTON, EXECUTIVE DIRECTOR, NATIONAL 
   VETERANS SMALL BUSINESS COALITION, CENTREVILLE, VIRGINIA; 
  ROBERT TAYLOR, FOUNDER, OWNER, AND CHIEF EXECUTIVE OFFICER, 
   ALLIANT HEALTHCARE PRODUCTS, LLC, GRAND RAPIDS, MICHIGAN; 
 CHERYL NILSSON, CHIEF EXECUTIVE OFFICER, FIRST NATION GROUP, 
    LLC, NICEVILLE, FLORIDA; AND DAVY G. LEGHORN, ASSISTANT 
        DIRECTOR, THE AMERICAN LEGION, WASHINGTON, D.C.

                  STATEMENT OF SCOTT DENNISTON

    Mr. DENNISTON. Good afternoon, Chairman Kelly, Ranking 
Member Adams, and distinguished members of the Subcommittee. On 
behalf of the over 400 members of the National Veterans Small 
Business Coalition, the largest nonprofit trade association 
representing veterans in the Federal market, it is my pleasure 
to be here today.
    On the invitation for the testimony, the question that you 
had was ``Vets First? An Examination of VA's Resources for 
Veteran-Owned Small Businesses.'' I would suggest there are no 
resources.
    As the chart attached to my testimony illustrates, VA, 
through its internal small-business goaling process, has in the 
last 8 years never raised its goal, in spite of accomplishments 
which exceed those goals. The chart also shows a decline in 
accomplishments since the peak year of fiscal year 2010.
    So I submit that there is little commitment by senior 
leadership. I would also submit that Vets First and the 
Kingdomware Supreme Court decision have had absolutely no 
impact on VA procurements.
    As recently as last October, at a congressional roundtable 
hosted by the chair and Ranking Member of the Subcommittee on 
Oversight and Investigations of the House Veterans Affairs 
Committee, senior VA leadership expressed their opinion that 
service-disabled vets add no value and cost VA more money.
    Also, the policies the VA has established limit the areas 
of opportunity for service-disabled vets. This was done by VA 
with no public comment or review and flies in the face of 
transparent government.
    Last August, the National Veterans Small Business Coalition 
published a paper identifying strategies used by VA to 
circumvent Vets First. The strategies negatively impact at 
least 7,000 veteran-owned small businesses attempting to do 
business with VA each year.
    We provided three specific recommendations to Congress to 
stop this abuse: one, halt VA contracting actions that don't 
support Vets First; request GAO investigate the VA's disregard 
of Vets First; and, third, conduct hearings to hold VA 
accountable.
    We are grateful to this Committee for the hearings today, 
as well as the House Veterans' Affairs Committee, which has 
also had hearings and a roundtable on these issues.
    In October of 2017, the Subcommittee on Oversight and 
Investigations had a roundtable where, after it was over, the 
National Veterans Small Business Coalition made eight specific 
recommendations to the VA as to how to improve the program. And 
a copy of that letter is attached to my testimony.
    One of the topics from your introductions that is of 
interest to this Committee is the VA Med/Surg Prime Vendor 
Program. The Strategic Acquisition Center of VA was established 
over 3 years ago to develop an effective Med/Surg Prime Vendor 
Program. It has been a failed program for the last 3 years.
    On April 12, the SAC issued, as you mentioned, a class 
justification for less than full and open competition to change 
the contracts from distribution contracts to distribution and 
supply contracts for four large, for-profit entities that are 
in the business of leveraging their own operations to increase 
their own bottom lines, not to be concerned about the health of 
veteran patients.
    These four entities will now determine which vendors get to 
supply what products to VA and at what price. All veteran small 
businesses are relegated to subcontractors, with no protections 
offered by the Vets First program.
    On April 14, the four prime vendors received the 
modifications directing them to negotiate between the suppliers 
and themselves to provide products to the VA. VA did not at 
that time require an approved subcontracting plan, as required 
by the FAR. And just as the policies and faulty interpretations 
led to the unanimous Supreme Court decision in Kingdomware, 
VA's position was that this was a, quote, ``modification'' to 
an existing contract and a subcontracting plan was not 
required.
    I also want to bring to the Committee's attention another 
disturbing action of the VA last year. Former VA Secretary 
David Shulkin announced that he was going to make a directed 
sole-source award, estimated at approximately $4 billion, to 
the Cerner Corporation to install an electronic health record, 
as it had done at DOD. The contract was recently awarded by the 
VA.
    We have requested a copy of the subcontracting plan under 
the Freedom of Information Act. VA has acknowledged our request 
but has yet to provide a copy of the plan.
    Given VA's abysmal record in subcontracting--which, over 
the last 10 years, the VA has never met its subcontracting goal 
of 3 percent to service-disabled vets, and only in 2 of those 
10 years did they even make half of that goal--we have great 
concerns about the subcontracting plan that may or may not 
exist for the Cerner contract.
    But to let you know that everything is not negative at the 
VA, we have worked with the VA for the past year to develop an 
electronic ordering system for micropurchases for the VA called 
GoVets. It was developed by one of our members, Veratics in 
Florida. And that now has the ability to have electronic 
ordering of micropurchase products to the VA.
    Remember, the SAC has worked 3 years to get 7,000 products 
onto the formulary. In the 6 months that we have been working 
at this full-time, we have over 50 companies on there with over 
50,000 products for the VA. So it makes you wonder why the SAC, 
with all their people, can't do what they are entitled to do.
    That is the end of my oral testimony. I would ask that my 
written comments be submitted for the record with attachments.
    Chairman KELLY. Without objection.
    Thank you for your testimony.
    And we now recognize Mr. Taylor for 5 minutes.

                   STATEMENT OF ROBERT TAYLOR

    Mr. TAYLOR. Thank you.
    Good afternoon, Chairman Kelly, Ranking Member Adams, and 
other distinguished members of the Subcommittee. Thank you for 
the opportunity for me to be here today. And it is my honor to 
be able to be here to testify to this Committee about the 
important value that we provide to the VA.
    My name is Bob Taylor, and I am here to testify on behalf 
of my company and the 39 employees of Alliant Healthcare 
Products. Alliant Healthcare is a Grand Rapids, Michigan-based 
service-disabled veteran-owned small business.
    As background, in my 17-year military career leading to the 
rank of major, I served my first 6 years in the Air Force on 
Active Duty as a navigator and radar navigator on B-52 bombers. 
In my much younger years, as a first lieutenant, I flew 11 
combat missions in the first Gulf War from an island called 
Diego Garcia in the Indian Ocean. I clearly remember one day 
when we learned that one of our B-52s had crashed and we had 
lost three of our crewmates.
    I would never do anything with my business to disrespect 
their sacrifices or those of any other veterans. The fact that 
this hearing is a little over 1 week following Memorial Day 
reminds us all that there are veterans that have sacrificed far 
more than me or more than anyone else here today.
    So, to me, it is not only a business matter but it is with 
a sense of purpose that I have always tried to set high 
standards in all of my business dealings. I refuse to operate 
as a simple pass-through or what is referred to as a rent-a-
vet. I constantly remind people that we are not just selling 
widgets to consumers but we are often selling lifesaving 
healthcare products to care for our warfighters and for other 
veterans that have served our country.
    Now, how do we add value? Alliant Healthcare Products 
focuses on helping companies navigate the complexities of the 
Federal market. We assist large and small businesses who 
provide market-leading and innovative healthcare technologies 
to the VA. We have earned a strong reputation as an exceptional 
Federal market expert who provides value throughout the supply 
chain of the VA.
    Our most important benefit to the government is that we do 
not increase our prices on the clear majority of the products 
that we sell to the VA. We allow the VA to negotiate their 
price, the fair and reasonable pricing, as though they were 
buying directly from the manufacturers themselves, and then we 
honor those prices. Manufacturers pay us for the services that 
we provide them, but the government does not pay us for any of 
our services.
    In the words of one contracting officer, and I quote, ``We 
love working with Alliant because you offer the same exact 
pricing and your team understands the government procurement 
process better than the manufacturers,'' unquote.
    Selling to the VA is quite different than selling to the 
commercial hospitals, and manufacturers' representatives are 
often ill-prepared to deal with the complexities of acquisition 
regulations. As a service, Alliant has our own area vice 
presidents who cover the United States. They provide support to 
make sure acquisition regulations are followed and help 
contracting officers get what they need in a timely manner.
    From another contracting officer, and again I quote, 
``Alliant is able to attend in-person meetings with clinical 
representatives. Having someone in meetings that understands 
how to speak government language is incredibly beneficial,'' 
unquote.
    At Alliant, we are also very creative problem-solvers. For 
example, a VA wanted to receive high-value endoscopes kitted 
together, because if they received them separately, they can 
often not find each other once they are inside the hospital, 
and this can cause reordering of very expensive, high-priced 
components. In this case, the large manufacturer was unable to 
provide these kits due to their internal policies. Well, we 
purchased the same components and placed them together at our 
manufacturing site in a single package and delivered to the VA 
exactly what they wanted.
    In conclusion, Alliant does provide value to the VA, to 
their contracting officers, and to the patients who are treated 
by the best technology available.
    My question to this Committee and to the VA itself is this: 
What is the possible downside to working with SDVOSBs if the 
hospitals receive what they need in a faster manner, with a 
more efficient process, with cost-effective, creative 
solutions, more accurate transactions, and delivered with 
better outcomes? And that is exactly Alliant Healthcare's 
mission.
    This concludes my testimony. Thank you very much for the 
time.
    Chairman KELLY. Thank you for your testimony, Mr. Taylor.
    And Ms. Nilsson is recognized for 5 minutes.

                  STATEMENT OF CHERYL NILSSON

    Ms. NILSSON. Chairman Kelly and distinguished members of 
the Subcommittee, I would like to express my sincere thanks for 
the invitation to submit testimony today at this hearing. I am 
honored to be here.
    My name is Cheryl Nilsson, and I am the CEO of First Nation 
Group. I served on Active Duty as an Air Force judge advocate 
for 23 years, specializing in government procurement, and 
retired in the rank of colonel.
    First Nation is a service-disabled veteran-owned, HUBZone, 
woman-owned small business. We employ 100 people, 100 
employees, and 40 percent live in the HUBZone, are from the 
HUBZone, and 14 percent are veterans.
    We distribute respiratory products to VA hospitals 
nationwide, to hundreds of thousands of veterans each year. We 
ship over 1,700 orders a day. Ninety-nine percent of those 
orders ship within 24 hours. We maintain a huge inventory with 
over 4,000 SKUs at 3 strategically located warehouses, 
including 1 at our HUBZone location in Detroit. This enables us 
to quickly meet urgent and emergency VA needs.
    What value does an SDVOSB like First Nation bring to the 
VA? There are many.
    One, experience. For over 30 years, we have specialized in 
serving in the Federal market. We are laser-focused on the VA. 
Ninety-nine percent of our business is with the VA.
    We are the VA's corporate knowledge for anything related to 
sleep therapy. We do business with over 1,700 purchasing agents 
around the country and probably know over half of them by name. 
We are a one-stop shop. We carry large inventories with a full 
range of sleep products from all major manufacturers. We 
provide customized, multivendor patient solutions. One order 
could include products from three or four manufacturers, 
significantly streamlining the VA ordering process.
    First Nation does what most large vendors can't or won't 
do: We sweat the small stuff. We fill hundreds of thousands of 
orders a year. Over 95 percent are under $3,500. Seventy 
percent are small-box deliveries under $200 that are shipped 
directly to the veterans' homes all over the Nation. These 
small purchases are a nuisance for most large businesses, and 
for us it is core.
    The VA is our only focus and passion. Few large businesses 
could risk being so specialized. Their focus must be in the 
larger commercial marketplace. We are the experts in this 
complex market. Manufacturers and the VA depend on this 
expertise to get the state-of-the-art products established in 
the VA.
    We are nimble. We can and do customize orders, large or 
small, even with 1,700 a day. We can easily pivot to make 
immediate and last-minute changes. We are a non-manufacturer. 
There is no conflict of interest over brand preference. We 
represent all the leading manufacturers. We can sell to the VA 
whatever the VA wants, when they want it, multi-brands, on 
large and small orders.
    Cost savings. We nurture and establish long-term OEM 
relationships. We buy in large order quantities to get top-tier 
pricing and pass the savings onto the VA.
    Just-in-time shipments. We preposition inventory in three 
strategically located warehouses. The morning mantra for our 
First Nation warehouses: ``Order in, order out.'' Ninety-nine 
percent of the time, they make it. Orders are shipped and 
invoiced in 2 days.
    First Nation's success as a VA supplier has afforded us the 
opportunity and privilege to give back to the communities. 
First Nation was founded with the goal of building a 
sustainable social enterprise to benefit the company's 
employees, the veterans, and the underserved in the community 
where we live and work.
    Some examples of these steps in the journey towards a 
social enterprise:
    Our focus with the veterans, like the VA, has been in 
eradicating veteran homelessness. We joined forces with 
Veterans Matter 4 years ago and, I am proud to say, have housed 
over 21 homeless veterans.
    We expanded our focus this year to support Paralyzed 
Veterans of America and are a premier sponsor with UPS for the 
2018 Veterans Wheelchair Games.
    In employee charitable giving, to encourage and empower 
employees to embrace the First Nation giving culture, First 
Nation matches their charitable contribution 10 to 1.
    In closing, small companies like ours feel very much at 
risk. The combination of the abandonment of the FSS, the focus 
on working only with manufacturers and large businesses, the 
distrust of VOSBs and an apparent unwillingness to embrace Vets 
First, and strategies to significantly limit prime contractors 
threatens veteran-owned businesses like First Nation and 
presents huge barriers of entry for any veteran who wants to do 
business with the VA.
    We need Congress' continued support of small business and 
the Vets First program and assistance in overcoming the 
challenges we are facing today.
    Thank you again for the opportunity to testify. I am happy 
to answer any questions at this time.
    Chairman KELLY. Thank you, Colonel, for your testimony.
    And I now recognize Mr. Leghorn for 5 minutes.

                  STATEMENT OF DAVY G. LEGHORN

    Mr. LEGHORN. Chairman Kelly, Ranking Member Adams, and 
distinguished members of the Subcommittee, on behalf of our 
national commander, Denise Rohan, and the 2 million members of 
The American Legion, we thank you for the opportunity to 
testify this afternoon.
    This issue is of the utmost importance to The American 
Legion, because how VA buys medical supplies directly affects 
the care of the most vulnerable segment of our population, 
veteran patients.
    Public Law 106-50 made all Federal agencies stakeholders in 
supporting the veterans small-business industrial base. 
Subsequently, Public Law 109-461 gave VA the authority to set 
higher agency small-business goals for veterans. Included was a 
provision requiring VA to set aside contracts for veteran-owned 
firms as long as the rule-of-two was satisfied. A new 
procurement hierarchy within VA was created. It is referred to 
as the Vets First Contracting Program.
    Later, the Supreme Court would finetune the Vets First 
contracting policy with VA with the Kindomware decision in 
2016. In 2018, VA launched the MSPV-Next Generation, an IDIQ 
contracting program which effectively removes 40 percent of the 
medical supply spend from the rule-of-two, utilizing only four 
prime vendors as suppliers and distributors.
    The master list of items, prices, and suppliers purchased 
through the MSPV-Next Generation is referred to as the 
formulary. The formulary is created by running a procurement-
like process to discover businesses who can meet the standards 
and offer the best prices.
    VA needs over 80,000 items to support all of the medical 
centers. The 7,800 items currently on the list is not enough to 
satisfy the demand, and VA's solution is to grant a 2-year 
period where prime vendors will determine what supplies VA 
medical centers need--a drastic departure from the current 
clinician-driven process.
    The American Legion believes that VA is the most qualified 
to deliver healthcare services to veterans, and we want them to 
step up to their responsibilities.
    The intimation that adherence to the Vets First procurement 
priorities could potentially cause catastrophic disruption to 
the healthcare supply chain is markedly false. The American 
Legion supports the Kingdomware decision and opposes any 
attempt to subvert the application of the rule-of-two at VA.
    In 2016, The American Legion passed Resolution 154 
advocating for a reasonable number of Federal set-asides for 
veteran-owned firms. MSPV-Next Generation not only reduces 
Federal contracts for veteran-owned businesses but also 
sidesteps the rule-of-two. Its existence is of great concern to 
The American Legion.
    Privatizing the functions of the VA Office of Acquisitions 
and Logistics presents a conflict of interest and harms small 
businesses. The American Legion would like to work with 
Congress and VA to look at the empirical evidence used for 
justification to better understand the underlying rationale for 
the private-sector bailout so another will not be required.
    Mr. Chairman, accepting the concept that the only solution 
is to abdicate responsibility by privatizing the procurement of 
critical supplies sets an irreversible path for VA to address 
all of its other problems through privatization as the only 
alternative.
    The American Legion makes the following recommendations:
    We believe that prime vendors must not be allowed to decide 
which healthcare products are to be added to the formulary and 
checks are put into place to prevent them from systematically 
displacing SDVOSBs as distributors.
    If VA is looking for a solution that meets small-business 
goals, adheres to the Kingdomware decision, has government-
certified fair and reasonable prices, and is FDA-, Trade 
Agreements Act-, and Buy American Act-compliant, they should 
look at the utilization of the Federal Supply Schedule. The FSS 
could be an alternative starting point for market research and 
a basis for rapidly moving products onto the formulary.
    Going forward, since the J&A's implementation, prime 
vendors are already assuming the distributor's role in the 
procurement process. The displacement of veteran-owned 
distributors at VA coincides with a downward trend in 
distributor utilization within the healthcare supply industry 
and is exacerbated by GSA's implementation of the 2017 NDAA's 
section 846, which establishes a program for Federal agencies 
to buy commercial products through e-commerce portals. 
Distributors are feeling the pinch across the Federal agencies 
and in the private sector. All industry indicators thus far 
present a very bleak future.
    Despite the odds stacked against the SDVOSB distributors, 
The American Legion remains committed to advocating for their 
utilization and place within the Federal procurement process.
    Chairman Kelly, Ranking Member Adams, and distinguished 
members of the Subcommittee, thank you for the opportunity to 
explain the position of the 2 million members of The American 
Legion, and I look forward to answering any questions you may 
have.
    Chairman KELLY. Thank each of you again for your testimony.
    And now we will have 5 minutes each to ask you questions. 
If we have the desire, we will go through a second round, but 
if not--I couldn't have testified any better than you guys did. 
I could have been down there sitting and talking, because I 
agree with what every one of you said pretty much.
    So I will start with me.
    Colonel Nilsson, First Nation Group is unique in that it is 
service-disabled veteran-owned, woman-owned, and located in a 
HUBZone. And you kind of articulated it, so I was listening, 
but I want you to go over it in about a minute, if you would 
tell me what your company does for other Federal agencies in 
the VA that can't be done by a larger business.
    Ms. NILSSON. Primarily, we fit in a niche where we, for 
lack of a better word, kind of take the crumbs. We do what the 
other companies really don't want to do, and that is dealing 
directly with the veterans, directly with those purchasing 
agents. And we get what they want when they want it, ship it 
out fast.
    We are a little like a prime vendor in sleep. We have all 
the products that the VA needs and wants, and we almost know 
what they need because we have been doing it so long. So 
manufacturers come to us because we are the distributors and 
the supplier of sleep and many respiratory products to the VA.
    Chairman KELLY. Thank you very much.
    You know, and it is really irritating that the VA, which is 
there to care for our Nation's veterans--their sole purpose is 
to care for our Nation's veterans--would not care for our 
Nation's veterans and not be exceeding all goals instead of 
halfway meeting those goals. It is very disappointing, but it 
shows a culture that we have to change. Their primary goal 
should be to service our American veterans, whether medically 
or through the contracts as long as we do those.
    With that, Mr. Denniston, you mentioned in your testimony 
that the contract justification and approval submitted by the 
VA in April mentioned subcontracting opportunities for veteran-
owned and service-disabled veteran-owned businesses.
    To your knowledge, has the VA provided any details on this?
    Mr. DENNISTON. Mr. Chairman, the answer to that is no.
    The J&A was done in April. Two days later, the prime 
vendors got the go-ahead to move forward. When we asked the 
question about the subcontracting, we were told that that was 
in the works and that the VA would ask for a plan by the end of 
June.
    The problem is, in those 2 months, the prime vendors will 
have already made the agreements with the manufacturers, which, 
in effect, cut out the distributors. So the damage is already 
done.
    Chairman KELLY. I have to be careful, because this stuff 
infuriates me so much that I have to watch my language up here.
    But don't prime vendors usually establish subcontracting 
opportunities before the prime contracts are awarded?
    Mr. DENNISTON. Yes, sir, they do, but remember, when the 
original contract was written, it was only for the distribution 
of product. Most of the opportunities for service-disabled vet 
and small businesses in particularly the distributing world is 
for the product. None of the product was included in that 
original subcontract.
    So, when we changed the scope of the contract from 
distribution to distribution and supply, there should have been 
another subcontracting plan that incorporated the opportunities 
for the distributors to play as subcontractors, and that has 
not been done.
    Chairman KELLY. I don't believe too much in coincidences, 
and I believe when you know business and you do things, I think 
they are intentional. And I think they intentionally are 
getting to the result that they want to get to. And, again, it 
goes back to my primary comment: They should be taking care of 
veterans, not looking at ways to not take care of veterans.
    And, Mr. Taylor, unfortunately, there is a misconception 
about contracting with veteran-owned small businesses, and your 
testimony touches on this. Can you explain this misconception 
and talk more about what Alliant Healthcare does to combat 
this?
    Mr. TAYLOR. Well, it is a constant effort to try and combat 
this. The misconceptions are communicated throughout the VA, so 
we are always in an effort to try and prove and demonstrate our 
value.
    One of the things that we do that other companies--it is 
very difficult, sometimes, for a large manufacturer sales rep 
to go into a VA. It is a much more complicated environment. And 
I believe, without us, some of these firms would not even 
promote their products within the VA. So I think we do a good 
job of helping new technology get to the VA that wouldn't 
normally get there.
    Chairman KELLY. Thank you. And I think that is important. 
That would be products that were either more expensive or not 
available for our veterans if you weren't doing your job, is 
the way I interpret that.
    And, with that, I am over my time--or I have a few seconds 
left, and I yield back my time and now recognize the Ranking 
Member, Ms. Adams.
    Ms. ADAMS. Thank you, Mr. Chairman.
    And thank you all for your testimony. Very enlightening.
    Mr. Leghorn, in your testimony, you stated that the VA's 
Medical/Surgical Prime Vendor-Next Generation Program is 
privatizing the functions of the VA's Office of Acquisitions 
and Logistics' Strategic Acquisition Center. This presents a 
significant conflict of interest and inflicts harm on veteran-
owned small businesses.
    So how can Congress prevent this harm and strengthen the 
VA's ability to expand the growth of set-aside contracting to 
small businesses through Vets First?
    Mr. LEGHORN. Ranking Member Adams, thank you for your 
question.
    The first thing that Congress can do, I believe, is to just 
halt the agency from allowing the prime vendors so much power 
to determine which suppliers and what items go on that list. It 
is a huge conflict of interest because a few of the prime 
vendors are actually manufacturers as well. They could easily 
tool around with the items on the formulary to, in effect, cut 
out small businesses.
    The other thing that we could look at doing is to go back 
and look at the FSS that VA runs and see if we could rapidly 
move items onto the formulary that way or to even just utilize 
the FSS more broadly for medical supplies.
    Ms. ADAMS. Okay.
    After Kingdomware was decided, the VA used the Ability One 
list to purchase goods without first applying the rule-of-two, 
which ensures set-asides for small businesses. This activity 
was later struck down by a court.
    It seems that the VA continues to struggle with putting 
veteran-owned small businesses and service-disabled veteran-
owned small businesses first when purchasing goods.
    Is this an indication of the VA's attitude toward veteran 
small businesses in general?
    Mr. LEGHORN. You know, the Ability One issue is really 
tricky. You know, we are dealing with conflicting authorities. 
The American Legion believes that the Supreme Court has the 
Kingdomware decision right in the black letter reading of the 
law. And the fact that VA continues to employ workarounds 
around the rule-of-two is really bothersome.
    And, as the Chairman said, it doesn't make any sense that 
an agency whose goal is to help the veterans community would 
purposely try to tank and bypass the rule-of-two within the 
Vets First program.
    Ms. ADAMS. Thank you.
    Mr. Denniston, are there possible unintended questions for 
small businesses to the VA's MSPV-NG that have not been 
considered in their approach to this procurement that Congress 
should act on?
    Mr. DENNISTON. I think the answer to that question is 
fairly broad.
    Let me just make a comment. We have been talking about the 
VA. The VA is 350,000 employees, most of whom want to do the 
right thing. And the people in the field that actually buy the 
products that we are talking about I truly believe want to do 
the right thing. The challenge is that the impediments have 
been put in their way because of poor policy, poor training, 
and poor oversight. And my personal opinion is that is how we 
need to fix these problems.
    To your point, historically, VA has done a terrible job of 
managing the subcontracting program. That is evident over the 
last 10 years. And VA has given us no assurances that anything 
is going to change now with the new MSPV program.
    In fact, in December of last year, when we were all in St. 
Louis for the national VA small business conference, when we 
asked the question of why should we feel you are going to do 
anything different, the answer from the senior VA leadership 
was, ``You have to trust us.'' Well you can't trust people 
after 10 years of evidence to the contrary.
    Ms. ADAMS. Okay. Thank you, sir.
    Mr. Chairman, I am going to yield back.
    Chairman KELLY. I thank the Ranking Member again.
    And I now yield to Mr. Blum, the Chairman of the 
Subcommittee on Agriculture, Energy, and Trade, for 5 minutes.
    Mr. BLUM. Thank you, Chairman Kelly.
    Thank you to our panelists for being here today, and thank 
you for your service to our great Nation.
    Mr. Denniston--is that correct?
    Mr. DENNISTON. Denniston, yes.
    Mr. BLUM. Denniston. The chart that accompanied your 
testimony is interesting. It is flat-lined for the last 8 
years. Why do you think it is flat-lined?
    Mr. DENNISTON. I think it shows a lack of commitment to the 
Vets First program. I think it shows----
    Mr. BLUM. At what level?
    Mr. DENNISTON. At the senior level of the VA.
    During the administration of Bush 43, when none of the 
government was making the goals, there was an executive order, 
13360, that said that all Federal agencies had to have a 
strategic plan and that strategic plan had to be measured by a 
senior VA official. In the time that I was there during the 
Bush administration, it was the Deputy Secretary of VA.
    There is no strategic plan at VA, and there is no senior 
leadership that is looking at holding people accountable for 
the accomplishments. And it is that same level of senior 
leadership that should be looking at the difference between the 
goals and the accomplishments and raising the goal if, in fact, 
there was a commitment to the program, in my opinion.
    Mr. BLUM. You saying under Bush 43----
    Mr. DENNISTON. Correct.
    Mr. BLUM.--there was a strategic plan----
    Mr. DENNISTON. Correct.
    Mr. BLUM.--at the VA and there is not today?
    Mr. DENNISTON. Correct.
    Mr. BLUM. How does that happen?
    Mr. DENNISTON. Lack of interest in the program. The real 
challenge is that the VA does not see as part of its mission 
helping service-disabled veterans.
    Mr. BLUM. I agree with Chairman Kelly. How can that be? I 
mean----
    Mr. DENNISTON. I can't answer that, sir.
    Mr. BLUM. That is absurd to me.
    Mr. DENNISTON. Yeah. And to all of us sitting here at the 
table.
    Mr. BLUM. Amazing.
    You stated in your testimony that the National Acquisition 
Center ran a successful MSPV program, but after the leadership 
was transferred to the SAC, they failed. What happened there? 
Why do you think that is true?
    Mr. DENNISTON. The big difference was, when the program was 
at the National Acquisition Centers, as Mr. Leghorn mentioned 
in his testimony, the Federal Supply Schedules were the basis 
for the formulary that was used for the Med/Surg Program. When 
the program was moved to the Strategic Acquisition Center, the 
requirement to use the Federal Supply Schedule was dropped. 
There was a policy change at the VA that said the Federal 
Supply Schedules, which they run as a delegated procurement 
from the GSA, are not considered competitive contracts; 
therefore, they can't be used as the basis for the formulary.
    Now, the problem with that is that disagrees with GSA 
policy. And that issue has been brought up to VA by numerous 
organizations in Washington that represent large business as 
well as small business, and every one of us says to the VA, if 
you want to fix the problem, go back and use the Federal Supply 
Schedules as your basis. VA won't do that.
    Mr. BLUM. I am a career business guy, not a career 
politician. I look at the VA, you know, our veterans, our 
national treasures. Would you say the VA--and this is a 
question for everyone there--is mismanaged? Is the VA 
mismanaged?
    Mr. DENNISTON. Yes, sir. In the procurement acquisition 
arena, yes.
    Mr. BLUM. How about the rest of it?
    Mr. DENNISTON. I can't speak to that. That gets a little 
bit broader than what I focus on with the National Veterans 
Small Business Coalition.
    Mr. BLUM. It sure seems to be that way to me, from what I 
hear.
    Mr. DENNISTON. Yep. I can't argue with you.
    Mr. BLUM. And is this a problem at the very top, or is this 
a midlevel management problem? Where is this mismanagement? I 
mean, is there accountability? I just find it incredible. Is 
there accountability there? Why aren't heads rolling? Why 
aren't people terminated?
    Is this middle management? Is this upper management? Where 
is this problem at?
    Mr. DENNISTON. You hit the nail on the head. It is with 
senior leadership. Because, as we learned in the military, 
everything starts at the top and comes down. And there has been 
such turnover at VA.
    The other problem is that acquisition is a technical field. 
It has the Federal Acquisition Regulations that are this high, 
its own language. The people that come in that are the 
secretaries and the deputy secretaries don't really understand 
that, so they rely on the technical experts the VA has hired. 
And there are a lot of problems there, because it is those 
people who are making the statements that working with service-
disabled vets is administratively burdensome and costs the VA 
money.
    Mr. BLUM. Anybody else want to jump in on either of those 
questions? Why we flat-lined and/or the VA is mismanaged.
    Ms. NILSSON. The VA, as Scott pointed out, especially in 
the group that we work with, is thousands of people. And at the 
working level, one, they love working with veteran-owned 
businesses and really work hard to find them in order to work 
with them.
    At the large acquisition levels that we are talking about 
with prime vendor, that is where a lot more of the difficulty 
comes with believing that there is a place for small business 
or for veteran-owned business. I don't think they really 
believe that we can do what they expect, do good work at a good 
price. And so we spend a lot of time trying to convince the 
leadership that we are worth their time. And that has been 
challenging.
    Mr. BLUM. I agree with Chairman Kelly. You would think the 
organization should also care tremendously about veteran-owned 
businesses. I just find it incredible.
    But thank you for your testimony today, and thank you for 
your service.
    Chairman KELLY. The gentleman's time has expired.
    We are going to do a second round of questions. I will try 
not to use all 5 minutes, but I am going to start with me and 
then go to Ms. Adams.
    I just want to say I have never met bad soldiers, bad 
airmen, bad sailors. I have seen--bad units, usually, I have 
not seen very many of unless there is bad leadership.
    Now, that doesn't indict the whole VA. Most of those people 
go to work there for lesser pay than they could make somewhere 
else. They work harder, and they go there because their heart 
wants to help people. And so I am not indicting the whole VA. 
But I do think there is a leadership issue at some point that 
we need to get to and critique and make sure that we are doing 
our mission.
    Returning to the MSPV, the VA's argument for restructuring 
their program relies on the logic that a catastrophic 
disruption of the VA healthcare supply chain will occur if they 
do not act.
    Mr. Leghorn, what are your thoughts on this?
    Mr. LEGHORN. Thank you for your question, Chairman Kelly.
    From the J&A, they--that is where that was quoted from, the 
catastrophic failure will happen if their proposals do not come 
to pass. But within the same document, they were talking about 
other ways that the VA procures things. They are not the most 
effective way of doing it, and it might not yield as much money 
savings to the VA when they buy in bulk off the MSPV-NG, but 
those are still viable ways that the agency is procuring 
medical supplies as we speak.
    So to say that if this doesn't come to pass that there is 
going to be a catastrophic failure, it is clearly not true, 
because there are only 7,800 items on there right now and VA 
medical centers are currently still running.
    Chairman KELLY. Very good.
    And I just want to--I am in a group called the Warrior 
Caucus. It is bipartisan. And there are members, former 
servicemembers who--Seth Moulton and Steve Russell co-chair 
that committee. And we had Secretary-nominee Wilkie in there a 
couple of weeks ago, and I am going to tell you, you know, he 
appeared to have his eye on the ball and looking at the right 
things. And, you know, I am just saying that from the questions 
that we had, from our bipartisan questions about what they are 
doing.
    So I think good leadership at the top, and I understand it 
is not necessarily the secretaries, but they can at least delve 
down in to identify the leadership level at which it is 
deficient. And so that is what we have to do: identify the 
deficient leaders at the right level and either remove them or 
make them do their job in the way that it was intended.
    Mr. Denniston, the chart attached to your testimony is 
interesting. And in a few words--and I want to go back again, 
because I know you talked about it, but sometimes this--we call 
those foot-stompers, you know? We want to touch it again. Would 
you sum up in a few words what your chart illustrates?
    Mr. DENNISTON. Lack of commitment to the program, lack of 
oversight. And I think that gets back to the points that I made 
before, that the people in the field that are actually buying 
the products and serving veterans need to have good, effective 
policies, good training, and then good oversight.
    Chairman KELLY. And, finally--boy, I wish I could ask you 
all a million questions. It just gets my dander up.
    But, Mr. Leghorn, I am going ask you this as the American 
Legion rep, which is an organization that I am in and a member 
of and does a lot of good. What are some of the consequences of 
removing competition from the process of awarding government 
contracts? Removing the veteran-owned small businesses, 
removing them from the competition, what are some of the 
consequences of doing that?
    Mr. LEGHORN. Thank you for your question, Chairman Kelly.
    The impact that we run into is, you know, a lot of the 
distributors that currently sell to the VA or would sell 
medical supplies to the VA are already on the GSA schedule. 
They are schedule holders. And the abandoning of the GSA 
Advantage, the FSS, would displace a lot of veteran-owned small 
businesses and preclude them from contracting directly with the 
VA as prime contractors.
    I wish I had the numbers of people that would be affected 
for you to see, but perhaps Scott knows what that number is.
    Mr. DENNISTON. More than the numbers, to answer your 
question, sir, the impact would be poor patient care.
    I think Bob and Cheryl have done a great job of explaining 
the hands-on services they provide. We have another one of our 
members, Mid-Cities Medical, who does home respiratory care for 
veterans, where they will go into a veteran's home, they 
determine what is the best products that they have, they bring 
the products in, they set them up, they train the veteran on 
how to use them. They provide all the services necessary for 
warranty, repair, and maintenance.
    Those are the kinds of services, hands-on in the local 
community, that small businesses provide that you are not going 
to get from four large prime vendors.
    Chairman KELLY. Thank you very much. And my time has 
expired, and I now recognize the Ranking Member.
    Ms. ADAMS. Thank you, Mr. Chairman, and I agree with you. 
Perhaps we need to move some folks.
    Let me ask Mr. Leghorn, just to follow up a bit, what 
should Congress do to make it clear that we do not accept the 
justification of unnecessary consolidation of contracts at the 
expense of the industrial base outside of what is already 
included in statute?
    Mr. LEGHORN. Thank you for your question, ma'am.
    I think, going back to our recommendations, we have to stop 
VA from consolidating the prime vendors. Today, they have four 
identified prime vendors. A lot of us believe that their end 
game is to, frankly, end up with one, because it is a 
procurement shortcut, and dealing with one prime vendor is a 
lot simpler than dealing with four prime vendors or a whole 
bunch of distributors.
    So we have to halt it there, because, in essence, they are 
trying to create a shortcut that will, in essence, end up as a 
monopoly. And you will not save money when you are dealing with 
somebody that could regulate their own prices.
    Ms. ADAMS. Yeah. Okay.
    So, Mr. Taylor, what are some ways we can incentivize 
agencies to use the contracting programs that require service-
disabled veteran-owned small businesses and veteran-owned small 
businesses to be hired outside of the goals?
    Mr. TAYLOR. Thank you for the question, ma'am.
    Really, the incentives aren't the most important thing. 
When Mr. Bloom asked if there is mismanagement, I don't think 
the issue has been mismanagement as much as it has been a 
purposeful effort to work around the VOSB and SDVOSB goals. So, 
if the goals are out there, we just need to create an 
environment where the will of Congress is followed by the 
agencies.
    And, like Cheryl provided earlier in her testimony, I think 
most of the rank-and-file, the people, the acquisition 
officers, contracting officers, want to deal with SDVOSBs and 
VOSBs. And so I think we just need to remove the impediment 
versus providing incentives, if that makes sense.
    Ms. ADAMS. Okay. Thank you.
    So, while the VA must give preference to service-disabled 
veteran-owned small businesses and veteran-owned small 
businesses, there is still room for improvement given the 
decline in the number of veteran-owned businesses receiving 
contracts.
    What are some goals that we can set and work to achieve 
with agencies within the next fiscal year? And any one of the 
panelists can answer that.
    Mr. DENNISTON. I would suggest that the goals are there; I 
think the issue is oversight.
    Agencies do--let me go back. Prime vendors, the private 
sector does what their customers want. So if VA, as an example, 
lets prime vendors know that this is important to them, they 
will make the goals. The businesses are good at that. The 
problem we have here is the VA has basically said, we don't 
care about the goals.
    So, Madam Ranking Member, to your point, it is an oversight 
issue. As the Small Business Committee, you have the ability to 
bring agencies in and ask them how they are doing towards the 
goals. You have the ability to say, ``Executive Order 13360 
requires a strategic plan. I want to see your strategic plan, 
and what are you doing to implement it?'' I think it is letting 
agencies know that, to this body, small business is important.
    Ms. ADAMS. Okay. Thank you.
    Mr. Chair, we are the Oversight Subcommittee, but I yield 
back my time.
    Chairman KELLY. I want to again thank our witnesses for 
your testimony, for your service to our veterans and small 
businesses, and also each of your services to our great Nation.
    I also want to thank the Ranking Member for being such an 
advocate for small businesses and veterans also.
    It is clear from today's discussion that the theory that 
contracting with veteran-owned small businesses is expensive 
and burdensome is nothing more than a misconception. Therefore, 
the VA needs to take their responsibility to help America's 
veterans succeed in all aspects of life seriously by utilizing 
the authority granted to them by Congress to its fullest 
potential. We shouldn't try to meet goals for veterans; we 
should try to exceed them.
    I ask unanimous consent that members have 5 legislative 
days to submit statements and supporting materials for the 
record. Without objection, so ordered.
    We are adjourned.
    [Whereupon, at 3:24 p.m., the Subcommittee was adjourned.]
                            
                            
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