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