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Hearing Transcript on Veterans Entrepreneurship and Self Employment.


 

 

VETERANS ENTREPRENEURSHIP AND SELF EMPLOYMENT

 



 HEARING

BEFORE  THE

SUBCOMMITTEE ON ECONOMIC OPPORTUNITY

OF THE

COMMITTEE ON VETERANS' AFFAIRS

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION


MAY 17, 2007


SERIAL No. 110-23


Printed for the use of the Committee on Veterans' Affairs

 

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COMMITTEE ON VETERANS' AFFAIRS

BOB FILNER, California, Chairman

 

CORRINE BROWN, Florida
VIC SNYDER, Arkansas
MICHAEL H. MICHAUD, Maine
STEPHANIE HERSETH SANDLIN, South Dakota
HARRY E. MITCHELL, Arizona
JOHN J. HALL, New York
PHIL HARE, Illinois
MICHAEL F. DOYLE, Pennsylvania
SHELLEY BERKLEY, Nevada
JOHN T. SALAZAR, Colorado
CIRO D. RODRIGUEZ, Texas
JOE DONNELLY, Indiana
JERRY MCNERNEY, California
ZACHARY T. SPACE, Ohio
TIMOTHY J. WALZ, Minnesota

STEVE BUYER,  Indiana, Ranking
CLIFF STEARNS, Florida
JERRY MORAN, Kansas
RICHARD H. BAKER, Louisiana
HENRY E. BROWN, JR., South Carolina
JEFF MILLER, Florida
JOHN BOOZMAN, Arkansas
GINNY BROWN-WAITE, Florida
MICHAEL R. TURNER, Ohio
BRIAN P. BILBRAY, California
DOUG LAMBORN, Colorado
GUS M. BILIRAKIS, Florida
VERN BUCHANAN, Florida

 

 

 

Malcom A. Shorter, Staff Director


SUBCOMMITTEE ON ECONOMIC OPPORTUNITY
STEPHANIE HERSETH SANDLIN, South Dakota, Chairwoman

JOE DONNELLY, Indiana
JERRY MCNERNEY, California
JOHN J. HALL, New York
JOHN BOOZMAN, Arkansas, Ranking
RICHARD H. BAKER, Louisiana
JERRY MORAN, Kansas

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.

 

       

C O N T E N T S
May 17, 2007


Veterans Entrepreneurship and Self Employment

OPENING STATEMENTS

Chairwoman Stephanie Herseth Sandlin
    Prepared statement of Chairwoman Herseth Sandlin
Hon. John Boozman, Ranking Republican Member
    Prepared statement of Congressman Boozman
Hon. Susan A. Davis


WITNESSES

U.S. Small Business Administration:
William D. Elmore, Associate Administrator, Veterans Business Development
    Prepared statement of Mr. Elmore
Louis J. Celli, Jr., Chairman, Advisory Committee for Veterans Business Affairs, and Chief Executive Officer, Northeast Veterans Business Resource Center
    Prepared statement of Mr. Celli
U.S. Department of Veterans Affairs, Scott F. Denniston, Director, Office of Small and Disadvantaged Business Utilization, Center for Veterans Enterprise
    Prepared statement of Mr. Denniston
 

 


 

American Legion, Joseph C. Sharpe, Jr., Deputy Director, Economic Commission
    Prepared statement of Mr. Sharpe
Halfaker and Associates, LLC, Washington, DC, F. Dawn Halfaker, Owner/Chief Executive Officer
    Prepared statement of Ms. Halfaker
MicroTech, LLC, Vienna, VA, Anthony R. Jimenez, President and Chief Executive Officer
    Prepared statement of Mr. Jimenez
National Veterans Business Development Corporation, The Veterans Corporation, Walter G. Blackwell, President/Chief Executive Officer
    Prepared statement of Mr. Blackwell
Oak Grove Technologies, Raleigh, NC, Mark Gross, President/Chief Executive Officer
    Prepared statement of Mr. Gross
Veterans Enterprise Training and Service Group, Inc. (VETS Group), Joe Wynn, President, and Member, Veterans Entrepreneurship Task Force (VET-Force)
    Prepared statement of Mr. Wynn
Vietnam Veterans of America, Richard F. Weidman, Executive Director for Policy and Government Affairs
    Prepared statement of Mr. Weidman


SUBMISSION FOR THE RECORD

Veterans of Foreign Wars of the United States, Eric A. Hilleman, Deputy Director, National Legislative Service, statement


MATERIAL SUBMITTED FOR THE RECORD

Executive Order 13360—Providing Opportunities for Service-Disabled Veteran Businesses To Increase Their Federal Contracting and Subcontracting, dated October 20, 2004


VETERANS ENTREPRENEURSHIP AND SELF EMPLOYMENT


Thursday, May 17, 2007
U. S. House of Representatives,
Subcommittee on Economic Opportunity,
Committee on Veterans' Affairs,
Washington, DC.

The subcommittee met, pursuant to notice, at 2:20 p.m., in Room 334, Cannon House Office Building, Hon. Stephanie Herseth Sandlin [Chairwoman of the Subcommittee] presiding.

Present: Representatives Stephanie Herseth Sandlin, McNerney, Hall, and Boozman.

Also Present: Representative Susan A. Davis of California.

OPENING STATEMENT OF CHAIRWOMAN HERSETH SANDLIN

Ms. HERSETH SANDLIN. Good afternoon ladies and gentlemen. The Veterans' Affairs Subcommittee on Economic Opportunity hearing on Veteran Entrepreneurship and Self Employment will come to order. First, I ask unanimous consent that Ms. Susan Davis of California be invited to sit at the dais for this Subcommittee hearing today.

Hearing no objection, so ordered.

The ranking member and some of the panelists may recall a joint hearing we held with our colleagues on the Committee on Small Business back in May of 2005 on Veteran-Owned Small Businesses.

Today's hearing will build upon that hearing as we receive testimony to explore the current state of veteran entrepreneurship and the challenges and obstacles they may encounter. Small businesses are essential to economic prosperity. The implementation of strong economic development plans, especially in rural States like South Dakota and certainly parts of Arkansas is essential.  Time and again, veterans have continually assisted in preserving this critical element of our Nation's economic prosperity.

In my home State of South Dakota, more than 17,000 veteran-owned small businesses are operating. These brave men and women add tremendous value to our economy when given the opportunity to start and manage their own businesses.

Starting and growing a small business is no easy task and can be a difficult challenge. I have heard of many of the difficulties that disabled veterans face when starting and developing a small business. In addition, I have also heard from many members of the National Guard and Reserve in South Dakota who find it challenging to maintain their small businesses when deployed overseas to Iraq and Afghanistan and a number of those who return that look to pursue other opportunities separate from the career path they were on prior to deployment. I look forward to working with Ranking Member Boozman and members of the Subcommittee to focus our efforts on assisting our Nation's veterans with these challenges. I now recognize the Ranking Member, Mr. Boozman, for any opening remarks he may have.

[The statement of Chairwoman Herseth Sandlin appears in the Appendix.]

Mr. BOOZMAN. Thank you, Madam Chairwoman. In the interest of time, what I would like to do is just make a very brief statement and then submit the rest for the record if you don't have any objections.

Ms. HERSETH SANDLIN. No objection. So ordered.

Mr. BOOZMAN. I am sure you are very pleased at that.

Ms. HERSETH SANDLIN. Yes, yes, I appreciate it, because I know we have three panels today and a number of questions.

Mr. BOOZMAN. And we have votes.

Ms. HERSETH SANDLIN. I would defer to see if there is a brief opening statement that Ms. Davis might have. Any opening comments?

OPENING STATEMENT OF HON. SUSAN A. DAVIS

Mrs. DAVIS.  Thank you, Madam Chair, I appreciate being here today.  I have had an opportunity to serve with you briefly as well, and Mr. Boozman, when I was on the Veterans' Affairs Committee.  I think it has become clear to us in speaking to many of our veterans returning from Iraq and Afghanistan particularly that they are looking and hopeful of beginning, starting a small business with the skills that they bring back, and so it is very important that we try and understand what programs work.  What are the best practices?  How can we build on those?  And I am happy to be part of this today.  Thank you.

OPENING STATEMENT OF HON. JOHN BOOZMAN

Mr. BOOZMAN. Can I just mention, Madam Chairwoman, again, I appreciate you having this because it is so important. As Ms. Davis said, we have these people coming back, and I was an optometrist. We had 80 or 90 employees prior to coming. And I know how difficult it is to be a part of a small business, and so, again, I appreciate it.

I know, in looking at some of the testimony and looking at some of the, just some of the comments that we have had, I think that it is fair to say that there is a level of dissatisfaction and disappointment with TVC's performance, and so, again, I am looking forward to the testimony and thank you for your leadership.

[The statement of Congressman Boozman appears in the Appendix.]

Ms. HERSETH SANDLIN. Thank you, Mr. Boozman. I want to welcome our panelists testifying before the Subcommittee today. Let me introduce our first panel, joining us is Ms. Dawn Halfaker, President and Chief Executive Officer of Halfaker and Associates, LLC; Mr. Mark Gross, President and Chief Executive Officer of Oak Grove Technologies; and Mr. Anthony Jimenez, President and Chief Executive Officer of MicroTech, LLC.

STATEMENTS OF F. DAWN HALFAKER, OWNER/CHIEF EXECUTIVE OFFICER, HALFAKER AND ASSOCIATES, LLC, WASHINGTON, DC; MARK GROSS, PRESIDENT/CHIEF EXECUTIVE OFFICER, OAK GROVE TECHNOLOGIES, RALEIGH, NC; AND ANTHONY R. JIMENEZ, PRESIDENT AND CHIEF EXECUTIVE OFFICER, MICROTECH, LLC, VIENNA, VA

Ms. HERSETH SANDLIN. Welcome to all of you. Thank you for being here, and Ms. Halfaker, we will go ahead and begin with your testimony.  You are recognized for 5 minutes.

STATEMENT OF F. DAWN HALFAKER

Ms. HALFAKER. Thank you. Chairwoman Herseth Sandlin, Ranking Member Boozman and Subcommittee members. I greatly appreciate the opportunity to testify at this hearing regarding veteran entrepreneurship and self employment. And I am very honored to represent a newer generation of entrepreneurs and wounded war fighters, as I am an Operation Iraqi Freedom (OIF) veteran. I am Captain Dawn Halfaker, retired, owner and CEO of Halfaker and Associates. We are a woman-owned, service-disabled, veteran-owned HUBZone small business providing national security consulting services to the Federal Government. We are focused on mission support for the global war on terror in the areas of force protection and anti-terrorism homeland security emergency management and chem biodefense operations.

I started the company in January 2006, a year and a half after I was severely wounded in action in Iraq. As a result of my injuries I lost my right arm at the shoulder, but even more devastating, I lost my career as a military officer. Like most of the wounded war fighters who are medically retired and off active duty, I really didn't know what I wanted to do with my career. But I knew that I wanted to remain close to the fight and continue my service in some capacity.

As a business owner, my company enabled me to do just that. I have the opportunity to use my military skills and expertise to continue my service as well as the ability to work and provide jobs for other veterans. My company competes for work within the Federal Government, primarily DOD, and targets contracting opportunities based not only on our capabilities that I mentioned but also the ability to be able to hire wounded veterans to perform the work that we get.

Since I began my business, we have realized a fair amount of success early on. After a year and 5 months, we have gone from one employee to 12 employees, and our projected revenue through the end of calendar year 2007 is $2.5 million. We currently have one prime contract and seven subcontracts and are obviously pursuing a number of other opportunities.

With this, many times people have asked me how we have done this so quickly and what resources we have used in our fair amount of success. And my answer is always the same. Hard work. And as you mentioned other veteran business owners, I would just like to point out some of the resources that have been so useful to me. One of the individuals, who happens to be sitting right next to me, and that is the CEO of Oak Grove Technologies. I would just like to point this out because I think it is very important to realize, as a young small business owner, there are a lot of pitfalls that we can step into and get bogged down with things that may seem like good resources but in truth aren't really doing much to help us grow our businesses and are somewhat of a distraction.

I would like to say that the best resources I have received is the help I have gotten from people who are willing to lend their time, their energy and their financial resources and give them to me at my disposal. For example, Oak Grove Technologies has been setting up my Web site absolutely free. Their only contingency is that it doesn't look better than theirs. With that said, there have been a number of other things that they have helped out with. They have helped us get our financial system in order, and they have given us a number of different H.R. functions, paperwork, just different things that you don't really know what you are getting into when you start a business. So I would just like to point out that I think, as we move forward and as we are looking for things that are very valuable, I would just like to recognize the other servicemembers and veterans in the community for stepping up and reaching out and really helping people like myself. And I think it would be valuable to point out that this has been my most efficient resource. I really have not received a lot of help in any other aspect other than people in the community reaching out to me and saying, this is what you need to do to be successful. So I think it might be worth looking into some kind of formal or informal program where other service-disabled, veteran-owned businesses, small businesses are able to help people like myself get started. I think it is basically taking the mentor/protégé model and looking at how successful that has been and mainly looking at how we can implement that at a lower level.

In sum, again, I would just like to say thank you for the opportunity to be here. That is all I have.

[The statement of Ms. Halfaker appears in the Appendix.]

Ms. HERSETH SANDLIN. Thank you very much, Ms. Halfaker for your testimony. Thank you for your service and for suggesting areas that we will be pursuing, not only with the other panels today but working with our staff and others that can evaluate some of the recommendations that you have made through your testimony.

Mr. Gross, thank you for being here. You are now recognized for 5 minutes.

STATEMENT OF MARK GROSS

Mr. GROSS. Good morning, Chairwoman Herseth Sandlin, Ranking Member Boozman and members of the Subcommittee. First, I want to thank everyone here for the invitation to come before you today and share some of my experiences within the veteran business community. I am a veteran of the United States Army. I founded Oak Grove Technologies, which is a service-disabled, veteran-owned company, 5 years ago this past August or this coming August.

Today I am proud to say that I employ over 140 people. Over 70 percent of those employees are veterans, 16 percent of disabled veterans. Geographically, we are dispersed in 16 States as well as supporting both Operation Enduring Freedom (OEF) and OIF, both Iraq and Afghanistan. I am here today to offer testimony on behalf of the business community and to offer some of the benefits of some research and some opinions that myself on the Veteran Business Advisory Committee has been privy to.

The question before the committee today is, what is the state of veterans entrepreneurship, obstacles faced by aspiring entrepreneurs, programs being relied upon by veterans and the current status of Federally funded programs to assist veterans?

I feel that I am uniquely qualified to answer some of these questions, as I have not only built a successful business in this economic climate, but I have also taken on the task of mentoring a number of other disabled veterans' companies. In my opinion, Congress has done an outstanding job in passing legislation, such as Public Laws 106-50 and 108-183, both of which established programs for the disabled veteran Federal goals and mandates in Federal contracting. Some of the problems today revolve more around accountability within some of these agencies and their willingness to make attempts to meet these goals.

I am here to offer my views on what I think can be done to ensure the state of veterans entrepreneurship within the Federal Government.

Congress and this specific committee have been working with veteran business owners for years. This issue is as important to our veterans as it is to you. What we have seen, however, in many agencies has been, frankly, a cavalier attitude toward meeting this 3 percent goal. I believe that many agencies believing that the mandate really doesn't apply to them.

In 2005 alone, the Department of Defense awarded 0.49 percent of contracts to disabled veterans' companies. Department of Defense accounts for roughly 70 percent of all government procurement spending, yet its repeated inability to meet service-disabled veteran contracting goals make it all but impossible for the other agencies as a whole to meet their 3 percent goal.

I would like to offer six recommendations on what can be done in order to meet that goal. Some of the legislation—well, one is eliminate the "Rule of Two" wherein a contracting officer has to have two or more disabled veteran companies before they can set aside a procurement. That is the only statutory program that has that requirement. Both the 8(a) program and HUBZone program do not have that requirement to create a level playing field between the statutory programs by changing the "may" to "shall" when using restricted competition for service-disabled programs. Both the HUBZone and 8(a) program use shall be procured to those particular socio-economic programs whereas in the disabled veteran community, it is the contracting officer. They give them a lot of latitude as far as "may." 

Small business subcontracting plans, including all details of the plans, required by large prime contractors should be made public and accessible electronically upon request.

Mandate that contracting officers impose liquidated damages, as predicated by the Federal Acquisition Regulation (FAR) part 19.705-07 for those large companies that fail to demonstrate a good faith effort to fulfill the requirement of their subcontracting plan.

Close some of the loopholes in the GSA schedule FAR Par 8 wherein large businesses use small companies as fronts and take away business that really was intended for some of the small businesses.

And penalize agencies that don't make a reasonable effort to maintain that, to meet that goal.

One of the—I can't speak very intelligently about many of the Federal programs out there because, frankly, not many—I haven't used many of them. One, I am aware of is The Veterans Corporation (TVC), and I am quite familiar with them. We used to be co-located in the same building in Alexandria, Virginia.

I frankly don't quite know really what they do. I had looked to them back in 2003 for some assistance and really didn't feel that there was a whole lot of assistance to be offered to me at that time. I believe they do bonding and some things like that, but none of which were my line of business.

On the other hand, I would like to recognize two agencies that I feel do a great job as far as outreach, and that is the Department of Veterans Affairs, and that is the Army Small Business Office, both of which in my opinion have really taken the lead as far as outreach to the community. We are proud to be the first disabled veteran's small business in the DOD Mentor Protégé program that was created by Public Law 108-103, and this year we were awarded the DOD's Nunn-Perry award for small business growth.

As an entrepreneur and veteran, I think the climate certainly has gotten a lot better than in the past 7 years. We still have a long way to go, but I am confident that Congress, many of the Federal Agencies, like the VA and the Army, are committed to this cause. And with that, I would just like to thank everyone for their time and all the efforts in improving the economic climate for disabled-veteran small businesses.

[The statement of Mr. Gross appears in the Appendix.]

Ms. HERSETH SANDLIN. Thank you for your testimony, Mr. Gross, and your insights and your participation in mentoring other business owners, in describing your experience with different programs or lack thereof, based on how successful you have been as well as maybe a lack of clarity about what some of these programs can offer you, specifically. We will explore that further as well.

Mr. Jimenez you are recognized for 5 minutes.

STATEMENT OF ANTHONY R. JIMENEZ

Mr. JIMENEZ. Good afternoon, Chairwoman Herseth Sandlin, Ranking Member Boozman and Subcommittee members. It is a privilege to be here today. I want to thank the Subcommittee for allowing me to share my thoughts regarding veteran entrepreneurship and, in particular, current programs funded by the Federal Government that support businesses owned by veterans.

I am CEO and president of MicroTech, which is a service-disabled veteran-owned small business. I retired from the Army approximately 4 years ago after serving 24 years. I started as a private and ended as a Lieutenant Colonel and am confident that the experience that I learned as a veteran can be applied to the Federal Government as a contractor or subcontractor.

I would like to begin today by clearing up what I believe to be a misconception about the primary obstacles facing service-disabled veteran small businesses or SDVOSBs. My sense is that there is a widely held belief that what service-disabled veterans need most is access to training, capital and other elements that support business development goals.

In response to these perceived needs, The Veterans Corporation was created. The Veterans Corporation provides many helpful tools for veterans looking to start a business, such as help with business plans, advice about contracting with the government, assistance obtaining financing and so on. And I am sure this type of assistance is very valuable to many folks starting new businesses and particularly by those that have taken advantage of that.

But I do not believe that these are the primary factors holding back business from veterans, especially well established service-disabled veterans.

I believe that these companies are more in need of advocacy and opportunity than they are in need of startup assistance and support. In fact, right now, today, there are over 12,500 service-disabled, veteran-owned small businesses and 37,000 veteran-owned small businesses which have negotiated all the hurdles required to become registered in the Contractor Central Registry (CCR).

Based on my personal knowledge and experience, I believe that the majority of these small businesses stand ready to deliver quality solutions to the government today. I firmly believe that what service-disabled veterans are in need of are genuine opportunities. These are opportunities that allow them to demonstrate and grow their capabilities.

To date, the government's record of identifying, setting aside and awarding contracts to service-disabled veterans is disappointing at best. The law mandates that the governmentwide goal for participation and government awards to service-disabled veterans is 3 percent of the total value of all contracts awarded each year.

To date, the government has fallen far short of that goal. Let's contrast the difference between the approximately 12,500 service-disabled veterans registered in the Central Contractor Registry, the CCR, to that of the approximately 10,000 8(a) small businesses registered. The legally mandated goals for 8(a) and service-disabled veterans are the same. And the government consistently meets the requirements of setting 3 percent aside for 8(a) small businesses almost across the board. What these circumstances translate into is a non-level playing field for service-disabled, veteran-owned small businesses. When you take DOD small business statistics for year 2001 through 2005, you will find that the targets for both 8(a) and service-disabled veteran-owned small business spending was over $31 billion each. The target was essentially met for 8(a)s. The amount awarded to service-disabled veterans was just under $7 billion.

That represents a deficit of nearly $25 billion worth of opportunities that were never afforded service-disabled veteran-owned small businesses.

Despite this disparity and according to the U.S. Small Business Administration (SBA), veteran entrepreneurs are successfully self-employed at a higher rate than any other group of American citizens. Imagine what service-disabled veterans could do if they had the opportunities they desperately need. We want to help create those opportunities and we need your help. And I promise you that if you can provide the opportunities, veterans will respond.

My other question is, why does this disparity of opportunity occur, and what can we do about it? I believe there are two factors, a lack of commitment to provide the mechanisms for service-disabled veteran-owned small businesses to become large businesses and a lack of knowledge of the current perceptions about service-disabled veterans. Contracting officers and their customers are simply not aware of the depth and breadth of options available that service-disabled veterans can provide.

I believe that many in government are reluctant to set aside large complex efforts for service-disabled veteran-owned small businesses for fear that the pool of respondents would be too small or that the offerings would be too expensive or noncompetitive. I believe this reluctance is also felt by the general business community.

Large businesses will never partner with or mentor service-disabled veterans if they perceive resistance on the part of the government or if it seems the commitment to develop, grow or mentor service-disabled veteran-owned small businesses is not genuine. With respect to the service-disabled veterans' ability to compete, I know from experience, it can be significant. To win our second-largest contract, which is a service-disabled veteran-owned small businesses set-aside, my company had to compete against 50 other service-disabled veteran-owned small businesses to win. We have successfully completed our base year of performance and are now working in our first option year, which is our second year of work. Our customer is receiving top notch service at a very competitive price and, having seen our capabilities first hand, understands the value of setting aside opportunities for veterans and service-disabled veterans.

We are also one of 44 companies to receive an award on the U.S. General Services Administration, GSA, Veterans Technology Services, VETS, Governmentwide Acquisition Contract (GWAC). Over 200 service-disabled veterans bid on that opportunity in a very competitive selection process.

Another outstanding example of veteran entrepreneurship is the NASA SEWP contract, which stands for Solutions for Enterprise-Wide Procurement. SEWP provides the latest in information-technology products, IT products, for all of the Federal Agencies. Until recently, SEWP had only large, small and 8(a) businesses as primes. On May 1, 2007, with the award of SEWP IV, six service-disabled veteran-owned small businesses are now prime contractors on SEWP IV. That means the Federal Agency now has the ability to procure the latest in IT products from service-disabled veterans at a very competitive price.

This is where advocacy comes in. These success stories need to be told. Government program managers, contracting officers and the business community at large should understand the significance in supporting small businesses that are owned by veterans. And they need to hear concrete examples of success stories where businesses owned by veterans have delivered excellent results. I think this type of educational advocacy should become an important part of any charter for any Federal programs that are funded by the Federal Government, such as The Veterans Corporation.

Another important resource that could help create opportunities for service-disabled, veteran-owned small businesses is a value that is gained when a large business partners with a service-disabled, veteran-owned business. For many years, there has been an 8(a) Mentor Protégé program at SBA that enhances the capabilities of 8(a)s to compete more successfully for government contracts. The program encourages private-sector relationships and expands SBA's efforts to identify and respond to developmental needs of 8(a) clients. Right now, there is nothing similar at the SBA for service-disabled, veteran-owned small businesses.

I personally know these types of relationships work. Our largest contract is with the VA where we provide enterprise solutions for Microsoft products and associated services. We are the prime on this contract, which is the largest contract ever awarded to a service-disabled veteran-owned small business. Our first award was $56 million. The VA contract would have never happened if it hadn't been for VA's Office of Information and Technology and in particular Mr. Craig Niedermeier and Mr. Dan Nascimento and all of the great people in their offices that worked so hard to provide more opportunities for service-disabled veterans. This contract is an example of VA's commitment to service-disabled, veteran-owned small businesses.

Once potential service-disabled, veteran-owned small business bidders were identified each identified business worked hand in hand with the Microsoft Federal team made up of Brian Roach, Geary Brummell and Marc MacDonald, and each one was paired with a large account reseller so that they could put in a number of competitive bids. Many companies worked together, and we in particular worked with Software Spectrum, who understood the need to mentor and assist service-disabled, veteran-owned small businesses. And they continue to do so today.

We have expanded that relationship, and we are picking up skill transfer and knowledge transfer, which is essential for our growth. We completed our base year of performance earlier this month, and we are now in our first option year, and VA is receiving top notch products and services at a very competitive price.

They—the VA are very pleased with our services and our process for delivering products and solutions. This contract continues to be a sterling example of what can happen when big business works with small business to create business opportunities, especially for service-disabled, veteran-owned small businesses.

I hope that my words have provided additional insight into veteran entrepreneurship and, in particular, the need to define the mission of current programs funded by the Federal Government. With the right focus, many of these programs can serve as opportunity advocates and can help ensure businesses owned by veterans have the opportunities they need to be successful.

I am convinced that the harder the government works to identify opportunities for veterans, the more success stories there will be. Thank you.

[The statement of Mr. Jimenez appears in the Appendix.]

Ms. HERSETH SANDLIN.  Thank you, Mr. Jimenez 

We have been joined by two other members of the Subcommittee, Mr. McNerney of California and Mr. Hall of New York.

I have a couple of initial questions, and then I am going to defer to the Ranking Member and the other members who have joined us here in the Subcommittee today for questions.

Ms. Halfaker, let me just probe a little bit more on how you got started. You talked about Mr. Gross and his help and other's who are service-connected disabled veteran who own their own businesses or other veterans who may not be service-connected disabled but who are business owners and the help they provided.

Did the Small Business Administration, the Center For Veterans Enterprise (CVE) or The Veterans Corporation assist you in any way in getting your business started? Was Mr. Gross part of the network of any of these three entities?

Ms. HALFAKER. Madam Chairwoman, when I first started my business, I didn't know what any of those organizations were. The first interaction that I had, in terms of becoming a business owner and realizing that there were actually resources out there, was probably through the SBA, just in going to their Web site and then initially meeting with a Score counselor at the SBA. And that was a very limited interaction. I paid, I think it was $40 and went to one class and realized that I was wasting my time. And that is not to say anything about the SBA it is just, I think I was already at a point where I needed, I was a little bit more aggressive and needed some additional help other than the very basic resources that they were providing.

So I continued to look and find other resources and tried to figure out how I was going to be able to accelerate the point my business was at and get to where I wanted to be quicker and attain my goals in terms of doing business with the government.

In terms of the other organizations you mentioned, the only other interactions I have had are subsequent to starting my business and having really been already running it for about a year. I would say it wasn't until maybe January of this year, a year after I started, when I really got involved with this community and obviously was introduced to Mr. Gross and started working with him, and then he also brought me into the community and introduced me to some other individuals.

Since that time, I have met with some members from Veterans Corp. They instructed me that they do have financial resources that they could help me get access to so I might pursue that. I haven't decided yet. But just exploring my options and learning, still learning what is out there.

Ms. HERSETH SANDLIN. You established your business and it has been up and running for about a year, and it is now an established business.  You just described what The Veterans Corporation offered as relating to financing opportunities and the financial resources.  Do you agree with Mr. Jimenez that the best help for you at this stage, now that your business is established, that to grow your business is the advocacy and the opportunity factors versus the training and other assistance, such as financial assistance?

Or do you think, since it is a fairly new business, that you still need access to some of the training and the other assistance in addition to advocacy and opportunity?

Ms. HALFAKER. Madam Chairwoman, I would say that it is a little bit of both.  I believe that my business—first of all, I do agree, to answer your question, with Mr. Jimenez, and my business being a year and a half old is still at the point where we can benefit tremendously from some mentorship.  But that mentorship, from what I have experienced, comes from a trusted partner, somebody who, you know, you leave the service and there is an element of trust.  You are used to being in an environment with people who basically would do anything for your life, and you go into a business environment, and it is a, I would say, a completely different kind of combat, and you don't know who you can trust.  There are a lot of different avenues you can go down.  There are so many resources out there that it is very confusing.  And the worst thing for a business—and I think some somebody mentioned this already—is to waste your time with something that is not going to ever help you grow your business.  So, that said, I think that there are resources out there, but I found the most effective resources to be other businesses, and I do agree with Mr. Jimenez

Ms. HERSETH SANDLIN. Thank you.

Mr. Boozman?

Mr. BOOZMAN. Thank you, Madam Chairwoman. I think one of you all mentioned that the climate seems to be a little bit better now than it was, and certainly this Subcommittee, in a very bipartisan way, has really been working on that, and it seems like in dealing with the agencies involved, that in some cases you were having a little bit of success.

That being said though—and all of you have seem to run across a little bit of an attitude with various procurement officers. I think in your testimony, Ms. Halfaker, you talk about being some place and somebody saying you and everybody else as far as the veterans' set-aside, Mr. Jimenez and Mr. Gross also, mentioned similar types of things.

So I guess something that—and again, we can talk about this, Madam Chairwoman—but I would really like to have some procurement officers over here and maybe get some of those that are doing a good job that seem to have figured this out because my experience is that, for the most part, these are good folks that are working hard.  However, sometimes they don't have the understanding of how to make it work where it is just easier to do it the way it has always been done so if we can, again, we will visit but if we could have a roundtable or something, and talk about maybe some of the men and women that are doing a good job of that, their experiences, some of you, that have done a good job of playing that game, I think that would be valuable.

Very quickly, one of the things that we are trying to do is bring the GI Bill up in the sense of getting it into the 21st century. Do you in your experiences of getting education for the businesses that you are in or continuing education, is there anything you have run across that maybe helped or was a hindrance?  Perhaps we can work on in that aspect also with the entrepreneurship?

For instance, one of the things we are trying to do is frontload, some of the short courses, trust, don't go as long, frontload the GI Bill to that sort of thing so you can go ahead and get the payment versus—go ahead.

Mr. GROSS. For me, the GI Bill, the GI Bill actually paid for my education. So the GI Bill worked very well for me. I believe that, you know, giving folks the opportunities GI Bill funds for, you know, for educational purposes that may not be, you know, pursuing a bachelor degree or that sort of thing I think would be very valuable. So I think using the GI Bill funds for training and some mentorship that sort of thing, I think the question then becomes, what organization is going to provide that?

Mr. JIMENEZ. Sir, if I may, I often referred to myself in the Army as the poster child for the GI Bill. I came from a very modest family. Neither of my parents were college graduates. In fact, neither were high school graduates. They didn't get their GEDs until late in life. And they didn't have the means to pay for college, so we had one of two options; either be very smart or be very good at sports. I was neither, so I found myself leaning more toward the military. And fortunately for me, they liked me as much as I liked them. And I was able to benefit from the GI Bill, which today I sit here with two master's degrees and a ton of experience and education that I owe to the Federal Government, to the U.S. Army in particular for having sent me to school on the GI Bill, and more importantly the guidance that I received from both the Army and the VA in how to best utilize my benefits. And I utilized the heck out of them.

I never have ever paid for any education, which I find shocking to this day; yet I was able to rise from Private E1 in the Army to Lieutenant Colonel 05 in the Army, and I went from being responsible for nothing to ultimately everything.  My last job prior to leaving was the program director of eArmyU, and here I was a guy who started out with no degree to managing a program that educated 45,000 soldiers. I thought it was just a phenomenal opportunity to show the great things that could happen. And I continue to think that even though there are disadvantages to serving in the military, the advantages far outweigh the disadvantages. It was an eye opener for me.

And it provided me with a business foundation I desperately needed to be successful. Had I not gotten that education and been able to take advantage of those benefits, I probably would have returned back to the neighborhood where I surely would not have been as successful.

Mr. BOOZMAN. Thank you, Madam Chairman, and thanks to the panel.

Ms. HERSETH SANDLIN. Thank you.

Ms. Halfaker, did you want to take an opportunity to respond to Mr. Boozman's question? You don't need to. I just wanted to make sure I gave you the opportunity despite time being—okay, all right, I do want to now recognize Mr. McNerney for any opening statement or questions for the panel.

Mr. MCNERNEY. Thank you, Madam Chairman.

I don't have an opening statement. I do have some questions.

Mr. Gross, I was delighted to hear you say that the VA, along with the Army Small Business Department,were very helpful to you. Could you answer fairly directly, without the SBA, would you have been able to start a business? Without the SBA, CVE and TVC, would you have been able to start a business?

Mr. GROSS. Well, CVE is part of VA, so, actually, I, frankly, relied on CVE early on quite a bit. So, you know, they kept a calendar of all procurement opportunity conferences and that sort of thing. So I did rely on CVE..

Mr. MCNERNEY. And they helped you develop a business plan?

Mr. GROSS. I wrote my own business plan. They didn't help me write a business plan, but it was a good place to go for outreach as far as the future procurement opportunities. And I will say and I know CVE has done a lot for me where they have provided outreach and brought the program managers from different VA opportunities and linked them up with contractors like myself to do direct capability briefings and so CVE has been helpful to me. SBA and TVC, I, frankly, haven't really gone to them, so I can't comment one way or the other.

Mr. MCNERNEY. Okay, thank you.

Mr. Jimenez, you are pretty blunt about lack of commitment being a big problem. And could you expand whether that is just the 3 percent, or is it also a lack of commitment from people within the administration?

Mr. JIMENEZ. Sir, I think it would be safe to say and I think probably just to give you kind of an idea of my—and I won't call it a tainted view—but my view as a business owner is that I was in the procurement business in the Army and found it extremely difficult to get the flow down of information you needed about changes in the FAR and new legislation.

What I found when I got out was that I was much more educated than many of the folks I was going to visit that were responsible for procurement and in particular changes to the procurement law. What I found was that, every time I walked in, I would have to educate contracting officers, program managers, folks who were responsible for opportunities and providing those opportunities in the Federal Government.

It was an education process. And the education process was extremely difficult, trying to make them understand what the difference was, what a veteran was, what a service-disabled veteran-owned small business was, what the difference was between 8(a) and service-disabled veteran small business and what were some of the laws or FAR clauses that would allow them to be able to provide me an opportunity to compete.

What I honestly believe is happening now is contracting officers, like many other folks in the Federal Government, are overworked, and they are more concerned at this point about providing satisfaction for the Federal Government by procuring what they can at the best cost. So the additional burden of having to provide opportunities to certain socio-economic type groups is creating a problem for many of them, and many of them just aren't interested in doing that.

I think the education process has been significant, but what I think would help that is to have somebody letting them know that they are being checked on, that it is down to the lower level. It seems to me that it reaches to the agency level, and the agency is responsible for announcing, we have met our goals or we haven't met our goals, but there is nobody at the top of the agency serving as the advocate for many of the agencies.

And exceptions obviously are the U.S. Army and Veterans Affairs and GSA where folks there have advocacy at the very top. Unfortunately, the other agencies, they almost seem to be absent landlords when it comes to taking care of service-disabled veterans. You tell them. You speak with them. You meet with them. You explain the advantages of contracting with the service-disabled veteran. Some of the opportunities, even in my case, some of the vehicles that I have, you plead with them. You respond to sources sought. You respond to Requests for Information (RFIs), and yet you don't see anything.

And what I desperately need is somebody besides myself—an advocate at these agencies saying, we will provide opportunities for service-disabled veterans. I have been empowered. I am going to go down and tell contracting officers. And many of the small business offices just don't have the resources to be able to do that. And that is where I think that agencies that are funded, such as TVC, might be able to assist in that by maybe at least being a watchdog group in the sense of who is going, well, who is not doing well; why haven't you turned this into a service-disabled veterans set-aside; this is a good fit; this would be a good opportunity for a service-disabled veteran.

And aside from some of the small business offices, I happen to be a big fan of the CVE. I think they do a great job within the VA of being that voice I just described. And I am not saying it because Mr. Denniston is sitting behind me, but he has been a friend to service-disabled veterans since the day I started my business, and he has been a friend to me. He does it in a very of agnostic process in that he provides opportunities for all service-disabled veterans, and we all get a chance to compete, and they are coming very fast but VA is just one agency. The Army is just one agency.

The other agencies, unfortunately—GSA is a great agency—the other agencies, we have difficulty getting them to acknowledge that service-disabled veterans are meaningful in the small business relationship piece.

Mr. MCNERNEY. Very informative answer. Thank you.

Ms. HERSETH SANDLIN. Thank you, Mr. McNerney.

Mr. Hall, do you have questions or an opening statement?

Mr. HALL. Thank you, Madam Chair.

I have questions. And first of all, thanks to all three of our panelists for your service and for your continuing service now and for coming here and sharing your experience and your observations with us.

And, Mr. Jimenez, I couldn't help but thinking, as you told your story of where you have come from and where you are now and your masters degrees and your success in businesses and so on, it is too bad it doesn't fit into a 30-second commercial. Very inspiring. It is kind of like the advertising slogan, "Be All That You Can Be," but really expounded upon. And I think it would be good for a lot of people to hear your comments about the advantages of being in the service far outweighing the disadvantages. And this goes for all of you, but especially the way you described it, Mr. Jimenez, your initiative and energy and accomplishing those things. It was nice that the opportunities were there. But it takes personal fortitude to take advantage of them so.

Ms. Halfaker, I just want to ask you, in terms of achieving the 3 percent goal—I think this question maybe all three of you can answer if you like—how can we help that goal be achieved? Would an ombudsman represent veterans with all the different agencies that you might seek to procure contracts or compete for contracts with, is that an idea that might be worth something and any of the suggestions to make sure that fair and equal consideration is given to those veterans and that procurement officers are not, either because they are so busy or because of the way things have always been done or whatever reason, that they don't overlook the importance of our veterans having this opportunity? It is a long question, but answer it however you like.

Ms. Halfaker first.

Ms. HALFAKER. Yes. I would just like to comment that I do believe that there is certainly an accountability issue that has already been brought up, and maybe it is a lack of resources from the side of the procuring officers and the contracting officers. But I think if there was just—there is a systemic problem, though. And it is a lack of caring on their part, and it is permeating, I think, you know, through many of the agencies and the agencies I have had experience with, particularly even the Navy, which I mean that just shouldn't happen. These are our own people. And I have run into a couple of different situations personally where people have just downright told me we don't care; how does this affect me? And it is simply a matter because it doesn't affect them because there is no negative reinforcement or repercussions when they don't do the right thing and they don't follow the rules.

So I guess I would just like to say that any kind of support that anybody can give would be helpful because I think that, you know, even if there is not—I do believe that there has to be some kind of consequence. But even if there isn't, just to show you guys just being here shows a tremendous amount of support but even taking that a step further and putting your name on something I think is really taking the first step in saying this is important and taking care of our veterans, veteran business owners, is important.

Mr. HALL. Perhaps one idea might be to fence off or to quarantine that 3 percent of the budget until it is used for veterans' projects or unless it can be proven that no veterans have applied for those, have bid for those projects.

Mr. GROSS. I think that is a great idea. You know, I think there needs to be a, you know, a reward/penalty program. I think we need to reward those who are making an effort and who are advocating, and penalize with budget those who don't.

Mr. HALL. Any thoughts on the idea of an ombudsman to keep an eye on all the different agencies?

Mr. GROSS. Well, I think we start at the Office of Federal Procurement Policy (OFPP). Start there.

Mr. HALL. They are supposed to be doing that?

Mr. GROSS. Right.

Mr. JIMENEZ. Sir, I agree with both Mr. Gross and Ms. Halfaker in that I—they bring up some very good points. We are not going to be able to change the mindset of people. They believe what they believe, and some will see value and some won't, no matter how much you confuse them with the facts.

I think the ombudsman is a good idea. But I think Mr. Gross just made an important point, and that is that the Office of Federal Procurement Policy has the ability to do something very similar—I am assuming, and I have not worked there, and I am not up on what capabilities they might have or what they might not have. But it would seem to me that if they in fact are the policy branch that would provide that, that that would be a good place to put somebody, but more importantly, I think that if the dollars were fenced off and if I, as a contracting officer, knew that if I used those dollars for service-disabled veterans, that provides me with the opportunity to provide opportunity to service-disabled veterans; and that if I don't, I leave money on the table when money is tight; I think that would be would go a very long way to providing opportunities for veterans and service-disabled veterans.

I think the ombudsman is a good idea, but without the ability to actually go in and provide penalties or to enforce the legislation that is presently in place, I think it would just be another position that unfortunately would be powerless to make changes.

Mr. HALL. Thank you, Madam Chair.

Ms. HERSETH SANDLIN. Thank you, Mr. Hall, and we will follow up with you on some of the ideas that you are so gifted in generating in our hearings.

Ms. Davis do you have questions for the panel?

Mrs. DAVIS. Thank you, Madam Chair, and again, thank you for holding this hearing. As someone who has been an advocate I would say for The Veterans Corporation and some of the good work that they do, I am really interested in what you had to say. And I know that, through the course of the hearing, we will have an opportunity to talk to a number of different entities that are very involved with trying to provide those kinds of opportunities.

But I would say, Madam Chair, I would certainly, certainly endorse my colleague's point of view in terms of, how could you do that? Money talks, we all know that. And so if there is some way within the procurement area or others that you can provide incentives for those who would get credit for having established a track record for helping service-disabled veterans, I think that would be significant.

It may be that, you know, there is a contract here and there, but what we are looking for is those who are strong advocates, put their energy and their investment of time and resources into providing that and really establishing all the poster companies I think that grow out of this. So I would hope that perhaps we could look at that.

But I wanted to see—you mentioned The Veterans Corporation. How do you see them as either providing the monitoring, the oversight that you think could be a stronger part of their role?

Mr. JIMENEZ. And I have talked to Mr. Blackwell, ma'am, on this subject. I think he has a great organization. I think he is a great advocate. Unfortunately, I don't think that he has that charter or the ability to go out and do the things that I as an established small business need for him to do for me. And that is, when he shows up and asks, why is this set-aside not a service-disabled set-aside, or why is this small business set-aside not a service-disabled set-aside, or why is this large business opportunity not a set-aside; the first question is, who are you, and the second question is because we don't want to.

I think if Mr. Blackwell were given the opportunity, perhaps through a charter or some way, I think he would be able to do that quite effectively, and I think a number of folks would. But he is in the same situation. Without tools and enforcement, there is just not much anybody is going to be able to do.

Mrs. DAVIS. If I could follow up quickly just in terms of policies. Are there policies in contracting, such as bundling jobs, that you think get in the way of this as well? I know, I am from San Diego, and we have a number of small businesses that are very frustrated often because they don't hear about the jobs or it is very difficult for them engage in the process.

Mr. JIMENEZ. I think the government has done a much better job particularly in the last 3 or 4 years of not doing the bundling. However, I am concerned about the fact that sometimes bundling does leave service-disabled veterans out in the cold. And more importantly, what I find is the problem that comes with bundling is not that it exists but that nobody goes in when there is a large corporation and says, we intend to do 20 percent small business, make a small business plan that includes 20 percent service-disabled, 20 percent 8(a) or small business, and they don't do it. And when they don't do it, nobody does anything about it. There are no penalties. There are no liquidated damages. And more importantly, nobody knows because there is nobody that has the ability to check.

So, first off, we have to identify that, in fact, didn't happen; that somebody said they were going to give business to small business or to service-disabled veterans or 8(a) or woman-owned or HUBZone, and when they didn't, somebody did something about it.

Mrs. DAVIS. Would you either of you like to comment?

Mr. GROSS. That is a big problem today. Many of the larger procurements, when the larger companies—I believe the threshold is $500,000 or greater—they are required to provide in their proposal a small business subcontracting plan. When, you know—and I myself have gone through this. You know, you put a lot of time and effort into a bid and proposal dollars into, you know, going after an opportunity with the company. They win, and they give you nothing, and there is not a whole lot you can do. There is really—now that contracting officer has the ability within the FAR to assess liquidated damages against that contractor. But it is hardly ever done.

Mrs. DAVIS. Thank you. I guess the other question would be, quickly, how many