Apr112013
Hearing Transcript on U.S. Department of Veterans Affairs' Center for Veteran Enterprise.
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U.S. DEPARTMENT OF VETERANS AFFAIRS’ CENTER FOR VETERANS ENTERPRISE
HEARING BEFORE THE SUBCOMMITTEE ON ECONOMIC OPPORTUNITY OF THE COMMITTEE ON VETERANS' AFFAIRS U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED ELEVENTH CONGRESS SECOND SESSION MARCH 11, 2010 SERIAL No. 111-67 Printed for the use of the Committee on Veterans' Affairs
U.S. GOVERNMENT PRINTING OFFICE For sale by the Superintendent of Documents, U.S. Government Printing Office
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CORRINE BROWN, Florida |
STEVE BUYER, Indiana, Ranking |
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Malcom A. Shorter, Staff Director SUBCOMMITTEE ON ECONOMIC OPPORTUNITY
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records of the Committee on Veterans' Affairs are also published in electronic form. The printed hearing record remains the official version. Because electronic submissions are used to prepare both printed and electronic versions of the hearing record, the process of converting between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process is further refined. |
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C O N T E N T S
March 11, 2010
U.S. Department of Veterans Affairs’ Center for Veterans Enterprise
OPENING STATEMENTS
Chairwoman Stephanie Herseth Sandlin
Prepared statement of Chairwoman Herseth Sandlin
Hon. John Boozman, Ranking Republican Member
Prepared statement of Congressman Boozman
WITNESSES
U.S. Department of Veterans Affairs, Tim J. Foreman, Executive Director, Office of Small and Disadvantaged Business Utilization
Prepared statement of Mr. Foreman
American Legion, Joseph C. Sharpe, Jr., Director, National Economic Commission
Prepared statement of Mr. Sharpe
American Veterans (AMVETS), Christina M. Roof, National Deputy Legislative Director
Prepared statement statement of Ms. Roof
National Veteran-Owned Business Association, Scott Denniston, Director of Programs
Prepared statement of Mr. Denniston
Paralyzed Veterans of America, Richard Daley, Associate Legislation Director
Prepared statement of Mr. Daley
Vietnam Veterans of America, Richard F. Weidman, Executive Director for Policy and Government Affairs
Prepared statement of Mr. Weidman
SUBMISSION FOR THE RECORD
International Franchise Association, David French, Vice President, Government Relations, letter
MATERIAL SUBMITTED FOR THE RECORD
Post-Hearing Questions and Responses for the Record:
U.S. DEPARTMENT OF VETERANS AFFAIRS’ CENTER FOR VETERANS ENTERPRISE
Thursday, March 11, 2010
U. S. House of Representatives,
Subcommittee on Economic Opportunity,
Committee on Veterans' Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 1:47 p.m., in Room 334, Cannon House Office Building, Hon. Stephanie Herseth Sandlin [Chairwoman of the Subcommittee] presiding.
Present: Representatives Herseth Sandlin, Adler, and Boozman.
OPENING STATEMENT OF CHAIRWOMAN HERSETH SANDLIN
Ms. HERSETH SANDLIN. Good afternoon, ladies and gentlemen. The Committee on Veterans' Affairs, Subcommittee on Economic Opportunity, hearing on the U.S. Department of Veterans Affairs' (VA) Center for Veterans Enterprise (CVE) will come to order.
I appreciate our panelists' patience in starting the hearing late because of a series of votes. Thank you for your patience.
I now ask unanimous consent that all Members have 5 legislative days to revise and extend their remarks and that written statements be made part of the record. Hearing no objection, so ordered.
Today's hearing will provide veterans service organizations (VSOs) the opportunity to highlight issues of concern regarding responsibilities that fall under the Center for Veterans Enterprise.
Furthermore, today's hearing will afford the recently appointed Executive Director of the Office of Small and Disadvantaged Business Utilization (OSDBU) with the opportunity to hear from the veterans' community and provide the Subcommittee an update on matters relating to the Center for Veterans Enterprise.
As many of our witnesses will testify, small businesses are an essential component to a strong economy. This Subcommittee has held several hearings on the challenges faced by our Nation's veterans seeking to start and develop a small business.
We have also heard from many members of the National Guard and Reserve components who find it challenging to maintain their small businesses when called to active duty.
I want to assure our panelists that this Subcommittee will continue to work to remove barriers that prevent veterans from accessing services that may help them succeed in their small business ventures.
Furthermore, I welcome the Department of Veterans Affairs incoming Executive Director who will oversee the Center for Veterans Enterprise. I look forward to hearing more about how Mr. Foreman's leadership will enforce current laws and meet the needs of veteran-owned small businesses in a challenging economy.
I now recognize our distinguished Ranking Member, Mr. Boozman, for any opening remarks he may have.
[The prepared statement of Chairwoman Herseth Sandlin appears in the Appendix.]
OPENING STATEMENT OF HON. JOHN BOOZMAN
Mr. BOOZMAN. Thank you very much, Madam Chair.
You and I first worked on creating additional tools for VA to meet and exceed the contracting goals for disabled veteran-owned small businesses in the 109th Congress. The result of our efforts culminated in Sections 502 and 503 of Public Law 109-461. I believe it is fair to say the passage of that law was greeted very favorably by veteran small business owners.
Unfortunately, we have a situation where VA appears to be dragging its feet in implementing at least one of the very important provisions of that law and that is establishing a database of veteran and disabled veteran-owned small businesses whose status as a veteran-owned small business has been verified by the VA.
In other words, the only companies that should be viewed by someone searching the database are those which have been vetted by VA. Unfortunately, that is not the case.
[Slide]
Mr. BOOZMAN. As you can see on the monitors, we are really high tech today, we have accessed the VA's vendor information pages database of veteran-owned businesses.
Although the law clearly limits the businesses listed in the database to those whose veteran-owned status has been validated by VA, the monitor clearly shows businesses that have not been validated.
VA staff have pointed out that the little wreath logo notes a VA certified veteran-owned small business (VOSB). I do not know about you, but it does appear that it is hard to view that as satisfactory to separate the verified from the unverified.
First of all, there is no legend that identifies the symbol as meaning the company has been verified. For example, on the screen shown here, seven of the ten businesses listed have not been verified. Additionally, it appears the database is also searchable for other set-aside groups such as HUBZone or 8(a).
The intent of creating the database was to provide VA contracting officers and other Federal agencies seeking to contract with real veteran-owned businesses a source that could be trusted. Whether a business self-certifies it is veteran owned while VA is doing its homework on the business, it should not be listed.
Finally, as I said, Madam Chair, we started working on this in 2006 and it is now over 3 years since passage of Public Law 109-461. Literally it is taking years to comply with what the Congress and the President has told VA what to do.
VA has presented Congress with four budgets since these provisions became law and, to my knowledge, not one of those budgets requested any additional resources to comply with the law.
As a result, as the U.S. Government Accountability Office (GAO) has reported extensively, companies falsely representing themselves as veteran and disabled veteran-owned have stolen millions of dollars in contracts from real veteran-owned small businesses.
I believe if VA had implemented the law expeditiously in accordance with the Congressional intent, those millions in taxpayer dollars would be in the coffers of real veteran-owned businesses.
The icing on the cake is that some of the businesses identified as fraudulent are still doing business with VA despite the Secretary's authority to debar them.
Finally, Madam Chair, I ask unanimous consent to have a submission by the International Franchise Association made part of the record.
With that, I yield back the balance of my time. Thank you.
[The prepared statement of Congressman Boozman appears in the Appendix. The letter from the International Franchise Association is included in the submissions for the record, which appear in the Appendix.]
Ms. HERSETH SANDLIN. Thank you, Mr. Boozman.
The document you referred to will be entered into the record as requested.
I would ask any other Members if they have opening statements to submit them for the record.
I thank Mr. Boozman for his opening remarks.
I want to welcome our panelists testifying before the Subcommittee today.
Joining us on our first panel is Mr. Scott Denniston, Director of Programs for the National Veteran-Owned Business Association (NaVOBA); Mr. Richard Daley, Associate Legislation Director for the Paralyzed Veterans of America (PVA); Mr. Rick Weidman, Executive Director for Policy and Government Affairs for the Vietnam Veterans of America (VVA); Mr. Joseph Sharpe, Director of the National Economic Commission for the American Legion; and Ms. Christina Roof, National Deputy Legislative Director for AMVETS.
I welcome you all back to the Subcommittee.
Mr. Denniston, we will start with you. You are recognized for 5 minutes.
STATEMENTS OF SCOTT DENNISTON, DIRECTOR OF PROGRAMS, NATIONAL VETERAN-OWNED BUSINESS ASSOCIATION; RICHARD DALEY, ASSOCIATE LEGISLATION DIRECTOR, PARALYZED VETERANS OF AMERICA; RICHARD F. WEIDMAN, EXECUTIVE DIRECTOR FOR POLICY AND GOVERNMENT AFFAIRS, VIETNAM VETERANS OF AMERICA; JOSEPH C. SHARPE, JR., DIRECTOR, NATIONAL ECONOMIC COMMISSION, AMERICAN LEGION; AND CHRISTINA M. ROOF, NATIONAL DEPUTY LEGISLATIVE DIRECTOR, AMERICAN VETERANS (AMVETS)
Mr. DENNISTON. Thank you.
Madam Chair, Ranking Member Boozman, Mr. Adler, good afternoon. Thank you for the opportunity to testify today on the Department of Veterans Affairs' Center for Veterans Enterprise.
As you know, I am Scott Denniston, President of the Scott Group of Virginia representing one of my clients, the National Veteran-Owned Business Association, and its over 2,000 veteran small business owners across the country.
I would ask that my formal testimony be submitted for the record.
Your letter of invitation asked me to discuss CVE's practices, priorities, effectiveness, including VA's implementation of Public Law 109-461, especially the Department's progress in implementing the database required by the law as well as its methods to improve veteran-owned small businesses.
In the interest of full disclosure, I must tell you that I had the pleasure of establishing the Center for Veterans Enterprise after the passage of 106-50 while the Director of Small Business Programs at VA.
In my entire 38-year career with the Federal Government, I have never worked with a more knowledgeable, dedicated, and passionate group of people. The CVE is one of the most entrepreneurial organizations in government.
Unfortunately, the CVE has become a victim of its own success and I would suggest the Veteran Entrepreneurship Program has not been embraced by VA from an institutional perspective.
There is no doubt that VA has led the government in meeting the three-percent goal and should be commended for that. Much of VA's success, I believe, is due to the work of the Center for Veterans Enterprise.
Unfortunately, as the role of CVE has expanded due to the demands of Public Law 109-461, the requisite resources and contractor support necessary to effectively carry out the mandates have not been forthcoming.
CVE is funded from an internal revolving fund called the VA Supply Fund. The Supply Fund is controlled by a Board of Directors. Over 18 months ago, this group approved a significant expansion of the resources dedicated to CVE, but, unfortunately, these resources have never been forthcoming.
Likewise, contractor support to address the verification process took over a year to get under contract. We believe it is time that the CVE became a line item in the VA budget to ensure appropriate resources are justified and forthcoming.
NaVOBA differs with what we understand is the position of this Committee that the CVE database should only include verified firms. The database was established to support all Federal agencies and prime contractors in identifying service-disabled vets and veteran-owned small businesses to assist them in achieving the three-percent goal mandated by Public Law 106-50.
The verification process required by P.L. 109-461 only applies to VA. CVE identifies in the Vendor Information Page (VIP) database those firms who have, in fact, been verified. If only verified firms appeared in the database, the number of firms available to government prime contractors would shrink from over 15,000 to around 2,500 firms. This would substantially hurt the government-wide service-disabled vet program in our opinion.
We understand and share this Committee's concern about fraud, waste, and abuse in the program as identified in the recent GAO report and believe strongly the verification requirement for service-disabled veteran-owned businesses (SDVOBs) should be made government-wide.
NaVOBA shares the concerns of others in the veteran small business community that the VA verification process is burdensome, overbearing, and so untimely as to cause serious financial strain on many service-disabled vets.
Some of our members share stories and frustrations of the process taking over 6 months to complete with the veteran applicant never being told where his or her application is in the process. CVE must do a better job communicating with veterans.
We understand there is some discussion at Congress of moving the service-disabled vet verification program to the Small Business Administration (SBA). NaVOBA is staunchly opposed to this move. Only VA can verify if an individual is a veteran or has a service-connected disability.
SBA has consistently over the years been criticized by GAO for their administration of the 8(a) small disadvantaged business and HUBZone programs. Significant resources have been expended by VA to establish the verification program. We would rather work with VA to refine and improve the current process rather than start over at an agency with a history of questionable program administration.
Our position is contingent upon VA providing CVE with adequate resources to administer the verification program.
I would like my testimony to in total be submitted for the record because we talk about some of the interpretation issues within the draft rule for P.L. 109-461 that we do not agree with.
But in summary, NaVOBA supports CVE, but strongly believes that VA must provide adequate resources commiserate with CVE's expanded mission, including verification in the database.
VA must reconsider its overly restrictive interpretation and administration of Public Law 109-461. We also believe VA must be more sensitive to the needs and concerns of the veteran small business community.
NaVOBA stands ready to be a partner with VA to achieve the intent of P.L. 109-461.
Again, I would like to thank the Committee for holding this important hearing and would be happy to answer any questions.
[The prepared statement of Mr. Denniston appears in the Appendix.]
Ms. HERSETH SANDLIN. Thank you, Mr. Denniston.
Mr. Daley, you are recognized now for 5 minutes.
Mr. DALEY. Chairwoman Herseth Sandlin, Ranking Member Boozman, I would like to thank you for allowing PVA to testify today on this important issue.
As we know, unemployment among veterans is higher than it is with the general population. Unemployment among disabled veterans is even higher. Among PVA members and veterans with spinal cord injury, it is about 85 percent unemployment.
But we know that as veterans go out to start a business or they purchase a business and would like to do business with the Federal Government, when they have to increase their payroll, the first thing they hire is other veterans and we know that. So we are supporting the efforts of veteran-owned small businesses.
With the current emphasis on employment for veterans coming from the President and directed down to the many agencies of the Federal Government, we hope that this message is resonating among the many dedicated professionals that oversee and award contracts that are available to the small veteran-owned businesses.
To better serve the veteran-owned businesses and the service-disabled veteran-owned business, the Center for Veterans Enterprise was created. As we discuss the Center for Veterans Enterprise today, I would like to share with the Subcommittee two predominant issues that I have heard over and over again from veterans who would like to contract business with the VA and other agencies.
As you will hear today, there are several issues with CVE, but two that I want to speak of are the verification process and a ruling that a veteran can only own one business if they plan to do business with the Department of Veterans Affairs.
The verification process, as you will hear today, is facing a 12-month backlog. More effort and oversight has to be put into this program if it is going to be successful and we are going to get the veterans' businesses verified on time.
The policy of owning only one business should be eliminated. One veteran business owner told me that his wife has sold Avon products for many years. Because his name is on their bank accounts as the primary supporter of the family, he is eliminated from doing business with the VA, because he owns two businesses. This does not make sense to me.
The witnesses you have speaking today will help inform you on the shortfalls and successes of the CVE. PVA is thankful that you are taking this time to oversee and perhaps make some needed adjustments in this program
Thank you for this opportunity to testify. I would be happy to answer any questions you may have.
[The prepared statement of Mr. Daley appears in the Appendix.]
Ms. HERSETH SANDLIN. Thank you, Mr. Daley.
Mr. Weidman, you are recognized.
STATEMENT OF RICHARD F. WEIDMAN
Mr. WEIDMAN. Madam Chairwoman, Mr. Boozman, thank you very much for the opportunity to appear here today.
The only thing worse than ignoring the needs of service-disabled veterans is giving them a promise and a pledge that is not fulfilled.
Public Law 106-50 was passed specifically to give people the opportunity to earn a piece of the American dream. Also passed because we know that veterans and service-disabled veterans if they get into business with assistance from the feds will turn around and hire other veterans and service-disabled veterans as well as demobilized Guard and Reservists much more likely than the average employer.
So it is to help solve the employment problem of veterans across the country as well as giving people the opportunity to become entrepreneurs.
The Center for Veterans Enterprise was actually not mandated by Public Law 106-50, but was consonant with the intent of that law and established by then Secretary Tony Principi. And it was a move that we in the veterans' community applauded at the time.
The original intent of CVE was to assist individual entrepreneurs, veteran entrepreneurs, and would-be entrepreneurs, and to serve as a clearinghouse to encourage, to help, to assist. And somehow within the last 15 months from the retirement at the end of 2008 of the previous Director of the Office of Small Business until now, somehow the Center for Veterans Enterprise became transmogrified into an entity that was not friendly to the average vet, that was not a forthcoming agency to help people find a way to get the organizational capacity developed to the point where they could get contracts and successfully perform those contracts with the Federal Government.
I would associate myself with the remarks of the two previous speakers, and I suspect those two who will follow me, that we need to eliminate the requirement that you only have one business. It is not realistic. There are many reasons why people would organize their overall endeavor into more than one corporation.
In fact, all of the veterans' organizations sitting here before you today have more than one corporation. We are organized primarily as a 501(c)(19), but we also have a 501(c)(3). In VVA's case, we have three 501(c)(3)s for tax reasons and because money is not necessarily interchangeable. And many of the veterans' organizations also have a 501(c)(4), particularly the Veterans of Foreign Wars.
Does that mean that the elected Commander or President is not in control of the entire entity? No, it does not. Do they have to be on the premises? That is just silly in the electronic age that you have to be there sitting on a stool behind the cash register to think that somebody is owning and effectively controlling a business.
So that needs to be struck immediately in our view. It is incidentally not mentioned anywhere in P.L. 109-461 nor in P.L. 108-187 nor in P.L. 106-50 nor in Executive Order 13-360. So that is one.
Two is what we would suggest as a solution is that have a two-step process in the verification. Number one can be set up to happen literally automatically and can happen and we can eliminate the backlog.
Before you can be listed in the VIP, the VA run that person's name against the databases of all disabled service-connected veterans and of all veterans. Now that we have interchange between the U.S. Department of Defense (DoD) and VA, you can find out quickly if this person is a veteran and they are claiming VOB and if they are a service-connected disabled veteran, you can find that out by doing a simple query. So that would be automatic for any business to be listed.
Frankly, where we hope that the VIP will go and where the statute will go in the future is that the ownership and control, which would be the next step, which also does not take as long as it has been taking, if you need to contract out, then contract out, but we need to simplify this process so that you do not have a thing where you have to wait a year to get approved.
Let me just say something about the GAO report, if I may. None of the businesses cited in the GAO report that VA came before this Committee and testified the reason why the ownership and being on premises full-time occupation was to stop the rent-a-vet. It did not stop rent-a-vet.
VA has not debarred a single one of those contractors who were specifically mentioned and at least one of them has gotten two major contracts from the VA and a $1.7 million contract from the Navy since the GAO report came out.
It is, as I noted in my statement, akin to your kid gets beat up on the way to school and the bums take his lunch money. Instead of going after the miscreants and seeing that they are identified and properly punished and apply behavior modification, we tell the kid he is not careful enough with his money and put him through all kinds of rigmarole which is exactly what the VA is doing in the CVE.
Instead of properly punishing, referring to the Office of Inspector General (OIG) and our view to the U.S. Attorney for those people who deliberately set out to perpetuate stolen valor by imitating a service-disabled veteran-owned business, they should be arrested, they should be tried, and they should be put in jail. It is only going to take one or two and all of a sudden, the wannabes will melt away.
Thank you for your indulgence. I know I am over time. And thank you for your leadership in having this hearing, Madam Chairwoman.
[The prepared statement of Mr. Weidman appears in the Appendix.]
Ms. HERSETH SANDLIN. Thank you, Mr. Weidman.
Mr. Sharpe, you are now recognized for 5 minutes.
STATEMENT OF JOSEPH C. SHARPE, JR.
Mr. SHARPE. Madam Chair, Ranking Member Boozman, and Members of the Subcommittee, thank you for the opportunity to present the American Legion's views on the Department of Veterans Affairs' Center of Veterans Enterprise.
The American Legion is an ardent supporter providing assistance to veterans and their families. The Center for Veterans Enterprise has been founded to assist those very same veterans with business and entrepreneur assistance in starting their own business and providing them with access to government contracts.
The American Legion believes that assistance such as this needs to be thorough, comprehensive so that veterans can move forward with their business and become a success in the workforce.
The Center for Veterans Enterprise is there to assist them, but a few members of the American Legion Small Business Task Force have made a few observations of the program such as a lack of comprehensive technical assistance, a Web site that is not user friendly, long waits to register with the VA, and not being able to register more than one business at a time.
The Center for Veterans Enterprise also has the responsibility of the implementation of Public Law 109-461 while also supporting veteran business owners. However, the office empowered to oversee the program remains critically ineffective, understaffed, underfunded, and marginalized despite laws championed by this very Committee to further empower veterans' entrepreneurship programs.
Furthermore, the vetbiz.gov Web site is not easily navigated and needs to become a more user friendly Web site. In addition, CVE only operates one office in Washington, DC, and does not cover the needs of all veteran-owned small businesses around the country.
Government employees fielding phone calls about business is not an ideal way of conducting training and market research for veterans and their small businesses.
VA and SBA should develop a comprehensive partnership to assist veterans who are interested in participating in Federal procurement with each Department utilizing their own resources to ensure proper implementation.
Madam Chair and Ranking Member Boozman, this concludes my portion of the testimony, and I am happy to answer any questions you may have.
[The prepared statement of Mr. Sharpe appears in the Appendix.]
Ms. HERSETH SANDLIN. Thank you, Mr. Sharpe.
Ms. Roof, you are recognized for 5 minutes.
STATEMENT OF CHRISTINA M. ROOF
Ms. ROOF. Thank you.
Madam Chair, Ranking Member Boozman, and distinguished Members of the Subcommittee, on behalf of AMVETS, I would like to extend our gratitude in being given the opportunity to share with you our views and ideas regarding the U.S. Department of Veterans Affairs' Center for Veterans Enterprise.
Due to the recent lack of leadership at CVE, AMVETS believes that this hearing is a vital first step in ensuring the success of CVE.
As we move through the 21st Century, during a time of war, the veteran-owned small business and service-disabled veteran-owned small business population continues to rise at a rate not seen since the end of World War II.
As America's war fighters transition back into the civilian life, many are choosing to pursue lives as entrepreneurs. Given the almost 30 percent influx of VOSBs and SDVOSBs, it is vital that CVE be ready and able to meet the growing demand for their services.
However, AMVETS does not believe that CVE is serving the needs of those veterans it was originally designed to help. Due to lack of leadership over the past year, we have seen CVE slowly move from the role of assisting veteran-owned businesses to that of an information and referral agency for other Federal and State agencies.
AMVETS believes the CVE must be brought back up to par to what it was originally tasked to do, assisting our veteran population in all aspects of their entrepreneurial endeavors. In order to effectively accomplish this, CVE must be properly staffed, trained, and funded.
On February 8, 2010, the Code of Federal Regulations rules regarding VOSBs and SDVOSBs were published. The final rule, as published, claims that it defines eligibility requirements to obtain veteran status, explains the examination process and procedure, and finally establishes record retention and review process guidelines.
However, AMVETS, as well as multiple other VSOs and military service organizations that we work with, found it to be abundantly clear, for lack of a better term, that the newly published rules fail to outline or clarify any solid changes or steps towards improvements to the SDVOSB verification process. The new rule also fails to outline or even touch upon the proper verification processes of SDVOSBs that should be used.
AMVETS is very disappointed at the suggestions coming from the people sitting here at this table as well as the VSO community have seem to have fallen upon deaf ear. AMVETS strongly urges that this Committee and VA reexamine the final rules as published.
Moreover, according to the Federal Register updates, SDVOSBs will only be allowed one entity to be registered in the Federal contracting system and that the veteran must work at the physical location 35 to 40 hours a week to maintain their status.
AMVETS strongly disagrees with the language used in the final rules and believes it will undoubtedly stifle the growth of veteran-owned businesses due to their concerns or fears of not wanting to break any of the rules set forth by this new law, or break any of the rules regarding their contract.
Finally, as a partner in writing the 2011 Independent Budget, AMVETS recommended all Federal agencies be required to certify their veteran status through VA's VIP Program before being awarded contracts.
Our thought process in making this suggestion was that Congress will once and for all require the use and implementation of a single-source database accessible to all Federal agencies.
We believe that there are many good programs out there. But due to lack of communication between these different programs and in our opinion duplication of efforts, our veteran business owners are the ones suffering because of this.
AMVETS strongly believes that the VA must eliminate the barriers that veterans face regarding the formation and development in their business ventures.
Madam Chair, this concludes my testimony and I will be happy to answer any questions you may have for me.
[The prepared statement of Ms. Roof appears in the Appendix.]
Ms. HERSETH SANDLIN. Thank you for your testimony, Ms. Roof.
Actually, something that you had stated forms the basis for my first question for the others on the panel as it relates to the Center for Veterans Enterprise shifting to an informational and referral agency essentially.
Do any of the other individuals on the panel care to comment? Do you agree or disagree with that statement?
Mr. WEIDMAN. I would agree that it was a place to go 2 years ago for an individual veteran who needed assistance, sometimes intensively working with the individual and sometimes referring them to the right person, which is not an inconsiderable service.
But they do not even do that many times anymore because everybody is caught up with trying to play policeman as opposed to doing the crux of the job, which is to assist service-connected disabled veterans as well as other veterans to be able to find the help they need to get a viable business going.
Mr. DENNISTON. The only comment that I would add to that is that we knew all along in the Center for Veterans Enterprise you could not do business development from Washington, that that is a local issue, that you need to know about the local bankers and the accountants and the lawyers and that support network.
And our goal always was to develop partnerships with organizations like the Small Business Development Centers, the Service Corps Of Retired Executives (SCORE) Chapters, the Procurement Technical Assistance Center, so that if a veteran from anywhere in the country called, we would have someone that we could send them to in the local area who knew what the economic climate was in that area. And that had always been the goal. We never believed that we could provide business development from Washington.
Ms. HERSETH SANDLIN. Well, as a follow-up then, Mr. Denniston, during your tenure, did you emphasize the importance of developing those partnerships? Were many of those in place in certain metropolitan areas, certain regions of the country that have not been maintained as far as you are aware?
Mr. DENNISTON. I cannot speak to the maintenance, but we did have formal memorandums of understanding (MOUs) with SCORE, with the Small Business Development Centers, with the Procurement Technical Assistant Centers so that there was a very strong recognition of the importance of the growth of the Veteran Small Business Program.
I think what has happened is that CVE has been so overwhelmed by the verification program that some of those relationships may have waned.
Ms. HERSETH SANDLIN. Okay. So back then to you in terms of some other questions I have for you, Mr. Denniston, in your testimony.
If CVE becomes overwhelmed by the verification process, and I think others have talked in terms about resources and training, can you provide us more specifics about what you think the requisite resources need to be? What type of contractor support does CVE need to be successful? Finally, should the Office of CVE be formalized by statute?
I think someone had testified to the importance of a separate line item in the budget, but this is a question for any of you.
Mr. DENNISTON. I do not know that it needs to necessarily be set in statute, the office itself. I do believe that it needs a line item for the budget for the reasons that all of us on the panel have discussed.
I think that the issue of resources in the beginning when we started the verification process at CVE, we knew that the initial challenge was going to be to take care of that first bubble of applicants. At that time, I think we had 12,000 people in the database. And we always felt that we needed contractor support for that to help with the administration of the applicants themselves to do some of the site visits that we had planned.
And then the goal always was to be able to maintain that once we got over the initial hump with VA staff. And as to the resources that were going to be necessary to do that, we did not really have a firm handle on that because this was new territory for all of us, but we did make some projections as to what they should be.
And I think as I mentioned in my testimony, some of those resources were, in fact, approved about 18 months ago. To my knowledge, they have not been forthcoming and I cannot answer that.
Ms. HERSETH SANDLIN. And they were approved by the Board of Directors for—
Mr. DENNISTON. Of the Supply Fund, right.
Ms. HERSETH SANDLIN [continuing]. The Supply Fund? Okay.
Mr. WEIDMAN. We believe that it should be enacted in the statute. If it is worth doing, it is worth doing formally and it should be a line item. And we would also suggest that while they may be in charge of verification, that is not their primary role.
If you view the service-disabled veteran ownership program as a program, it needs to be built in and encouraged by VA vocational rehabilitation and perhaps some changes in that section of title 38. There is no reason why we cannot bring back the old Loan Fund that has still been on the books since 1944 for startup capital if, in fact, people have a solid business plan.
I mean, Mr. Buyer has, I think, introduced legislation to do that. And we strongly support that. And it can become a locus.
I believe that Mr. Denniston is absolutely correct. You cannot do business development in South Dakota from Washington, DC, but you darn sure can find out who are the people in South Dakota either at the Small Business Development Center, at the State Economic Development, work with the County Executive Associations, which does have an office in Washington, DC, to find out who do they have in economic development that you can send service-disabled and other veteran-owned businesses to. That should be the primary purpose.
In terms of contracting out, as I mentioned before, the veteran verification really only needs to be done once. You can double check if somebody is service-connected, but even that does not go away since there is no minimum threshold to be declared a service-connected disabled vet. Once you are service-connected, you are service-connected. It might go down to zero if your cancer goes into remission, but you are still a service-connected disabled vet.
So you only need to do that once. And, frankly, you can do that through automated comparisons of that individual to the databases already that VA has or has access to DoD through the interagency agreement.
The second part, in Veterans Integrated Services Network (VISN) 4, and we would be glad to refer the gentleman who actually is active in Vet Force who had the job of procurement in Network 4, VISN 4, and what they did was literally have Veterans Health Administration staff, which are all over the country, go out and see. They say they have X people working out of Y location. They would go out and see is it there, is it for real. And they were able to come back and, therefore, get about as much as you are going to get except from tax documents by CVE sending somebody out from Washington.
So you do not need to do that. You can do a training package and train people either out of the regional office or out of the medical centers all across the country to perform that function.
And the most important thing we would stress, however, is not putting small businesses, veteran-owned small businesses through a bunch of rigmarole, but to VA to go after the people who perpetuate fraud and to go after the people who often are knowingly complacent on the inside with somebody being a rent-a-vet. And they should have consequences, severe negative consequences and the rest of them will start to listen up.
Ms. ROOF. If I may, Rick, you said something that has really been bothering me and a lot of our members, the hindrance of the recertification on the annual basis. We have all sat up here and said we need tougher certification processes in place. And we still all believe that, but this is not the best way to go about it.
We already have a backlog of 9 to 12 months to get original certification. So when should, if I was a service-disabled veteran, when should I reapply for my next year's certification? Three months after I apply for the first one just so I make sure there is not a gap there?
And also, it almost seems unfair that veterans are not being provided the equal protections under the law and they are made to do this extra work. So I am hoping that maybe the next panel can shed a little light on this for us of what the thought behind this recertification every year would do and how they plan on handling it because I know our membership would really like to know.
Thank you.
Ms. HERSETH SANDLIN. Any other comments on the issue raised by Mr. Weidman regarding concerns with fraud that was identified and noted in the GAO report?
Mr. DENNISTON. The only comment I would make is one that has been made before, that P.L. 109-461 has penalties and that is the personal and the corporate debarment. And we strongly agree with VVA that if someone actually goes through that process and makes examples of people that we are going to find the people that do not belong in the program are going to move quickly to get out.
Ms. HERSETH SANDLIN. Okay.
Mr. WEIDMAN. May I just mention one thing, ma'am? In the beginning, the 8(a) Program, there was no verification process or certifying process there. And when they put in the certifying process, it went from 11,000 some odd down to less than 3,000 in 2 months.
Ms. HERSETH SANDLIN. In the 8(a) Program?
Mr. WEIDMAN. In the 8(a) Program. That was more than a decade ago. And in talking with the gentleman who was Chief of Staff at that time on the Small Business Committee and it happened just like we thought it did.
Ms. HERSETH SANDLIN. Is there any recertification requirement in the 8(a) Program that you are aware of?
Mr. WEIDMAN. Is there now? Yes, ma’am. It is a very strenuous requirement.
And, you know, I do not know. Is there still fraud in like the HUBZones or in other programs, yes, there is. But the sureness and swiftness of the deterrence is that if you do it, you are going to get caught. And if you get caught, we will prosecute you to the full extent of the law just like with your people’s tax returns. People will straighten out and stop misrepresenting them, number one.
Number two, it is certainly possible, we have the technology, if the Center for Veterans Enterprise was the place to go, that you knew everybody on it was at least a vet and if they have been verified, there was significant evidence that they had ownership and control.
Before you get listed on the CCR, the Central Contracting Registry, or any other Federal database for procurement or on GSA’s schedule and claim that you are a veteran-owned business or service-disabled veteran-owned business, you could not claim those two categories unless you have gone to the VIP and been verified first. That is easy to set up electronically.
And if VA does not have the horses, there are lots of folks in this town and across the country in information technology who would be glad to contract with them to show them how, including some service-disabled veteran-owned businesses, I may add, ma’am.
Ms. HERSETH SANDLIN. I have some additional questions for Mr. Daley and Mr. Sharpe, I have gone over my time, so I will recognize the Ranking Member for his questions.
Mr. BOOZMAN. Thank you, Madam Chair.
Mr. Denniston, CVE is funded through nonappropriated funds from VA’s Supply Fund, which gets its dollars from VA’s franchising operations.
Can you tell us about the process that is involved in that or can you expand on that?
Mr. DENNISTON. The process for the CVE budget?
Mr. BOOZMAN. Yes, sir.
Mr. DENNISTON. Once a year, at least when I was at VA, once a year, the Supply Fund Board would meet and the programs that were funded by the Supply Fund, which was the Acquisition Program at VA, the Inspector General’s Office that deals with procurement fraud and the Office of Small Business would make presentations to the Supply Fund Board of Directors as to what we believed our resource level was going to be for the next year. And we would have an opportunity to make a presentation and justification and then the Board would either vote up or down for that.
Mr. BOOZMAN. Who is on the Board?
Mr. DENNISTON. The Board is Chaired, at least it was, by the Assistant Secretary for Management. And the Office of Acquisition Management, Veterans Health Administration, Veterans Benefits Administration, National Cemetery Administration, and General Counsel were the voting members.
Mr. BOOZMAN. Okay. Very good.
Can you expand, Rick, on the comments you made about regarding the arbitrary and artificial limit of allowing the veterans to just list one business in the database and maybe comment on, you know, if you can find any indication that that was either in the law or Congressional intent?
Mr. WEIDMAN. There was never any discussion of limiting it to only one business. It is not a business development program. They got this idea apparently from talking to SBA staff who run the 8(a) Program.
The 8(a) Program, there is significant assistance of every sort to help them get contracts, to help them get organized, which flat does not exist for service-disabled veteran-owned businesses.
And it is basically a deal you make with the SBA that I am willing for 10 years to put up with you, this level of actually seceding of control to some degree to people at SBA because I know that I will get these contracts and this other assistance. That does not exist for SDVOBs, number one.
Number two, there is no delimiting date on being a service-disabled veteran business owner, you know. And hopefully the young people who are serving in this war who go into business when they get back into civilian life will be SDVOBs for the next 40 years and that would be great. So there is no delimiting date. It is artificial for the reasons I named.
Let me give you an example of one of our very active folks in the veterans’ business community who does basically three different activities, his firm. They do business to business in the private sector. They do business with Federal agencies. Most of it is quote, unquote soft services and organizing, processing of various things. And then he does a lot of stuff in black ops.
He has three separate corporations. The business to business stuff has different needs than the Federal stuff for the nonrequiring of top secret TC clearance. For the black ops, everybody, everybody, including the janitors, have to be top secret TC clearance and you have to pay those people more even to clean the restrooms.
So that is why it is a whole separate company instead of having people basically doing the same work, getting paid differential amounts, working side by side which causes morale problems. So there is a real good reason why he has three separate corporations all working under the same roof.
Incidentally, this is a very strong fellow who is a good manager and one tough former Marine grunt, service-connected combat disabled. I can assure you he is in control of all three businesses at all times even though he may not be on premises at all times.
Mr. BOOZMAN. Thank you, Madam Chair.
Ms. HERSETH SANDLIN. Thank you, Mr. Boozman.
Mr. Daley, a quick question. In your testimony, you stated that when individuals call or e-mail the Center for Veterans Enterprise, there is sometimes no response; and, therefore, it becomes difficult to check the status of the application.
In your opinion, is staffing sort of the critical problem here or is the office being mismanaged?
Mr. DALEY. That is a very good question. It could be staffing or it could be mismanaged. I really cannot say. All I hear is complaints from the veterans that have tried to communicate and there is no communication. A veteran said periodically somebody will accidentally pick up a phone and say I want to check on my verification. The veteran will but they cannot tell you anything about your application. I was speaking with somebody that sent in the application in early September and he called 3 months later to ask, where is it. They could not get information from anybody.
He said at least if they could tell you, well, 2 more months we will have it done. Nobody talks to you. There is no communication. They do not return e-mails. And that must be frustrating for the business owner.
Ms. HERSETH SANDLIN. Mr. Sharpe, in your testimony, you state that qualifications of CVE staff is questionable, and I think you had mentioned the lack of technical assistance that is available.
Is this a comparison of folks that were there and how the office operated about 2 years ago versus what you are aware veterans are experiencing today? If you could elaborate on the past experience or current knowledge you have to make that statement.
Mr. SHARPE. Well, currently the American Legion does not have a resolution on CVE, so most of our testimony is based on talking with many of our Business Task Force members.
And what they have told us in the last couple of days, it appears that within the last year or so, but I have to tell you that there is a great deal of anger toward CVE. I was really surprised how angry a lot of these business owners are. They feel that it is both, that it is mismanagement and underfunding and training. They are complaining of the same things.
If they have a problem, they cannot get an answer. If they do connect with someone, the individual does not seem to have the knowledge or the background to assist them. The tools that they need as far as the Web site are inefficient for them. They are really angry with the new rules as far as trying to register. If it takes them a year to register their business and then they have to be reclassified or recertified, you know, they just do not understand that. They are angry about the fact that if they have more than one business, you know, they can only do one at a time and they have to be at that particular business 24 hours or whatever. They feel that CVE is just not doing the job that they had hoped. If they have a problem with VA, they want to go to CVE and get some sort of answers.
Now, I have personally witnessed a couple of meetings with VA officials in the last year or so with these individuals and none of their questions or concerns were cleared up. I was just surprised at the amount of anger and hostility that I have gotten from these individuals for the last couple of days.
Ms. HERSETH SANDLIN. Well, thank you for your responses to our questions and for your testimony. And, thank you for your continued service on behalf of our Nation’s veterans.
We look forward to working with you as we follow-up with the concerns that you have expressed and the recommendations that you have made. Again, we will look forward to working closely with you to make improvements that are necessary.
I would now like to invite panel two to the witness table. Joining us on our second panel of witnesses is Mr. Tim Foreman, Executive Director of the Office of Small and Disadvantaged Business Utilization in the U.S. Department of Veterans Affairs.
Mr. Foreman is accompanied by Ms. Iris Cooper, Associate Deputy Assistant Secretary for Acquisition, Office of Acquisition, Logistics, and Construction, and Ms. Phillipa Anderson, Assistant General Counsel, Government Contracts, Real Property, and Environmental Law Group, Office of General Counsel for the U.S. Department of Veterans Affairs.
I welcome you all to the Subcommittee.
And we look forward to your testimony, Mr. Foreman. And your written statement is made part of our hearing record and so we will recognize you now for 5 minutes.
STATEMENT OF TIM J. FOREMAN, EXECUTIVE DIRECTOR, OFFICE OF SMALL AND DISADVANTAGED BUSINESS UTILIZATION, U.S. DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY IRIS COOPER, ASSOCIATE DEPUTY ASSISTANT SECRETARY FOR ACQUISITION, OFFICE OF ACQUISITION, LOGISTICS, AND CONSTRUCTION, U.S. DEPARTMENT OF VETERANS AFFAIRS; AND PHILLIPA ANDERSON, ASSISTANT GENERAL COUNSEL, GOVERNMENT CONTRACTS, REAL PROPERTY, AND ENVIRONMENTAL LAW GROUP, OFFICE OF GENERAL COUNSEL, U.S. DEPARTMENT OF VETERANS AFFAIRS
Mr. FOREMAN. Members of the Subcommittee, good afternoon. Thank you for convening this hearing to discuss the issues pertaining to VA’s Center for Veterans Enterprise, CVE.
I am accompanied today by Ms. Cooper, the Associate Deputy Assistant Secretary of Acquisition to my right and Ms. Anderson, VA Assistant General Counsel to my left.
We are pleased to represent Secretary Shinseki and the veterans that do business with VA. Our CVE has become a central point for agencies, contractors, and veterans for support of veteran business-owned programs at the VA. CVE Verification Program is our first line of defense to ensure the integrity of these efforts.
VA is strongly committed to identifying, eliminating, and pursuing fraud wherever it appears in the veteran-owned small business program. As Director, I take personal responsibility for critical small business programs at the Department.
While I am relatively new in my position, I have over 30 years of small business program experience and over 38 years of government experience. I am a passionate veteran program supporter. I am the one belly button to push and if there are any problems, please come and see me.
VA believes that legitimate veteran businesses are authorized under this program and they should have few barriers to doing business with VA. I believe that other businesses that use fraudulent means to garner contracts under the auspices of the Veteran Business Program are in effect stealing valor from those who have legitimately earned that veteran privilege.
The CVE maintains the vetbiz.gov Web portal which hosts the Vendor Information Pages or VIP database for veteran-owned small businesses. The database allows VA to compile a list of service-disabled veteran-owned businesses.
The core mission of CVE is to improve the business climate for veterans, minimize barriers to access or, as I say, barriers to entry, and to inform the public about the benefits of working with veteran-owned business, small businesses.
Our verification program is a vital part of the Veteran Business First Procurement Program. VA’s unique procurement legislation gives priority to certain veteran-owned small businesses over all other types of businesses within our Department.
In 2009, our contractor recommended a plan to automate a large part of the verification process and to ensure that specific business documents are included in our examination to make better decisions and informed decisions for a recommendation, either approval or denial. These two recommendations will eliminate hundreds of staff hours and the data entry problems that go with that.
Our reliance on publicly available information through documentation has also been a problem. This will eliminate that. Where we had previous
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