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	<title> - HEARING ON EXCELLENCE IN ACTION: GOVERNMENT SUPPORT OF DISABLED VETERAN-OWNED BUSINESSES</title>
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	[House Hearing, 108 Congress]
	[From the U.S. Government Publishing Office]




	HEARING ON EXCELLENCE IN ACTION: GOVERNMENT SUPPORT OF DISABLED
	VETERAN-OWNED BUSINESSES

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

	HEARING

	before the

	SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT & GOVERNMENT PROGRAMS

	of the

	COMMITTEE ON SMALL BUSINESS
	HOUSE OF REPRESENTATIVES

	ONE HUNDRED EIGHTH CONGRESS

	SECOND SESSION

	__________

	WASHINGTON, DC, JULY 15, 2004

	__________

	Serial No. 108-73
	House Veterans' Affairs Committee, Serial No. 108-48

	__________

	Printed for the use of the Committee on Small Business


	Available via the World Wide Web: http://www.access.gpo.gov/congress/
	house


	______

	U.S. GOVERNMENT PRINTING OFFICE
	20-816 WASHINGTON : 2005
	_____________________________________________________________________________
	For Sale by the Superintendent of Documents, U.S. Government Printing Office
	Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
	Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001


	COMMITTEE ON SMALL BUSINESS

	DONALD A. MANZULLO, Illinois, Chairman

	ROSCOE BARTLETT, Maryland, Vice NYDIA VELAZQUEZ, New York
	Chairman JUANITA MILLENDER-McDONALD,
	SUE KELLY, New York California
	STEVE CHABOT, Ohio TOM UDALL, New Mexico
	PATRICK J. TOOMEY, Pennsylvania ENI FALEOMAVAEGA, American Samoa
	JIM DeMINT, South Carolina DONNA CHRISTENSEN, Virgin Islands
	SAM GRAVES, Missouri DANNY DAVIS, Illinois
	EDWARD SCHROCK, Virginia GRACE NAPOLITANO, California
	TODD AKIN, Missouri ANIBAL ACEVEDO-VILA, Puerto Rico
	SHELLEY MOORE CAPITO, West Virginia ED CASE, Hawaii
	BILL SHUSTER, Pennsylvania MADELEINE BORDALLO, Guam
	MARILYN MUSGRAVE, Colorado DENISE MAJETTE, Georgia
	TRENT FRANKS, Arizona JIM MARSHALL, Georgia
	JIM GERLACH, Pennsylvania MICHAEL MICHAUD, Maine
	JEB BRADLEY, New Hampshire LINDA SANCHEZ, California
	BOB BEAUPREZ, Colorado BRAD MILLER, North Carolina
	CHRIS CHOCOLA, Indiana [2 VACANCIES]
	STEVE KING, Iowa
	THADDEUS McCOTTER, Michigan

	J. Matthew Szymanski, Chief of Staff

	Phil Eskeland, Policy Director/Deputy Chief of Staff

	Michael Day, Minority Staff Director

	SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT AND GOVERNMENT PROGRAMS

	TODD AKIN, Missouri, Chairman TOM UDALL, New Mexico
	JIM DeMINT, South Carolina DANNY DAVIS, Illinois
	SHELLEY MOORE CAPITO, West Virginia GRACE NAPOLITANO, California
	JEB BRADLEY, New Hampshire ED CASE, Hawaii
	CHRIS CHOCOLA, Indiana MADELEINE BORDALLO, Guam
	STEVE KING, Iowa [VACANCY]
	THADDEUS McCOTTER, Michigan

	Joe Hartz, Professional Staff

	(ii)
	?

	COMMITTEE ON VETERANS' AFFAIRS

	CHRISTOPHER H. SMITH, New Jersey, Chairman

	MICHAEL BILIRAKIS, Florida LANE EVANS, Illinois
	TERRY EVERETT, Alabama BOB FILNER, California
	STEVE BUYER, Indiana LUIS V. GUTIERREZ, Illinois
	JACK QUINN, New York CORRINE BROWN, Florida
	CLIFF STEARNS, Florida VIC SNYDER, Arkansas
	JERRY MORAN, Kansas CIRO D. RODRIGUEZ, Texas
	RICHARD H. BAKER, Louisiana MICHAEL H. MICHAUD, Maine
	ROB SIMMONS, Connecticut DARLENE HOOLEY, Oregon
	HENRY E. BROWN, Jr., South Carolina TED STRICKLAND, Ohio
	JEFF MILLER, Florida SHELLEY BERKLEY, Nevada
	JOHN BOOZMAN, Arkansas TOM UDALL, New Mexico
	JEB BRADLEY, New Hampshire SUSAN A. DAVIS, California
	BOB BEAUPREZ, Colorado TIM RYAN, Ohio
	GINNY BROWN-WAITE, Florida STEPHANIE HERSETH, South Dakota
	RICK RENZI, Arizona
	TIM MURPHY, Pennsylvania

	Patrick E. Ryan, Chief Counsel and Staff Director

	__________

	SUBCOMMITTEE ON BENEFITS

	HENRY E. BROWN, Jr., South Carolina, Chairman

	JACK QUINN, New York MICHAEL H. MICHAUD, Maine
	JEFF MILLER, Florida SUSAN A. DAVIS, California
	JEB BRADLEY, New Hampshire CORRINE BROWN, Florida
	GINNY BROWN-WAITE, Florida STEPHANIE HERSETH, South Dakota

	(iii)


	C O N T E N T S

	----------

	Witnesses

	Page
	McCullough, Ms. Allegra, Associate Deputy Administrator,
	Government Contracting and Business Development, U.S. Small
	Business Administration........................................ 5
	Ramos, Mr. Frank, Director, Office of Small and Disadvantaged
	Business, Office of the Secretary of Defense................... 8
	Scott, Mr. Brad, Regional Administrator, Region 6, Heartland
	Region, U.S. General Services Administration................... 10
	Denniston, Mr. Scott, Director, Office of Small Business and
	Center for Veterans Enterprise, U.S. Department of Veterans
	Affairs........................................................ 12
	Hatfield, Ms. Nina Rose, Deputy Assistant Secretary, Business
	Management and Wildland Fire, U.S. Department of the Interior.. 14
	Lopez, Mr. John, Co-Chairman, Task Force for Veterans
	Entrepreneurship............................................... 20
	Schooner, Professor Steven, Co-Director of the Government
	Procurement Law Program, George Washington University Law
	School......................................................... 22
	Hudson, Mr. James, Marketing Director, Austad Enterprises, Inc... 24
	Forney, Mr. Joseph, President, Vetsource, Inc.................... 26
	Weidman, Mr. Rick, Chairman, Task Force for Veterans
	Entrepreneurship............................................... 28

	Appendix

	Prepared statements:
	McCullough, Ms. Allegra, Associate Deputy Administrator,
	Government Contracting and Business Development, U.S. Small
	Business Administration.................................... 33
	Ramos, Mr. Frank, Director, Office of Small and Disadvantaged
	Business, Office of the Secretary of Defense............... 37
	Denniston, Mr. Scott, Director, Office of Small Business and
	Center for Veterans Enterprise, U.S. Department of Veterans
	Affairs.................................................... 49
	Hatfield, Ms. Nina Rose, Deputy Assistant Secretary, Business
	Management and Wildland Fire, U.S. Department of the
	Interior................................................... 53
	Forney, Mr. Joseph, President, Vetsource, Inc................ 55
	Hudson, Mr. James, Marketing Director, Austad Enterprises,
	Inc........................................................ 61
	Lopez, Mr. John, Co-Chairman, Task Force for Veterans
	Entrepreneurship........................................... 66
	Weidman, Mr. Rick, Chairman, Task Force for Veterans
	Entrepreneurship........................................... 66
	Submitted for the Record:
	US Department of Agriculture................................. 86
	Speake, Ms. Theresa, Director, Office of Small &
	Disadvantaged Business Utilization, US Department of Energy 91

	(iv)




	HEARING ON EXCELLENCE IN ACTION: GOVERNMENT SUPPORT OF DISABLED
	VETERAN-OWNED BUSINESSES

	----------


	THURSDAY, JULY 15, 2004

	House of Representatives
	Committee on Small Business
	Subcommittee on Workforce, Empowerment and Government
	Programsjoint hearing with the Committee on Veterans'
	Affairs Subcommittee on Benefits
	Washington, D.C.
	The Subcommittee met, pursuant to call, at 2:05 p.m. in
	Room 311, Cannon House Office Building, Hon. Todd Akin
	[chairman of the Subcommittee] presiding.
	Present: Representatives Akin, Brown, Velazquez, Michaud,
	Udall, Herseth, Chocola
	Chairman Akin. This is an interesting Committee hearing in
	that we have essentially two different committees having the
	same hearing at the same time. And that is a fortunate thing,
	because I have got another Committee where I have got to be
	scooting off, so we are going to be turning the hearing over in
	a couple minutes to my colleague. Henry will handle that after
	we make an opening statement and get started.
	I also think we have two panels of witnesses, is that
	correct? Okay.
	Well, let us go ahead with an opening statement then. And
	also, we will be hearing a statement from our Minority Member
	from the Small Business Committee also, Mr. Udall, as well. So
	that will be good.
	Good afternoon, and thank you all for being here today as
	we examine federal government support of disabled veteran-owned
	small businesses. I would especially like to thank each of our
	witnesses who has agreed to testify before our Committee today.
	Before we begin I would like to welcome my friend and
	colleague, Chairman Henry Brown, of the Committee on Veterans'
	Affairs, Benefits Subcommittee. Mr. Chairman, welcome, and
	thank you for the opportunity to work together on this issue.
	And over the past three and a half years Chairman Brown has
	worked tirelessly on a multitude of issues, and has been a real
	champion for America's veterans. I would like to express my
	gratitude to the good people of the First District of South
	Carolina for sending Henry to the House, and also for the
	peaches that they distributed a couple days ago.
	I am very pleased to be able to co-chair this hearing with
	him, and hope that this is just the first of a long line of
	veteran small business concerns we can work on together. With
	President Bush, this Congress has made it a priority to reach
	out to all of America's entrepreneurs, especially those who
	served this nation in our armed forces. We must continue this
	effort to ensure that those who sacrificed and served our
	nation in uniform have access to contracting opportunities with
	the federal government.
	As many of you know, the Veterans' Entrepreneurship and
	Small Business Development Act of 1999 set a government-wide
	goal of 3 percent of all federal prime contracting dollars, and
	3 percent of all federal subcontracting dollars, should be
	awarded to service-disabled veteran-owned small businesses.
	However, for the first two fiscal years after enactment,
	less than one-half of 1 percent of such contracts have been
	awarded to disabled veteran-owned small businesses.
	In order to provide the federal agencies with the necessary
	tools to meet the 3-percent goal, Congress and President Bush
	enacted the Veterans' Benefit Act of 2003 on December 16, 2002.
	This law allows contracting officers to create sole-source
	contracts for disabled veteran-owned small businesses.
	The new law also provides contractors the discretionary
	authority to restrict certain contracts for disabled veteran-
	owned small businesses, if at least two such small businesses
	are qualified to bid on the contract.
	Today we have invited a number of federal agency officials
	to testify on their progress in implementing the Veterans'
	Benefit Act. Also with us today are several disabled veteran-
	owned small business owners. They are here to explain their
	experiences, both before and after passage of the Veterans'
	Benefit Act.
	I am looking forward to hearing the testimony presented
	today, and hope to hear that each of the agencies represented
	have taken appropriate steps to meet the 3-percent goal.
	I hope that this Congress and our colleagues in the
	Administration can continue to work with the veterans'
	community together in order to provide our service-disabled
	veteran-owned small businesses each opportunity to succeed in
	the federal contracting agenda.
	I now invite my friend and ranking Member, Mr. Udall, to
	make an opening statement.
	Mr. Udall. Thank you very much, Mr. Chairman. I appreciate
	you holding this hearing. I think this is an important hearing
	for veterans, and also for the small business community.
	Let me first say that, along with a few other members here
	today, I have the pleasure of serving on both the Small
	Business and the Veterans' Committees. And it is a pleasure for
	us to have our colleagues on both of the Committees here today.
	We all recognize the importance of this issue before us, and I
	hope that this hearing will lead to a more effective
	procurement process for our veteran-owned small businesses.
	The Veterans' Benefit Act is legislation built off the work
	of the Small Business and the Veterans' Committee during the
	105th Congress. Two Congresses ago we passed the Veterans'
	Entrepreneurship and Small Business Act that created several
	veterans' business development programs.
	Given the sacrifices that our veterans have made and the
	service they have provided to this country, it only makes sense
	to provide our nation's veterans with assistance to jump-start
	small businesses.
	A key component for any small business to succeed, not only
	veteran-owned small businesses, is access to government
	contracts. That is why we must ensure that veteran-owned,
	minority-owned, and all small businesses have a fair shake in
	the federal marketplace.
	Today, however, we are focusing more specifically in
	evaluating the recent implementation of the new program
	established under the Veterans' Benefits Act. On May 5, 2004,
	five months after the President signed the legislation into
	law, the SBA put out the regulations to carry out the
	procurement program. These provisions allow agencies to set
	aside contracts for service-disabled veterans.
	Unfortunately, in issuing the regulations, the SBA may have
	missed the mark. The regulations omit important safety and
	soundness protections, such as a certification program.
	In addition, I am very concerned that these regulations not
	only fall short of the policy goals, but will also create
	confusion that will result in lost contracting opportunities,
	not only for service-disabled veterans, but for all small
	businesses.
	The original intent of the bill was to create a fair and
	just system, to provide entrepreneurial opportunities to those
	who, for various reasons, have been left behind or left out. In
	order for this to be successful, we must ensure SBA programs
	can operate in unison.
	Mr. Chairman, we all know how important it is that we
	provide assistance to all sectors of the small business
	community. After all, as is repeated often in the Small
	Business Committee, small businesses are the engine that drives
	our nation's economy.
	It is of particular importance, however, that we provide
	assistance to our nation's service-disabled veteran
	entrepreneurs. History has shown that they, along with other
	particular segments of the population, rely most on the
	programs and assistance offered through SBA. That is why it is
	so important that as this new and important procurement program
	be implemented, we ensure that it is implemented in a manner
	that truly provides greater access to the federal marketplace
	for veteran-owned small businesses.
	I look forward to hearing the testimony of the witnesses on
	the panels, and thank them for being here today.
	Thank you, Mr. Chairman.
	Chairman Akin. Thank you, Mr. Udall. And then also we have
	an opening statement from Mr. Brown.
	Mr. Brown. Thank you, Mr. Chairman. And I want to also
	extend a warm welcome to everyone here today, Chairman Akin,
	our Committee Ranking Member, Mr. Udall, for bringing us all
	together.
	American sons and daughters who serve in our military
	indeed are engaging and resourceful individuals. In few
	professions do 19- and 20-year-olds, for example, maintain
	multi-billion-dollar airplanes or operate multi-billion-dollar
	missile systems or nuclear-powered submarines, all in defense
	of our way of life.
	Those who are disabled in their service to our nation
	deserve a full opportunity to participate in the economic
	system that their service has sustained.
	Indeed, during the Colonial era, the First Continental
	Congress furnished pensions to members of our Continental Army
	to empower economically after they left the military. In so
	doing, the Continental Congress established one of our young
	nation's core values.
	Further, during the Homestead Act of 1862, veterans
	received a priority for receiving parcels of land. This goes
	beyond gratitude and respect; it is about using scarce public
	resources in our private economy to empower those who have
	served.
	Mr. Chairman, fast-forward into today. A five-year profile
	survey of veteran-owned businesses in Massachusetts, conducted
	in the late 1980s and early 1990s, found that a pool of
	approximately 2,000 veterans engaged in micro-businesses
	generating $74 million for the Commonwealth of Massachusetts.
	That is just for one state.
	On February 5, 2003, Veterans' Affairs Committee hearing on
	the state of veterans' employment took testimony from among
	other current entrepreneurs who were disabled by their military
	service. The body of testimony showed these are engaging
	individuals who are strong and well-positioned to participate
	in the economic system they fought to defend.
	The outgrowth of that 2003 hearing was the bipartisan
	discretionary set-aside and restricted contract authority for
	disabled veteran-owned small businesses, established as Public
	Law 108-183, to which I was an original co-sponsor.
	I thank Congressman Renzi for introducing this important
	bipartisan legislation, of which Chairman Manzullo was the
	original co-sponsor.
	Federal departments and agencies now have additional tools
	to contract with such small businesses. These are tools that
	were not available through the bipartisan enactment of Public
	Law 106-50, authored primarily of former Chairman Talent of
	this Committee, and Mr. Stump and Mr. Evans of the Veterans'
	Affairs Committee.
	Mr. Chairman, I would note the White House Conference on
	Small Businesses, convened by President Carter in 1980,
	recommended set-aside authority in federal contracting for
	Vietnam-era disabled veterans as part of the aid program.
	The 1981 expert report of the Small Business Administration
	Veterans' Project, written by the Center for Community
	Economics, made the same recommendation. The bipartisan
	Congressional Commission on Service Members and Veterans'
	Transition Assistance of 1998 made similar-type
	recommendations.
	Without objection, Mr. Chairman, I would like to insert
	into the record the appropriate sections of these reports.
	In closing, Mr. Chairman, I would note that in a broad
	sense, these discretionary contracting authorities for disabled
	veterans we are discussing today were some 24 years in the
	making.
	This is not something Congress went into lightly, so I am
	very pleased we are holding this hearing.
	Thank you, Mr. Chairman. I look forward to hearing today's
	witnesses.
	Chairman Akin. Without objection, in terms of the record.
	Our next opening statement is going to be from Mr. Michaud.
	Mr. Michaud. Thank you very much, Chairman Akin, Chairman
	Brown, and Ranking Member Udall, for working to put this
	hearing together today.
	I have the privilege of serving both, as Ranking Member of
	Veterans' Affairs Benefits Subcommittee, and sitting on the
	Small Business Committee. I am very fortunate, and obviously
	have strong interests in exploring the issues before us today
	with the panels that we have, and the lengthy discussions.
	So with that, Mr. Chairman, I would ask unanimous consent
	to have my opening remarks submitted for the record.
	Chairman Akin. Without objection, and thank you.
	We will now proceed to our first panel of witnesses. And I
	believe our first witness is going to be Ms. Allegra
	McCullough, who is the Associate Deputy Administrator for
	Government Contracting and Business Development for the USSBA.
	Allegra, thank you.
	Excuse me, I did not mention you have about five minutes,
	standard format. Thank you.

	STATEMENT OF ALLEGRA MCCULLOUGH, GOVERNMENT CONTRACTING &
	BUSINESS DEVELOPMENT, US SMALL BUSINESS ADMINISTRATION

	Ms. McCullough. Good afternoon, Chairman Akin, Brown, and
	Ranking Members Udall, Michaud, and other distinguished Members
	of the Committee.
	My name is Allegra McCullough, Associate Deputy
	Administrator for Government Contracting and Business
	Development at the US Small Business Administration.
	Thank you for inviting me to appear before you today to
	speak about our efforts to reach out to service-disabled
	veteran-owned small businesses, and achieve the 3-percent
	federal procurement goal.
	Mr. Chairman, as you are aware, the Veterans'
	Entrepreneurship and Small Business Development Act of 1999
	created a government-wide goal that 3 percent of the total
	value of all federal prime and subcontract dollars be awarded
	to service-disabled veteran-owned small business concerns.
	Unfortunately, the federal government has consistently
	fallen well short of the 3-percent statutory goal. By fiscal
	year 2003, only three agencies met or exceeded the 3-percent
	goal. The National Endowment for the Arts--
	Chairman Akin. Allegra, if I could interrupt you for a
	minute and just ask you to move your mic a little bit closer. I
	think we will get a little bit better reception. Thank you.
	Ms. McCullough. By fiscal year 2003, only three agencies
	met or exceeded the 3-percent goal: the National Endowment for
	the Arts, the Consumer Product Safety Commission, and the
	Railroad Retirement Board. Of the large agencies, the
	Department of Housing and Urban Development has been the most
	successful in making progress toward the 3-percent goal.
	On June 10, 2004, SBA's Office of Advocacy issued a report
	indicating achievements in this area were low, but also
	indicating that actual agency accomplishment may be under-
	reported.
	Congress and the President provided federal procurement
	officials with a valuable tool: The Veterans' Benefit Act of
	2003, 108-183. That was signed by the President on December 18,
	2003, that authorized bills of procurement set-asides for
	SDVOSB, and sole-source contracting authority for only one
	SDVOSB as identified that can meet the government's
	requirement.
	On May 5, 2004, the SBA and the Federal Acquisition
	Regulatory Council concurrently published interim final rules,
	implementing the procurement provisions of the Veterans'
	Benefit Act of 2003, while still providing the public with a
	60-day comment period. Both SBA and the FAR Council worked hard
	to expedite these regulations.
	The new regulations permit contracting officers to either
	restrict competition in contracts, or issue sole contracts to
	SDVOSB, but then specify dollar thresholds, in accordance with
	statutory requirements.
	Our regulation also establishes procedures for protecting
	the status of an SDVOSB.
	There are some common misconceptions out there that hinder
	the government's ability to reach the statutory 3-percent goal.
	Since these procurements are based on a premise other than
	socio-economic status, educating the federal and private sector
	contracting communities is very important.
	Also, some SBCs are reluctant to identify themselves as
	service-disabled just to gain the status designation as an SDV.
	This hinders our outreach efforts, since we are unable to
	identify our clients.
	So educating SDVOSBs to recognize the value added in
	securing or self-identifying as disabled is very important.
	S.B.A. has not achieved its annual procurement goal for
	SDVOSBs since the inception of the requirement. However, as a
	result of the recently-enacted legislation and published
	regulation, SBA is designing an integrated effort that includes
	specific steps to be taken among our various program areas to
	utilize the set-asides and sole-source authorities for the
	purpose of meeting the 3-percent goal.
	As a part of SBA's annual acquisition planning process, the
	agency will include all socio-economic goals, including SDVOSBs
	in our selection strategy. SBA's Office of Administration will
	also work closely with our Office of Veteran Business
	Development to identify potential SDVOSBs to meet SBA's
	contracting needs.
	Where feasible, contracting opportunities will be posted on
	our home page, as well as highlighted in our vet cassette
	electronic newsletter, which reaches thousands of veterans.
	The SDVOSB procurement goals will be communicated to all
	program areas, and each area will be encouraged to consider
	these agency goals when developing its procurement strategy for
	each planned acquisition.
	SBA's outreach goals over the last three years, combined
	with the efforts of others, have contributed to the increase in
	veteran participation between 40 to 100 percent in most SBA
	programs. We have and will continue to coordinate these efforts
	internally and with other federal agencies.
	S.B.A. will work with the agencies' representatives today,
	and with others, to conduct outreach training and other policy
	program initiatives, specifically for SDVOSBs and veteran-owned
	businesses. This effort will include educating procurement
	officers of the new program, as well as educating service-
	disabled veteran entrepreneurs on SDV status, size standards,
	marketing to federal officials, information requirements in the
	bid of a procurement challenge, and tools for partnering with
	other SDVOSBs and veteran-owned businesses, and other agency
	procurement program participants.
	Registration and the central contract registration, and the
	use of the dynamic small business search engine contained in
	the CCR as a source of market research, along with other
	federal databases, will be highlighted.
	Further, non-SDVOSB prime contractors should also be made
	aware of subcontracting opportunities and responsibilities for
	the SDVOSB and veteran-owned businesses. To fully accomplish
	the objectives of this legislation, SDVOSBs must be prepared to
	conduct business in a manner consistent with current federal
	procurement trends.
	Today, a large portion of the annual federal procurement
	dollars are spent through contracting actions using GSA federal
	supply schedules. While not the only way to provide SDVs with
	more contracting dollars, the ability of SDVOSBs to be placed
	on and market their companies on the GSA federal schedule will
	be a critical portion of their success in the federal market.
	Through SBA procurement assistance programs, its business
	development counselling and training programs, and in
	partnership with other federal agencies like the ones here
	today, SBA will continue to identify and work with SDVOSBs to
	ensure that they have the necessary tools in place to enhance
	participation on GSA schedules.
	Additionally, SDVOSBs must be educated on federal
	procurement trends, including using federal purchase cards to
	make purchases under $2500 without competitive quotes. These
	purchases amount to approximately $16 billion last fiscal year.
	Mr. Chairman, the SBA will continue to work with the
	Committee and with other federal agencies in any efforts to
	promote programs and contracting opportunities for our
	veterans.
	This concludes my testimony. And I would be happy to answer
	your questions.
	[Ms. McCullough's statement may be found in the appendix.]
	Chairman Akin. Thank you, Ms. McCullough.
	I will remind the witnesses, I know Ms. McCullough went a
	little bit over the five minutes. And I would caution you, if
	you would, kind of keep your remarks to five minutes. All of
	your prepared remarks will be entered into the record, but just
	for the sake of the time line to try to work within, if you
	would just contain your statements to five minutes.
	The next witness is Mr. Frank Ramos, Office of Small and
	Disadvantaged Business, Office of the Secretary of Defense, US
	Department of Defense.
	Thank you, Mr. Ramos.

	STATEMENT OF FRANK RAMOS, OFFICE OF SMALL AND DISADVANTAGED
	BUSINESS, OFFICE OF THE SECRETARY OF DEFENSE, US DEPARTMENT OF
	DEFENSE

	Mr. Ramos. Mr. Chairman, if I would, please, I have four
	interns in the back. And I think there is some significant
	interest in one of them. If they would stand up.
	One is the granddaughter of a US Marine code talker from
	World War II from the Navajo Nation. And I thought it would be
	appropriate to bring them here to go through this exercise.
	[Applause.]

	Chairman Akin. We had a special ceremony in the Capitol, I
	guess about a month or so ago, honoring the code talkers. And
	they certainly played a major role in our victory in World War
	II. And thank you for bringing her today. Thank you for coming,
	too.
	Mr. Ramos. Thank you, sir. Right behind me also, sir, is my
	Deputy, Lynn Oliver, and a new person who is a special
	assistant to me, a political appointee who is going to be
	focusing on veterans' affairs for us. He just came on board; he
	served with the Army Airborne.
	I will move on with my statement here, sir.
	Good afternoon, Chairman Akin and Congressman Udall; good
	afternoon, Chairman Brown and Congressman Michaud.
	My name is Frank Ramos. I am the Director of the Office of
	Small and Disadvantaged Business Utilization, in the Office of
	the Secretary of Defense.
	I wish to thank you for the opportunity to testify before
	this joint subcommittee hearing concerning the Department of
	Defense implementation plan to execute public law 108-183. This
	law has helped clarify questions of priority within the
	competing small businesses' interest. This will help us.
	The Defense implementation plan is our roadmap to meet the
	federal government goal to award 3 percent of all contracts for
	our war fighters who have become disabled in defense of our
	nation.
	Today I will describe the three arenas of focus to improve
	our service-disabled veteran business statistics.
	Number one. We are developing a strategy to increase
	service-disabled veteran supplier pool on increasing contract
	amounts to these businesses.
	After I assumed my office, I began collecting data to
	determine how and what we must do to achieve the goal. In
	fiscal year 2002, the Department of Defense awarded $204.5
	million in prime contract awards to service-disabled veterans,
	but we only reached .13 percent of that goal.
	In fiscal year 2003, we awarded $341.7 million, an increase
	of $37.2 million. That only raised our goal percentage to .18
	percent, a 72-percent increase that still fell short of the 3-
	percent goal.
	The number of DoD service-disabled veteran business
	contractors grew from 408 in fiscal year 2002, to 692 in fiscal
	year 2003, an increase of 70 percent.
	The government-wide centralized contractor register has
	only 5,600 active registrants who have identified themselves as
	service-disabled veterans. This compares with around 180,000
	registrants who identify themselves as small business, as of
	last week.
	Accretion of contract size is a challenge. Right now there
	are only five firms who have contract awards in excess of $11
	million. The balance of contract awards are in the lower
	ranges, most frequently under $100,000. Those larger Department
	of Defense awards are in research and development, engineering
	services, commercial institutional and construction, security,
	and boat-building.
	Our primary tasks are twofold. To grow the number of
	service-disabled veteran firms that will be able to compete,
	and to increase the dollar value of our contracts with them,
	while buying goods and services that the war fighter needs.
	The second area of focus is training. In late 2002 I
	recognized that small business-related training courses were
	not part of the Defense Acquisition University curriculum. The
	Undersecretary of Defense for Acquisition, Technology, and
	Logistics and the President of the Defense Acquisition
	University were quick to support our small business initiative,
	to consolidate courses that military services had partially
	developed for themselves.
	We now have our first comprehensive Department of Defense
	small business training course contracts 260 that will be
	initiated at the end of August. The course is required for all
	defense small business specialists, and is encouraged for all
	acquisition professionals, which will include the service-
	disabled veteran topics.
	Another initiative is to have an electronic continuous
	learning module. We expect that within 45 days of our pilot
	course, the electronic course will be available to anyone over
	the Internet.
	We are expanding our defense community practice repository
	to provide a central electronic location where all acquisition
	professionals can share information relating to service-
	disabled veteran-owned small businesses.
	Third. In 2003 I raised the service-disabled veterans as a
	heightened priority within the Department of Defense. For
	emphasis, we invited two Congressional Medal of Honor
	recipients--the Honorable Harvey ``Barney'' Barnum, the
	Assistant Secretary of the Navy, and Rodolfo Hernandez--to
	address our mentor/protege conference. The Honorable Everett
	Alvarez was another keynote speaker. He is the longest-captive
	prisoner of war decorated service-disabled veteran, and a
	successful small business owner.
	I also had the Honorable Albert Zapanta, Chairman of the
	Reserve Policy Forces Board, a recipient of the Silver Star and
	Purple Heart, and small business owner, who addressed the
	veterans' issues.
	That level attention by the distinguished heroes has never
	been done before at that conference.
	I am also proud to state that my support contractor is a
	very competent service-disabled veteran business. And I guess
	what I am saying is I practice what I preach.
	We have identified our challenges, and we developed a
	roadmap. We are working hard to achieve our goal.
	I would like to close by expressing my appreciation for
	your interest, and the collaborative effort by our sister
	federal agencies, to strive toward this patriotic goal of
	supporting our former war fighters. It is the right thing to
	do.
	I hope you can discern from my testimony that I have a real
	passion to meet this challenge. Thank you, sir.
	[Mr. Ramos' statement may be found in the appendix.]
	Chairman Akin. Thank you very much, Mr. Ramos. I know there
	is a lot of work left to do, and I thank you for your effort in
	trying to reach that 3-percent goal.
	Our next panel member is Mr. Brad Scott, Regional
	Administrator, Region Six, Heartland Region, US General
	Services Administration. Welcome.

	STATEMENT OF BRAD SCOTT, US GENERAL SERVICES ADMINISTRATION

	Mr. Scott. Thank you, Mr. Chairman, Ranking Member Udall,
	Ranking Member Michaud.
	I am pleased to report on behalf of Administrator Steve
	Perry on GSA's continuing efforts to preserve the spirit of the
	two respective laws enacted to promote government contracting
	with service-disabled veteran-owned small businesses.
	It has been my personal privilege to play a part in
	developing and implementing programs designed to, first,
	leverage our relationships within the federal community, to
	promote achievement of socio-economic goals by our client
	agencies.
	Second, to help service-disabled veterans identify
	opportunities to do business with the government.
	And finally, to enhance GSA's ability to achieve its own
	goal.
	I would like to thank the Congress and the President for
	providing this tool that I believe will prove to be a
	meaningful enhancement in creating opportunities for service-
	disabled veteran-owned small businesses.
	When public law 108-183 took effect last December,
	Administrator Perry challenged the GSA management team to forge
	an initiative to meet the demands of this new law. In response
	to this, we initiated a program that is entitled ``Operation
	Fast Break.''
	Operation Fast Break is a two-pronged approach aimed at
	creating and improving GSA's external and internal offerings to
	our federal customers, and to service-disabled veteran-owned
	small businesses.
	The broad goals of Operation Fast Break are first to
	identify, recruit, train, and assist service-disabled veteran-
	owned small business owners to get on GSA's multiple-award
	schedule program. And second, it is to inform client agencies
	of the new law and the opportunity contained therein to
	streamline the ability to access service-disabled veteran-owned
	small businesses.
	G.S.A. has worked very closely with the Department of
	Veterans' Affairs, DoD, the Small Business Administration, and
	the Defense Logistics Agency to identify ways to expand
	contracting opportunities to service-disabled veteran-owned
	small businesses. This partnership has opened lines of
	communication between the agencies, and enabled the involved
	partners to embark on joint conferences and joint initiatives
	to the benefit of all involved.
	I would like to hold up for distinction the Department of
	Veterans' Affairs, and Scott Denniston, who will testify next.
	GSA is hosting conferences to put service-disabled veterans in
	touch with federal agencies and prime vendors. Conferences have
	been held in Washington, D.C. and New York already. Today there
	is one being held in Denver, Colorado, and we have one being
	planned for the Pacific Rim Region, Region 11 in California,
	and we have one scheduled in my region for October 20.
	G.S.A. has utilized the power of the world-wide web to
	improve offerings to service-disabled veterans through cross-
	agency coordination and links. In addition, under Operation
	Fast Break, GSA created a website solely dedicated to service-
	disabled veterans.
	During our internal review, GSA uncovered several dead
	links from other agencies to GSA. In addition, we found
	erroneous and outdated information contained on our own sites,
	as well as others. All of them have been fixed.
	Additionally, veterans were frustrated that they were
	having difficulty talking with live bodies who could provide
	meaningful information. Not only have we listed points of
	contact on our website, we created a 1-800 number for veterans.
	When a service-disabled veteran contacts the hotline, he or she
	is directed to his or her local GSA Office of Small Business
	Utilization for more information on how to become a GSA
	contract holder.
	G.S.A. is working with the Association of Procurement
	Technical Assistance Centers, and has established a memorandum
	of understanding to create an avenue for service-disabled
	veterans to receive intensive assistance that we cannot always
	provide.
	G.S.A. has held internal conferences with its Office of
	Small Business Utilization to coordinate efforts, create a
	common customer experience, and enhance our offerings to not
	only our client agencies, but to veterans.
	G.S.A. maintains a permanent liaison with the Task Force
	for Veteran Entrepreneurship.
	While still too early to judge the impact of our
	initiative, we can identify some progress. For instance, at the
	end of 2003, GSA had 167 schedule-holders designated as
	service-disabled veterans. In March of this year, after GSA
	conducted an in-house review and contacted the businesses on
	schedule to inform them of the passage of the law, that number
	doubled to 332 businesses. As of June 30, we reached 351
	businesses listed on schedule.
	Once on schedule, GSA maintains and regularly updates the
	list of service-disabled veteran-owned small businesses. This
	list of businesses can be obtained from GSA service-disabled
	veteran-owned small business website.
	In addition to asking for more service-disabled veterans on
	schedules, federal agencies have asked for a more user-friendly
	method of identifying service-disabled veterans. We are working
	to provide that, as well as to expand the pool.
	And with that, Mr. Chairman, my time is about up, and I
	would like to end within the five minutes. We thank you for the
	honor and privilege of testifying before this august body.
	Chairman Akin. Thank you very much, Mr. Scott.
	Our next panel member is Mr. Scott Denniston, Director,
	Office of Small Business and Center for Veterans' Enterprise,
	US Department of Veterans' Affairs.
	Welcome.

	STATEMENT OF SCOTT F. DENNISTON, OFFICE OF SMALL BUSINESS &
	CENTER FOR VETERANS ENTERPRISE

	Mr. Denniston. Thank you. Mr. Chairman and distinguished
	Members of the Committee, thank you for the opportunity to
	testify on behalf of Secretary Anthony Principi on what VA has
	done to implement the programs envisioned by public law 106-50
	and 108-183.
	In 2001, the Department created the Center for Veterans'
	Enterprise. The Center's principal mission is to promote
	business ownership and expansion for veterans and service-
	connected disabled veterans.
	The Center, which started with four employees, now has 11
	employees in three functional areas: communications, business
	development, and business expansion.
	The mission of the Communications Unit is to ensure
	awareness of the Federal Veterans' Entrepreneurship Program and
	the assistance offered by our resource partners: the
	Association of Small Business Development Centers, the
	Association of Procurement and Technical Assistance Centers,
	the Veterans' Corporation, the Veterans' Business Outreach
	Centers, the Small Business Administration Development
	Officers, and the Service Corps of Retired Executives.
	A principal tool of the Communications Unit is the Center's
	web portal, vetbiz.gov. The web portal was recognized in the
	2004 Edition of the 100 Best Resources for Small Business.
	The mission of CVE's Business Development Unit is to
	efficiently connect veterans with community-based support, and
	to assess the responsiveness and effectiveness of local
	services. This unit was established in July of 2003.
	A newly-developed tool of the Business Development Unit is
	the VetBiz Assistance Program, which will allow providers of
	business assistance services to post their program information
	for veterans to easily locate. This new program will be
	unveiled on August 17, 2004, on the fifth anniversary of public
	law 106-50.
	The mission of CVE's Business Expansion Unit is to directly
	assist veterans who are seeking federal marketplace
	opportunities, and to minimize access barriers, and to maximize
	where possible. The principal tool of this unit is the VetBiz
	Vendor Information pages.
	In April, the Administrator of the US Small Business
	Administration and the Acting Administrator of the Office of
	Federal Procurement Policy jointly issued a memorandum to all
	federal agencies encouraging the use of the VetBiz VIP
	database.
	The database accepts information from external sources
	where veteran-owned businesses may be located, including
	Department of Defense's central contact registry. For a
	business to be posted on this Internet offering, the company
	must answer questions regarding small business size status, and
	affirm that the company is truly 51-percent owned and
	controlled by veterans or service-disabled veteran-owned
	businesses.
	In the past 12 months, more than 59,000 calls and faxes
	from veterans have been handled by the Center. The web portal
	established to provide 24/7 access to veterans has received
	more than 700,000 hits in the first six months of this year.
	VA's CVE has joined forces with federal agencies and prime
	contractors to create a corps of government and corporate
	advocates for veterans' enterprise, volunteers who stand ready
	and able to answer questions from entrepreneurial veterans on
	how to access requirements of their organizations.
	I am proud to report that the Center and the Department
	have been actively sought out by federal agencies and
	corporations to partner in their outreach efforts. VA has co-
	sponsored outreach programs with the Air Force, Defense
	Logistics Agency, Department of Health and Human Services,
	Department of Housing and Urban Development, Department of
	Interior, Department of Transportation, General Services
	Administration, Small Business Administration, General Dynamics
	and SAIC, to name a few.
	Additionally, we have ongoing relationships with the DoD
	Regional Small Business Councils, the DoD Procurement Technical
	Assistance Centers, and the Small Business Development Centers.
	The CVE has also been invited to address employees of many
	other federal agencies as part of their acquisition education
	program.
	Last spring, Secretary Principi issued a comprehensive
	report on recommendations to improve the performance of
	veteran-owned small businesses. This report contains many
	important changes. Perhaps the most startling and truly
	sweeping is the requirement now to include performance with
	veterans and service-disabled veterans in executives'
	performance plans within the Department of Veterans' Affairs.
	This report, coupled with the new set-aside authority which
	Congress has passed, should result in significantly higher
	improved achievements for both veterans and service-disabled
	veterans. This report is posted on the VetBiz web portal for
	anyone who is interested in using it.
	Shortly before President Bush signed the Veterans' Benefit
	Act of 2003 on December 16, we began receiving enthusiastic
	calls from service-disabled veterans who had been closely
	monitoring the legislation. The callers wanted to know how long
	before the legislation would be implemented within VA and other
	federal departments and agencies. Obviously, they urged
	immediate implementation.
	Secretary Principi, in consultation with VA's General
	Counsel, determined that implementing regulations were not
	necessary to implement the provisions of the law. On February
	24, the VA's Office of Acquisition and Material Management
	issued an information letter which implemented the set-aside
	provisions of the law for VA immediately.
	Thanks to the tremendous efforts and collaboration of the
	Small Business Administration and the Federal Acquisition
	Council, both SBA regulations and the Federal Acquisition
	regulations were revised, effective May 5, to implement the
	public law. As a result, we rescinded our informational letter.
	What is interesting to note is that, since the time that
	the implementing of regulations went into effect, there have
	been 86 opportunities advertised in FedBizOps for service-
	disabled veteran set-asides. And we are pleased that more than
	half of those, or 48, came from the Department of Veterans'
	Affairs.
	We have been very active in developing and supporting
	veteran-owned businesses. We think that we have put the tools
	in place that will, in the near future, show the results that
	Congress expects through the set-aside authority.
	Thank you for the opportunity to testify, and I would be
	happy to answer any questions.
	[Mr. Denniston's statement may be found in the appendix.]
	Chairman Akin. Thank you, Mr. Denniston.
	Our next member is Ms. Nina Rose Hatfield, Deputy Assistant
	Secretary for Business Management and Wildland Fire, US
	Department of the Interior.
	Thank you.

	STATEMENT OF NINA ROSE HATFIELD, BUSINESS MANAGEMENT AND
	WILDLAND FIRE, US DEPARTMENT OF THE INTERIOR

	Ms. Hatfield. Thank you, Mr. Chairman.
	Mr. Chairman and Members of both Committees, I appreciate
	the opportunity to testify today on behalf of the Department of
	the Interior in support of the strategies that will increase
	small business procurement opportunities with service-disabled
	veterans on businesses.
	Fifty percent of the $4 billion spent by our bureaus and
	offices in fiscal year 2003 were awarded to small businesses.
	We have consistently been among the leaders of the government
	in contracting with small and minority businesses. Nonetheless,
	we recognize the need for continued progress with service-
	disabled veteran-owned businesses.
	Our small business theme is know your neighbor, because we
	have offices located across the nation, with responsibilities
	where our veterans reside and are business owners. We
	understand that we need to do a good job of providing
	information for those veterans about how they can contract with
	Interior. And we believe that public law 108-183 will open more
	doors for those veterans.
	Within Interior, many positive steps have occurred in the
	past two years, but more remains to be accomplished. Prior to
	the recent passage of the Veterans' Benefit Act, Interior
	increased SDV procurements from fiscal year 2002 to fiscal year
	2003 by about 65 percent. We rank in the upper third of all
	federal agencies in SDV contracting accomplishments for fiscal
	year 2003, and we are confident that we can meet our share of
	the 3-percent government-wide goal for fiscal year 2005, with
	the additional benefits of the set-asides and sole source
	authorities that are provided in public law 108-183.
	The Interior Department has adopted a model, which has been
	very successful for us in other areas, to reach this 3-percent
	goal based on our partnerships, our advocacies, and targeted
	information for service-disabled veterans. At every forum or
	Chamber of Commerce opportunity, our small business leaders
	continue to address our commitment to increase SDV
	opportunities.
	With over 14 national Small Business Associations as our
	business partners, we are constantly looking for new ways that
	we can work to involve SDV business owners as mentors and team
	players.
	We are also looking for innovative ways to reach our SDV
	business owners through partnering with minority-serving
	institutions business schools across the nations and our
	territories.
	Today, in Denver, Colorado, we are participating with the
	GSA and the Small Business Administration in the Regional
	Procurement Fair for service-disabled veterans. We also have
	participated in other key outreach programs in Albuquerque and
	Washington as a part of the larger federal commitment to open
	opportunities.
	Internally, we have developed and disseminated DOI guidance
	within two weeks of the interim rule, for all of the
	Department. We also have a detailed staff person as a primary
	point of contact. We are working now with bureaus to identify
	contracts. And we, too, have modified our website to provide
	better and more information about getting on the Central
	Contract Register, and how you do business with the Department.
	Building on these efforts, we are very confident that
	Interior can indeed achieve its 3-percent target of business
	with SDV small businesses.
	And with that, that concludes my testimony. And I will be
	glad to try to answer questions. Thank you.
	[Ms. Hatfield's statement may be found in the appendix.]
	Chairman Akin. Thank you very much, Ms. Hatfield.
	At this time we will entertain questions from the panel.
	Mr. Udall, do you have a question?
	Mr. Udall. Sure, Mr. Chairman, thank you. I would like to
	ask Allegra McCullough about an issue here.
	The SBA moved very quickly on the regulations to implement
	public law 108-138. Could you talk about some of the reasons
	why you moved so fast on this?
	Ms. McCullough. Absolutely. Being able to give back to
	those who have sacrificed so much for this country, which is
	certainly a priority with this Administration. And so we tried
	to, as quickly as we could, pull together our top legal and
	policy people to make this a number-one priority.
	Mr. Udall. Now, in the process of moving forward, you
	waived the notice and comment requirements for the interim
	rule. Was there a reason for doing that? I mean, do you think
	it might have been a more effective rule if you had gone
	through the notice and comment requirement?
	Ms. McCullough. We did go through a comment requirement.
	But we wanted to also make certain that very little time passed
	before SDVs were able to take advantage of the benefits of the
	rule.
	Mr. Udall. Do we have any idea how many businesses fit the
	category that we are talking about here?
	Ms. McCullough. No, we do not. And to be perfectly honest,
	we must work with all of our agencies, making certain that we
	are using every possible instrument and outreach effort to
	identify our service-disabled veterans.
	Mr. Udall. Is there anybody else on the panel that has an
	idea of how many service-disabled veteran-owned businesses
	there are? I mean, wouldn't it be helpful to have that kind of
	information to target what we are trying to do here? Any
	comments?
	Mr. Denniston. Mr. Udall, the best numbers that we have on
	the number of service-disabled veteran-owned businesses come
	from some statistical samples that have been done by the
	Department of Commerce, Bureau of Census. And they range
	anywhere from about 350,000 to 500,000. That is about the best
	number that we have been able to come up with.
	Mr. Udall. Three hundred and fifty to 500 thousand. Okay. I
	think that is good for me here, Mr. Chairman. Thank you, and I
	yield back.
	Chairman Akin. Thank you, Mr. Udall.
	Do you have a question? Welcome to the panel.
	Ms. Herseth. Thank you very much, Mr. Chairman, and thank
	you for your testimony here today.
	Just maybe a little bit of a follow-up on Congressman
	Udall's question there. It seems that maybe there has been some
	trouble in identifying and reaching these businesses that meet
	the eligibility requirements for those veterans that have
	service-connected disabilities.
	So it leads me to question, under the new tool that we have
	here, the authority to sole-source or restrict certain
	contracts, your ability to use those new tools may be somewhat
	limited until we make more effort or make sure you have the
	resources, not just financial resources, but information
	network resources, to best identify the businesses that
	qualify. Right? I get the sense that there might be a consensus
	just in some nodding of the heads here.
	Ms. McCullough. If I may speak, yes and no. Yes, there has
	been difficulty identifying. And I think I speak for everyone
	that we are determined to make an all-out effort to use every
	tool necessary to identify and to outreach to every segment of
	America to make certain that we are articulating this rule,
	that we are letting service-disabled veterans know about the
	goals that the federal agencies would like to achieve,
	educating them on how to contract with the federal government.
	Ms. Herseth. I just want maybe to point out, as you go
	forward, that while we want to move forward to the 3-percent
	goal as best possible, and now have some authority that has
	been granted to help us achieve that goal, I do not want any
	businesses for veterans who have the service-connected
	disabilities to be at a disadvantage when someone is making a
	determination that they can sole-source if there is no
	reasonable expectation that bids are going to be offered. But
	yet if there are businesses out there that would be in a
	position to offer, but they are just not as familiar with this
	program because they have not been identified, we have not
	effectively reached out to them.
	I am just pointing out maybe this inherent tension a little
	bit, and to be cognizant of that moving forward, that we do not
	start putting certain businesses at a disadvantage because we
	have not done enough at the outset to identify them.
	Mr. Denniston. I think there are two issues here. Number
	one, going back to Congressman Udall's question about how many
	service-disabled veterans are there in the United States. And
	if we look at the number that are participating in federal
	contracting, it is a very small percentage. So I think that is
	issue number one, how do we get more businesses involved in the
	federal procurement process.
	I think Mr. Ramos hit the other nail on the head. The fact
	that those we have identified have been working in the small
	contract area, and what this authority will allow us to do will
	be to grow those businesses that we have identified now as part
	of the process.
	Ms. Herseth. Thank you. And the last question I will pose
	is, from your testimony I do not get the sense from any of you
	that you feel the 3-percent goal is unattainable.
	Ms. Hatfield. I think we agree that we can reach the goal.
	I would agree, though, with the rest of the panel members and
	the issues that you have raised. It is very important in terms
	of doing the outreach to the veterans so they are aware of what
	those opportunities are, and help us in terms of identifying
	who may be available to do business.
	Mr. Brown. Thank you very much. And I know that we must
	have a benchmark to work towards, and maybe we might not reach
	that 3 percent. But if we keep working together, maybe we will
	find some folks that they will be interested and we can help
	along the way.
	We are very privileged today to have joined with us the
	Ranking Member of the Small Business Committee, Ms. Velazquez.
	Any questions?
	Ms. Velazquez. I do.
	Mr. Brown. I have some questions myself, but I am going to
	submit those in writing to you later, just for the sake of
	time.
	Ms. Velazquez. Thank you, Mr. Chairman. And I am really
	happy that you are conducting this joint hearing.
	I think this provides for the Committee and Subcommittee to
	fulfill its duty of oversight. And conducting these types of
	hearings will help us fix some of the problems that we are
	having with the legislation that we passed.
	My personal opinion is that we made some mistakes, and this
	is an opportunity now to fix out the mistakes that were made.
	Ms. Allegra McCullough, I am curious about your
	interpretation of the statute in the promulgation of the
	implementing regulations, allowing agency contracting officers
	to choose whether to use the 8(a) program or the Hub Zone
	program or the new SDV program. In light of the mandatory
	language contained in both the 8(a) program and the Hub Zone,
	why has the SBA chosen to allow the permissive language, the
	so-called ``may'' language, to take a priority?
	Ms. McCullough. That is the language that was actually
	passed in the statute. We did not really have the discretion to
	change that language.
	However, we would be happy to revisit that language.
	Ms. Velazquez. Can you speak up, please?
	Ms. McCullough. You were talking about the use of the word
	``may'' rather than ``shall,'' in terms of sole-sourcing?
	Ms. Velazquez. No. I am talking about you, the agency
	allowing contracting officers giving parity, when we have the
	statutory language that says that the 8(a) program or the Hub
	Zone program, that they have priority over the SDV program.
	Ms. McCullough. Well, the language, I mean, there is parity
	between the 8(a) and the other programs. But the language in
	the statute indicates ``shall,'' which clearly indicates a
	mandate.
	In the statutes for the SDV, it indicates ``may,'' which
	indicates that it is up to the discretion of that federal
	contracting officer. This is certainly language that, if
	Congress wishes to revisit, we would be more than happy to
	revisit that issue with you.
	Ms. Velazquez. The service-disabled veteran on business
	procurement programs has discretionary language. A contracting
	officer may use the program.
	Under the SBA implementing regulation for PL 108-183, I see
	that it allows the SBA to release a requirement under the 8(a)
	program.
	Would you please describe in what circumstances the SBA
	will agree to such a release?
	Ms. McCullough. Releasing the contracting officer from
	sole-sourcing? Is that what you are asking? I am not quite sure
	that I understand your question.
	Ms. Velazquez. It would allow for releasing the requirement
	of the 8(a) program, specifically the 8(a) program.
	Ms. McCullough. If I am understanding you correctly, what
	it articulates is that there would have to be, if they cannot
	find more than one 8(a) participant, then they could sole-
	source it. But that is something that they must consider.
	I hope I am answering your question. If not, I would be
	more than happy to answer it for you at a later time, when I am
	sure about--
	Ms. Velazquez. I will allow you to answer me at another
	time.
	Ms. McCullough. Okay, I will be happy to.
	Ms. Velazquez. You will be able to send a written
	submission to the Committee?
	Ms. McCullough. I would love to. Thank you.
	Ms. Velazquez. Ms. McCullough, on May 24 the SBA published
	a final rule to the Hub Zone program. In this regulation, the
	SBA proposal to provide parity for the 8(a) and the Hub Zone
	program was not finalized. Am I correct?
	Ms. McCullough. On parity with the 8(a) program, that it
	was not finalized?
	Ms. Velazquez. Yes. On May 24?
	Ms. McCullough. Yes.
	Ms. Velazquez. Okay. In fact, the SBA said it will further
	examine issues raised, and will not amend the rule at that
	time. Is that correct?
	Ms. McCullough. That is correct.
	Ms. Velazquez. But on May 5, the SBA seems to imply, with
	the regulations for the service-disabled veteran-owned business
	procurement program, that, except for existing 8(a) contracts,
	contracting officers can pick and choose whether they will use
	either the 8(a) program, the Hub Zone program, or the newest
	program.
	My question to you is, what is the priority among these
	programs, in light of the fact that 13 CFR 126.607 has not been
	modified?
	Ms. McCullough. We are making certain that we articulate to
	our federal partners that it is extremely important that they
	consider meeting the goals of all of these programs, as best as
	they can.
	Ms. Velazquez. The problem that I have is that you are not
	allowed to pick and choose, in terms of the regulation. You
	cannot pick over one or the other, unless you modify the
	regulation. Did you modify the regulation?
	You answered to me that on May 24, when I asked you, that
	the regulation was not finalized. You said that I am correct.
	Ms. McCullough. That is correct.
	Ms. Velazquez. Yes. But then on May 5, the SBA seems to
	imply, with the regulation that you issued, that for the
	service-disabled veteran-owned business procurement program,
	that except for existing 8(a) contracts, contracting officers
	can pick and choose whether they will use either the 8(a)
	program, the Hub Zone, or the newest program. But you did not
	finalize the rule, the regulation.
	Ms. McCullough. We really wanted to make certain that very
	little time passed before SDVs were able to take advantage of
	the rule.
	Ms. Velazquez. Based on the May 5, can you tell me which of
	the programs has the priority? When a contracting officer is
	going to decide how they are going to do it.
	Ms. McCullough. SBA does not have the discretion to
	actually make that rule. And it is something that we would
	certainly like to revisit with Congress on. But we do not have
	that discretion.
	Ms. Velazquez. Okay, you do not have it. So tell me, who
	created this priority? The current priority listing for 8(a)
	and Hub Zone companies, located at 13 CFR 126.607(e), 8(a)
	companies located in a Hub Zone; two, 8(a) company; third, Hub
	Zone competitive procedures; and fourth, Hub Zone sole-source
	procedures.
	Ms. McCullough. You are saying who established that?
	Ms. Velazquez. Yes. Do you have the legal counsel from SBA?
	Ms. McCullough. We will have to get back to you on that.
	Ms. Velazquez. Who issued this regulation?
	Ms. McCullough. Excuse me?
	Ms. Velazquez. Who issued? Who issued this regulation that
	established this order?
	Ms. McCullough. The original issuer?
	Ms. Velazquez. The one that I just read. Was it SBA?
	Ms. McCullough. SBA issued that rule.
	Ms. Velazquez. Ms. McCullough, in the fourth pages of your
	testimony, you say not one word regarding how the SBA is going
	to police this new procurement program. These are the
	parameters for a joint venture program in the new rule that is
	different than for any other SBA program. The ownership
	requirements for this program are different than for any other
	SBA program. The percentage of work requirements are different
	than for any other SBA program.
	And yet, you have not said one word in your testimony about
	how the SBA is going to ensure this program is not abused. Can
	you please comment on this?
	Ms. McCullough. I will be happy to. With all due respect,
	SBA has and never has had the power to police any procurement
	program offered throughout the federal government.
	We do, however, intend to, through our relationships with
	our federal partners and combined outreach and marketing
	efforts.
	Ms. Velazquez. So how are you going to make sure that the
	program is not abused?
	Ms. McCullough. We will certainly have to make certain that
	this is articulated to our federal partners, that, by all means
	necessary, the integrity of this program must be obtained.
	But again, we do not have the authority to police any of
	our programs throughout the federal agencies.
	Ms. Velazquez. With all due respect, you are wrong. You are
	totally wrong. And legal counsel is there behind you, and they
	can tell you that you are wrong.
	Thank you, Mr. Chairman.
	Chairman Akin. Okay. Thank you, Ms. Velazquez.
	Members of the panel, thank you very much for coming and
	enlighten us on these regulations. And we will now proceed to
	the second panel.
	[Recess.]
	Chairman Akin. Let me extend a warm welcome to our second
	panel. And we are pleased to have you come and testify on such
	an important issue.
	Our first two members, participating members, one will
	testify and the other will not. Is that correct, Mr. Lopez? As
	Co-Chairman of the Task Force on Veterans' Entrepreneurship,
	and Mr. Rick Weidman is the Chairman of the Task Force on
	Veterans' Entrepreneurship. So which will testify?
	Mr. Weidman. Mr. Lopez. We decided to give the kid his shot
	at it, Mr. Chairman.
	Chairman Akin. Okay. Welcome, Mr. Lopez.

	STATEMENT OF JOHN K. LOPEZ, TASK FORCE FOR VETERANS
	ENTREPRENEURSHIP

	Mr. Lopez. Good afternoon, gentlepersons. I believe there
	is a lady remaining.
	Thank you for your kind invitation to testify before the
	distinguished Committees regarding government support of
	service-disabled veteran-owned businesses.
	My name is John Lopez. I am Chairman of the Association for
	Service-Disabled Veterans, and I am Co-Chairman of the Task
	Force for Veterans' Entrepreneurship. I am here with my
	colleague, Rick Weidman, who is the Chairman of the Task Force,
	as well as the Director of Government Relations for the Vietnam
	Veterans of America.
	Without objection, I would ask to submit our testimony for
	the record, and summarize our observations for the Members, in
	respect for your time and indulgence. No objections.
	On behalf of the nation's over 60-million-person veteran
	community, and especially the disabled-in-military-service and
	prisoner-of-war veteran businesses, I would like to express the
	appreciation of the veterans' community for the exemplary
	accomplishments of your committees, on behalf of America's
	service-disabled and prisoner-of-war veterans.
	The Members have demonstrated the highest level of
	commitment, concern, and service to our nation's veterans. It
	is a privilege to address the Members of these two Committees.
	In the four years since the enactment of public law 106-50,
	and the year since the enactment of public law 108-183, the
	impact of the legislation has been negligible. Since March,
	2003 few agency acquisition and contracting officials have
	demonstrated an increased interest in the legislative direction
	to assist service-disabled veterans to maintain their
	rehabilitation through self-employment, as federal prime and
	subcontractors.
	The United States Small Business Administration has
	minimally increased the integration of service-disabled
	veterans into some of the special assistance effort of that
	agency. Outreach materials, standard publications, and routine
	announcements now mention support and assistance for service-
	disabled-veteran enterprises. The level of effort and outreach
	in early 2003 had implied to the procurement community that
	there is no commitment by the federal government to assist
	service-disabled veterans.
	To urge government outreach, and as a stakeholder in the
	outcome, the Association for Service-Disabled Veterans, a
	member of the Task Force for Veterans' Entrepreneurship has
	financed and expanded a previous certified disabled veteran
	interactive database, containing more than 20,000 service-
	disabled-veteran enterprises that is a follow-on of a
	certification process started in 1989. The intent was if they
	were unable to find service-disabled veterans, there was a
	database that had been developed since 1982, starting in
	California, which has over 20,000 vetted by the legislative
	directive of the California Legislature service-disabled
	veterans.
	The second year, the yearly release of data pertinent to
	agency small business procurements, the summary, what is called
	the Summary of Actions and Dollars Reported on SF279 and SF281
	by Agency, continues to report minimal progress to the 3-
	percent legislative goal for disabled-veteran participation.
	A telephone sample by ASDV of that method of calculation of
	that report, of the method of calculation of the data in those
	reports, reveals no increased accuracy of dollars, action, or
	appropriate categorization in those reports. Inevitably, the
	erroneous information misleads the US Congress, and subverts
	the intent of public law 106-50 and public law 108-183.
	Sadly, a perceived lack of commitment has also been
	repeatedly voiced to service-disabled-veteran enterprises by
	off-the-record comments of procurement officials. Such as,
	service-disabled veteran assistance is just a goal. If the
	Congress had been serious about helping service-disabled
	veterans, they would have legislated mandatory requirements,
	not unaccountable goals.
	While the Task Force firmly believes that the Congress is
	serious about service-disabled veterans, the perception
	advanced by procurement officials contrasts sharply with the
	legislative intent of public law 106-50 and public law 108-183.
	The commitment of the private sector prime contractor is
	even more abysmal. Service-disabled-veteran enterprise requests
	to participate as subcontractors has been met with negative
	responses and disinterest.
	As a routine response to service-disabled-veteran
	enterprise requests for procurement participation, prime
	contractors initially profess ignorance, and protest that
	government procurement officials never mentioned service-
	disabled-veteran enterprises. This is followed by subsequent
	protestation that prime contractors are exempted from
	participation by variously-invoked parsing of the regulatory
	language, special procurement official dispensation, or that
	they are not performing contracts that are subject to
	regulation.
	There are no clear villains in the failure to assist the
	service-disabled veterans of our nation. Rather, there is a
	need for more specific direction from the United States
	Congress, even at the risk of cries of Congressional micro-
	management by the federal bureaucracy.
	It is imperative that your Committee takes initiative in
	establishing the legislative requirements that will permit our
	nation's disabled-in-service and prisoner-of-war veterans to
	participate more fully in the economic system they sacrificed
	to preserve.
	It is respectfully requested that public law 106-50 and
	public law 108-183 be amended and expanded to provide
	authorized, directed, specific, and mandatory participation by
	service-disabled veterans and prisoner-of-war veterans, in all
	federal procurement, whether through inclusion in the various
	set-aside provisions of the Small Business Act, as amended, or
	in the newly-included sections of that Act.
	Only the active application of this Committee's authority
	will ensure that entrepreneurship is an available
	rehabilitation alternative to those that sacrificed for the
	security and prosperity of our nation.
	Thank you. I would be pleased to respond to any questions,
	as would my colleague, Mr. Weidman.
	[Mr. Lopez's statement may be found in the appendix.]
	Mr. Brown. [presiding] Thank you very much, Mr. Lopez. And
	we will have questions at the very end.
	Next is Professor Steven L. Schooner, Co-Director of the
	Government Procurement Law Program, George Washington
	University Law School. Welcome.

	STATEMENT OF PROFESSOR STEVEN L. SCHOONER, GOVERNMENT
	PROCUREMENT LAW PROGRAM, GEORGE WASHINGTON UNIVERSITY LAW
	SCHOOL

	Mr. Schooner. Chairman Brown, Congressman Michaud, Chairman
	Akin, Congressman Udall, and members of the Subcommittee, thank
	you. I appreciate this opportunity.
	Let me begin by joining the chorus of those who recognize
	that service-disabled veterans deserve our respect and
	attention for their lasting sacrifices. Having spent my entire
	life affiliated with the United States Army, these issues
	strike particularly close to home.
	While this program was intended to benefit a deserving
	class of businesspeople, however, I fear that the rush to
	implement the program risks inefficiency in the procurement
	system, and at worst, potential abuse.
	My primary concerns are, first, empirically it is unclear
	that the program is the most efficient tool to achieve the
	desired end.
	Second, rather than creating new business opportunities,
	the program merely escalates infighting within the small
	business community.
	Third, certain aspects of the program raise troubling
	issues of accountability and oversight.
	And fourth, the program further burdens an already-thin
	federal acquisition work force.
	For example, the initial regulatory flexibility analysis
	and SBA's analysis makes clear we do not know how many and what
	type of service-disabled veteran-owned small businesses exist.
	A survey or study, possibly a joint effort of the SBA, the VA,
	and the Commerce Department, might be immensely valuable.
	If, for example, a significant percentage of these firms
	fall into the comp demo categories, the set-aside provisions
	would be deemed ineffective. As this Committee well
	understands, the small business competitiveness demonstration
	program bars agencies from setting aside contracts for small
	businesses in certain industries where small businesses
	historically have proven themselves competitive.
	A better understanding of the SDVOSB market and its
	capabilities, the industries in which the capacity exists, the
	extent to which the capacity is utilized by the federal
	government will permit a much more targeted and effective
	outreach, and hopefully business development, program.
	Further, the program creates no new opportunities for small
	business; it merely redistributes opportunities. The program
	further subdivides the existing small business piece of the
	government's procurement pie by pitting small businesses
	against each other.
	Similarly, government-wide goals may not be the most
	effective tools if your purpose is to broadly distribute
	contract opportunities to emerging firms.
	Experience suggests that once an aggressive goal is in
	place, it favors the most successful or strongest existing
	firms. Because the goal focuses upon the percentage of dollars
	in contract awards, contracting officers have an incentive to
	award the largest possible contract to the smallest number of
	eligible firms. So the chief beneficiary tends to be robust
	small- to mid-sized firms, many of which strategically avoid
	formal growth by subcontracting or outsourcing tasks.
	In addition, the system will be very difficult to police.
	First, self-certification opens the door for abuse. That is why
	both the SDV and the Hub Zone programs require certification,
	and I think that is appropriate here.
	In addition, sole-source contracting contradicts one of the
	fundamental premises upon which our system is based:
	competition. And we are all familiar with the Competition in
	Contracting Act, and why it is in place.
	In addition, sole-source contracting presents significant
	risks to emerging veteran-owned firms. Small firms that may not
	fully understand the contractual obligations are all too eager
	to assume their appropriate risks. When those firms fail, it
	disrupts the government operations. But in addition, because
	the government increasingly relies on past performance
	evaluations, this can prove potentially fatal, a professional
	death knell, to an emerging small business in the government
	marketplace.
	Finally, further proliferation of set-asides in small
	business programs adds complexity and inefficiency in the
	procurement system, and that is problematic because throughout
	the 1990s, Congress mandated acquisition work force reductions.
	There is an insufficient number of qualified federal
	acquisition professionals left to conduct appropriate market
	research, plan acquisitions, maximize competition, comply with
	Congressionally-imposed social policies, administer contracts
	to assure quality control and compliance, resolve protests and
	disputes, and close out contracts.
	I remain disappointed by Congressional unwillingness to
	intervene on behalf of the acquisition work force, particularly
	in light of the recent experience in Iraq, where, for example,
	our Program Management Office outsourced its management of its
	contractors. The acquisition work force crisis is exacerbated
	by the Administration's emphasis on competitive sourcing, and
	it will get worse before it gets better. So asking this work
	force, without additional resources, to cater to special
	interest groups is unrealistic, and arguably fiscally
	irresponsible.
	The bottom line is in attempting to balance these competing
	concerns, providing good opportunity to veterans and small
	businesses, while obtaining supplies in an economically-
	efficient manner, patience seems to be an appropriate response.
	That concludes my testimony. Thank you for the opportunity,
	and I would be pleased to answer any questions.
	Mr. Brown. Thank you very much, Mr. Schooner.
	Gentlemen, I am going to skip over you and go to Mr.
	Hudson, if that is in order. And Mr. James Hudson is the
	Marketing Director of Austad Enterprise, Inc.
	And thank you, Mr. Hudson.

	STATEMENT OF JAMES C. HUDSON, AUSTAD ENTERPRISES, INC.

	Mr. Hudson. Good afternoon, Chairman Brown, Chairman Akin,
	other distinguished members of the subcommittees, dedicated
	members of the respective staff, my colleagues both in and out
	of the government today.
	I am a service-disabled Vietnam veteran. My wife Fran, also
	a service-disabled veteran, and I work together in a
	corporation which publishes the Veterans' Business Newswire, an
	e-newsletter disseminated to more than 25,000 service-disabled
	and other veterans in small business.
	We also publish a directory for small business owners,
	called ``Purchasing Contacts in Major US Corporations.'' And we
	own a video and audio conferencing company, whose customers
	include federal agencies.
	I have worked in the field of veterans' affairs and
	disability rights since my discharge from the Army in 1970. My
	testimony today is based largely on my own experience, but also
	on the experience of our readers, and their emails to us and
	their phone calls. Also, we have published a brochure
	immediately after the passage of public law 108-183. Joseph
	Forney, myself, and my wife made that a downloadable Microsoft
	Publisher and .pdf file. And we have had more than 500
	downloads since February, when that was made available to
	service-disabled veterans in small business. And so we have
	gotten feedback from them, as well.
	And I can tell you that we have also had efforts over the
	last three years to market to federal agencies and prime
	contractors, and that is the basis of my testimony today.
	We have attended conferences in Colorado, New Mexico,
	Washington, D.C., other states, at the urging of small business
	officials. We have traveled to other states to meet with
	federal buyers. As a result of those efforts, we have had sales
	of $10,000 in the last, with federal agencies.
	We have corresponded and spoken with literally 1500
	veterans, and most of them non-service-connected, but I would
	say approximately three or four hundred service-disabled
	veterans in the last several years. We personally know just a
	few who describe themselves as being successful in the federal
	arena.
	I would urge the Committees to study the issue of how many
	new service-disabled veterans are contracting with federal
	agencies. The Federal Procurement Data Center can pull that
	information from their data.
	For example, the Veterans' Administration in fiscal year
	2002 was contracting with, on average, three to four new
	service-disabled veterans per month. Those are companies that
	did not have previous contracts with that agency, or any other
	federal agency, prior to those months. That gives you a better
	picture of how public law 106-50 has been implemented.
	This fiscal year, fiscal year 2003, service-disabled
	veterans should have earned a gross revenue of $7.5 billion.
	Instead, they brought in $549 million, two-tenths of 1 percent
	of the procurement budget, instead of the 3-percent goal that
	was set. And that total is actually $5 million less than the
	$554 million that was targeted, or that was actually earned two
	years earlier, in fiscal year 2001.
	This is especially hurtful to our nation's service-disabled
	veterans in small business, to know that more than half of all
	federal agencies, more than half of the 60 federal agencies
	spent zero percent of their budgets with service-disabled
	veterans. That includes the Office of the White House, the
	Executive Office of the President, the Small Business
	Administration, the Department of Labor; agencies that you
	would expect to lead, not bring up the rear in procurement
	spending. SBA, for three years straight, has spent zero dollars
	with service-disabled veterans.
	It was, as you recall, Angela Styles, the top federal
	procurement official, that came to this Committee last year and
	said that the federal government was doing an abysmal job in
	procurement spending for service-disabled and other veterans.
	And that helped to spur the Committee to take the action with
	respect to public law 108-183. And we appreciate that effort
	very much. This gives new hope to service-disabled veterans.
	But I have to say that we would be mistaken if we thought
	that thousands of service-disabled veterans have not dropped
	out of the system. In talking to them, we have learned that
	many veterans just are not going to come back one more time.
	Over the last 20, 30 years since the Vietnam War ended, the
	treatment that they received by the SBA and other resource
	partners of the government has been poor, and they are just not
	going to come back and try one more time. And these zeroes that
	have been piling up in the federal agencies over the last five
	years, you cannot knock on those doors over and over again and
	not, in some cases, drop out. So we have lost many service-
	disabled veterans from the system. That is just a reality.
	We were encouraged with the brochure download, so we know
	some are still in the fight. And the outreach efforts of the
	government have brought in new service-disabled veterans. So we
	have to respond to their needs, and I know the Committees are
	willing to do that and are making their effort.
	The focus of your Committee today is to talk about outreach
	efforts, and whether they are making a difference since the
	passage of this new law. I wish I could say it has been more
	positive. Joseph and I have been out knocking on doors, and you
	will learn from Joseph his response. But I can tell you that my
	own has not been positive.
	I will tell you that--is the time almost expired? I am
	sorry.
	Mr. Brown. You are 1:18 over already, so--and I am just
	waiting on Joseph, so go ahead.
	Mr. Hudson. I am waiting on him, too. Let me just wrap up
	by saying that though the outreach efforts have not been
	positive, I believe that one of the actions that the Committees
	may take that would be beneficial would be to accept the fact
	that we are not going to see much positive action by the
	federal agencies until they have a program in place that will
	give more of a case-managed approach to service-disabled
	veterans. Especially veterans with more severe disabilities.
	They need more follow-along, they need more intensive service.
	And the idea of handing them a brochure referring them to an
	SBA or a small business development center is not going to be
	sufficient. They need follow-along perhaps for years.
	The 8(a) program for some businesses has been successful,
	but they do not need to be referred to the 8(a) program, God
	forbid. But they do need that kind of intensive, sustained
	effort.
	[Mr. Hudson's statement may be found in the appendix.]
	Mr. Brown. Thank you, Mr. Hudson. And now we have got the
	wrap-up member of the panel, Mr. Joseph Forney, President of
	VetSource, Inc. Welcome.

	STATEMENT OF JOSEPH K. FORNEY, VETSOURCE, INC.

	Mr. Forney. Mr. Chairman, Members of the Committee who have
	stayed, I appreciate the opportunity to testify in front of
	you. I was hoping that Chairman Akin would stay. I am from his
	home state of Missouri. And what we say in Missouri, show me.
	Mr. Brown. Well, you know, he cannot be in two places at
	one time. And I guess he is on the Armed Services Committee,
	and the mark-up over there has taken priority. But all of this
	will be recorded, and he will have access to those minutes.
	Mr. Forney. I just wanted to hear him say ``show me.''
	Because that is what I am telling you is I ain't seen much yet.
	And my eyes are wide open, sir. We have been out in the field,
	as Jim mentioned, trying to sell our goods and services. And to
	hear over and over again that this is just a goal.
	I have a signed letter from Department of Agriculture where
	they stated, from their Office of Procurement Policy, that it
	is discretionary, and not mandatory. And so therefore, they are
	not going to participate.
	I was a little bit leery sitting behind the young lady from
	SBA after the way that Ms. Velazquez took to her. But as Jim
	mentioned, their participation is zero.
	Department of Defense was up here. The Army is at .02, two
	one-hundredths of 1 percent. At this rate--I am sorry, and I do
	not want to confuse you with facts and figures and fancy
	ciphering--.04. At this rate it would take them 300 years to
	get to the 3-percent goal.
	Now, I do not know about me, but I do not think Mr. Lopez
	is going to make it.
	The reasons that they claim, there are not enough of us, we
	are not capable, is ludicrous. I sell air conditioning filters
	along with the food items that I sell to states, prisons,
	school districts back in California. I sell them to utility
	companies; namely, Semper Utility, which is San Diego Gas and
	Electric and Southern California Gas. I have proven myself in
	the public sector.
	Just for a little drill, I checked the GSA schedule. Their
	best price for the standard air conditioning filter was $1.73.
	I would have trouble sleeping at night if I sold them to you
	for a dollar. That is just one example of how we can provide
	goods and services.
	We have all been trained. We have the experience, the time,
	the knowledge within the private sector. Yet when I tried to
	sell these same air conditioning filters to the VA, I could not
	even get a call back.
	I have been to two different VISNs, VISN 22, my local one,
	VISN 19 up in Denver. And I have been there numerous times. All
	I wanted them to do was find out how they buy air conditioning
	filters. I could not even get a response. I had to go to the VA
	mothership over here and get the Head of Acquisitions, Mr.
	Derr, and he is going to check into it. But not everyone is
	going to have the capability to come to Washington to go to VA
	headquarters to find out how they buy air conditioning filters.
	Because what if it is something more complicated, like pencils?
	I am glad to see the Ranking Member come back. I love that,
	with the SBA, because while you were gone, we pointed out that
	their participation was zero. So at this rate, it would take
	never?
	I will submit my testimony. If I can answer any questions,
	I would be glad to.
	[Mr. Forney's statement may be found in the appendix.]
	Mr. Brown. Thank you very much, Mr. Forney.
	This has been a real eye-opener. We pass regulations and
	laws; we do not know how they are being perceived or
	implemented through the process. This was real eye-opening for
	me.
	I have some questions; I will submit them for a written
	response. But do we have any questions from the panel? Mr.
	Udall?
	Mr. Udall. Thank you, Mr. Chairman.
	Mr. Lopez, in your testimony you talk about the integration
	of service-disabled veteran-owned businesses and the SBA's
	efforts. And also about the SBA's inclusion of SDVBs in the
	agencies' publications and outreach materials. And yet you also
	express a concern about ``the lack of effort and outreach in
	2003.''
	What kind of outreach have you been expecting to see?
	Mr. Lopez. I make that distinction because they have a
	policy of using all of their old materials first in respect to
	government efficiency.
	If you read their old materials, including some that were
	recently printed, you will find out they do not even mention
	service-disabled veterans. It is only their new literature that
	is just coming out now, after the effort of these Committees,
	that they begin to talk about service-disabled veterans.
	What I expect, I expect activity on the part of the staff.
	I expect seminars in training their personnel, so the personnel
	knows what a veteran is. I expect them to be very cognizant of
	the fact that you have a peculiar type of population here. You
	do not have the normal population. They have limited energy.
	They have a great deal of cerebral capacity. But you have to be
	able to get to them, not wait for them to come to Washington,
	D.C., or any of the other regional offices.
	Mr. Udall. Go ahead, please.
	Mr. Weidman. If I may, please, Mr. Udall. There was a
	question today about how many veteran entrepreneurs there are.
	In the first session of the 105th Congress, the Congress
	mandated that there be a study done of how many people are
	there. That was 1997.
	That report was finished--it was delayed because of OMB
	delays, and because of SBA--but it was finally completed and
	accepted in 1999, just before Veterans' Day. No, excuse me,
	1998.
	It has still not been officially delivered to the Congress.
	I know that Chairman Smith and Ranking Member Lane Evans
	wrote to Mr. Pereto over a year ago, about a year and a half
	ago. It still has not been received.
	May I suggest, if at all possible, with the Chairman, that
	that be included somehow in this record? Or at least some kind
	of reference to a website when it is posted.
	But I think the key thing is this. What you seem to be
	suggesting, sir, is that the SBA is heavily weighted towards
	doing this outreach for veterans. No other agency, as long as
	SBA has zero, zero contracts with service-disabled veterans, is
	likely to pay them a whit of attention.
	Similarly, how many service-disabled veteran business
	owners do you think are going to trust an agency that, even by
	accident, ought to have a few contracts with service-disabled
	veterans, but which has none, sir?
	Mr. Udall. Thank you. And thank you, Mr. Lopez, for your
	expectations. At least for me, I believe we should be pushing
	on this front.
	Professor Schooner, in your testimony you speak of the need
	for a study or survey to gain a better understanding of the
	SDVB market and its capabilities. Can you talk a little bit
	more about what impact proceeding without knowledge of the
	market can have?
	Mr. Schooner. Well, if you do not mind, let me--
	Mr. Udall. And go ahead, if you want to elaborate a little
	bit.
	Mr. Schooner. Let me speak to the importance of a study. At
	a minimum, whether you begin with the process that was already
	done and get that completed and updated, until we know how many
	potential businesspeople there are, and much more importantly,
	in what industries they pursue government business or want
	government business, we are shooting in the dark. It is the
	most inefficient way in the world to proceed by shotgunning out
	in the world.
	Let us find out where the strengths are, and target those
	businesses directly. It is exactly what you have heard the
	others say. Information here is power. And without information,
	what we are doing is we are putting a burden on everyone that
	is not going to get you a return on investment.
	The best precedential example I can give you on this was
	after Aderand, when we went through the promulgation of the
	rules for the revised SDV program, the Department of Commerce,
	in conjunction with the Justice Department, and later the
	Council on Economic Advisors, spent years working with the
	SMOBY and the SWOBY data, trying to get this data. It is very,
	very difficult to find out which industries are important. And
	we may or may not come back to comp demo. But it is
	tremendously important to know where you are going, and where
	you are going to get return on investment.
	Mr. Udall. Thank you. Thank you. And Mr. Forney, given your
	recognition as a veterans' advocate, have you been approached
	by a federal agency to assist agencies in identifying qualified
	veteran-owned companies? And I can submit that one for the
	record.
	Mr. Brown. Mr. Udall, if you would. I would just like to
	make an announcement, as we just got an email that we might
	have votes within the next 10 minutes.
	And so, just to give the other members of the panel a
	chance to--
	Mr. Udall. Okay. I will submit that one for the record, and
	let the other members of the panel question.
	Mr. Brown. Thank you very much.
	Ms. Herseth. If Mr. Udall is going to submit that in
	written form, I would like that same question, if you would
	provide an answer there. Because my concern--not a concern, but
	a hope--is that you, as a veterans' advocate, other
	organizations that serve as advocates for veterans, are
	involved. You are being asked by federal agencies. Because it
	is sort of information both ways that we are lacking. It is
	information of the qualified businesses having the information
	of what the program is, but it is also a lack of information
	for the agencies of the implementation of the program.

	Mr. Forney. Exactly. And in Los Angeles we have the LA Area
	Service-Disabled Veteran Business Network that we started, just
	as an ad hoc group. We try to outreach through public service
	announcements for veterans who are either in business or
	starting a business.
	I know Mr. Weidman and myself have gone over to Walter
	Reid. And one of the most important questions these young men
	and women returning home wounded and forever changed is, will I
	still be able to go to school? And what if school is not the
	best approach for their rehabilitation? What if it is
	entrepreneurship, because they are unemployable? This is
	something that we try to outreach as much as possible.
	To get to both questions, there is a state program, as Mr.
	Lopez mentioned, in California. There is over 1,000 identified
	state-certified service-disabled veteran-owned firms. And the
	state estimates that there is over 10,000.
	But with such hollow promises, why should we bring them
	out? A lot of people are reluctant to participate.
	Ms. Herseth. The only other thing I want to add, just so
	that it is a comment reflect in the record, based on the study,
	Mr. Weidman, that you said was authorized, we think was
	completed but has not yet been delivered. And then--go ahead.
	Mr. Weidman. We have a copy, and I have it on cd/rom,
	Madame. And I will have it to your office before tomorrow
	morning.
	Ms. Herseth. Okay. The only comment I want to add, though,
	is that I do think it needs to be updated. Because in South
	Dakota we have a significant number of National Guard
	reservists that are currently serving, that are going to be
	coming back, that are concerned, because they are small
	business owners, about the effect that that has had on their
	small business during a deployment of 12 to 18 months. And I
	think that we should see that, but also recognize the need for
	an update of that study.
	Mr. Weidman. The Task Force on Veterans' Entrepreneurship
	is engaged in preparing now a report to the nation that will be
	delivered this coming October.
	The principal investigator is the same gentleman, Dr. Paul
	R. Comacho from the William Joyner Center for War, the study of
	war and its social consequences, at the University of
	Massachusetts at Boston. The steering committee is chaired by
	Major General Chuck Henry, and co-chaired by Wayne Gatewood,
	who is a successful business entrepreneur, and a small
	businessperson veterans' advocate of the year last year for the
	District of Columbia.
	We will be glad to brief you, and we would welcome any
	academic input from George Washington Law or anyone else, as we
	prepare this report and essentially update that material,
	ma'am.
	Mr. Brown. That is the vote, but we still have got a few
	minutes.
	Ms. Velazquez, did you have any questions?
	Ms. Velazquez. Thank you, Mr. Chairman. First I would like
	for the record to reflect the fact that in the House-passed
	version of the bill that established this program, Democrats
	from the Small Business Committee insisted on such a study.
	But I would like to ask Professor Schooner, you questioned
	the credibility of this 3-percent goal. What do you think a
	reasonable goal should be?
	Mr. Schooner. In any situation like this, the most
	reasonable goal is what the empirical evidence suggests is
	feasible. But we also have precedent for better ways of
	approaching this.
	For example, the Hub Zone program was a classic example,
	where you ended up with a very similar goal, but at least you
	staggered the goal.
	All I am saying is, if you are already in a situation where
	you know you need the information, do not set the goal until
	you have the information. If the information suggests that you
	could have a 5- or 10-percent goal, so be it. But do not set
	the goal arbitrarily. I think that is a pretty simple point.
	Ms. Velazquez. Professor, you appeared to indicate that
	there are structural problems with the underlying statute. The
	House-passed version of the bill that established this program
	initially had a number of provisions pushed by the Small
	Business Committee Democrats. These provisions were intended to
	process the program, and to ensure the safety and soundness of
	the program.
	The House-passed version included, first, a certification
	program administered by the SBA. The final bill did not include
	that. A study to identify how many service-disabled veterans
	own businesses; and of those, what is the primary industry of
	the businesses. The final underlying statute does not contain
	this.
	And third, an order of precedence, so that contracting
	officers can identify clearly what the priorities of Congress
	are. The final statute does not have this.
	All three of these provisions were kept out of the final
	product. My question to you is, what is your view of the
	underlying statute missing these?
	Mr. Schooner. Well, I think we are all in agreement that
	the study would be a good thing, and we have already spoken
	about that.
	I cannot argue strongly enough for a certification in a
	program like this. We saw in the SDV program, we saw in the Hub
	Zone program, how important it is to inject credibility into
	the system. And I am assuming that the gentleman sitting at the
	table with me fully recognizes the worst thing that can happen
	in a program like this is if individuals fraudulently represent
	themselves and get these contracts. So they should have no
	concern whatsoever with an open and credible certification
	system.
	As for the order of precedence, I think it is pretty clear,
	based on the questions you asked earlier, that we have now
	created in the regulations a conflict between the 8(a) program,
	the Hub Zone program, and the others. And this type of
	confusion serves no one. It will not help veterans, but it
	impacts the entire procurement process. And I think an order of
	precedence would be a step in the right direction.
	Ms. Velazquez. Thank you, Professor. Mr. Lopez, in your
	comments on the interim rule implementing PL 108-183, you
	suggest that contracting officers should be allowed to use
	service-disabled veteran-owned businesses for requirements that
	are currently being performed by 8(a) companies. Why do you
	believe that contracts that are currently performed should be
	taken away from 8(a)?
	Mr. Lopez. Do I say that, or is it in our task force
	report? I did not make any such comment.
	Ms. Velazquez. In the task force, yes.
	Mr. Lopez. Ah, okay. Then you have to direct that to the
	task force in writing. I did not make that comment.
	Ms. Velazquez. But do you agree with that assessment?
	Mr. Lopez. I beg your pardon?
	Ms. Velazquez. Do you agree with that?
	Mr. Lopez. No. I do not even address that. I do not think
	that is an issue.
	But if I may, with permission, Congresswoman, I would like
	to address something that Mr. Schooner has said, and I take a
	great deal of objection to.
	And that is that academic inertia is not an option. This is
	a unique population. The intent of Congress is to assist
	service-disabled veterans, not lighten the workload of
	government officials, nor create information for government
	archives.
	We have already cheated the world's greatest population,
	the World War II veterans. They are not participants in this
	program because they were never given assistance. We will not
	go through that again for our Vietnam veterans, our Bosnia
	veterans, our Gulf veterans, or our Iraq veterans.
	Ms. Velazquez. I do not think that that is what the
	professor--
	Mr. Lopez. That is the intent and direction of these
	recommendations. And that is to further delay. And we will not
	have further delay.
	Ms. Velazquez. I do not know what you are talking about,
	but let me tell you this.
	We will do everything possible to help disabled veterans.
	Mr. Lopez. Madame--
	Ms. Velazquez. Excuse me, sir, I am talking here. We will
	do everything that we can.
	But the pie is too small. We cannot rob Peter to pay Paul.
	And what we need to do is to expand the program and the
	resources so that we could allow disabled veterans to
	participate, but it cannot be at the expense of the 8(a)
	program.
	Mr. Lopez. May I respond to that?
	Ms. Velazquez. No, you do not have to respond. I am not
	asking you a question, I am making a statement.
	Thank you very much.
	Mr. Lopez. May I make a statement? Mr. Chairman, may I make
	a statement?
	Mr. Brown. You have got 30 seconds.
	Mr. Lopez. I agree with you. I agree with you. But first of
	all, your first premise is wrong; there is no size to the pie.
	That is an imaginary creation of dominant corporations
	restricting the size of the contracts available to those
	disadvantaged populations. There is no size to the pie.
	Let me add, if I may, Mr. Chairman.
	Mr. Brown. Okay.
	Mr. Lopez. Our comrades are dying at the rate of 1100 a
	day. We do not have time for these machinations, academic
	machinations. The world is passing us by. We have a closing
	window of opportunity, not an opening window of opportunity. We
	must move quickly, or we will be passed.
	Mr. Brown. Let me see. I do not think there is any
	misunderstanding in this panel that we want to be absolutely
	sure that we address the problem that will allow more input,
	more involvement in the procurement process.
	We do not want to get tied up with the mire of all the red
	tape. We want to try to solve that. That is the purpose of this
	hearing.
	And I appreciate you all coming, but we must go vote. Thank
	you very much.
	[Whereupon, at 3:52 p.m., the Subcommittee meeting was
	adjourned.]

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