Joint Hearing of the Committee on Homeland Security and Governmental Affairs of the U.S. Senate and the Committee on Veterans’ Affairs of the U.S. House of Representatives at 1:00 p.m. CDT.
Submission For The Record of Mr. James F. McDonnell, Chairman & Chief Executive Officer, Trinity Applied Strategies Corporation
I am writing you as a service-disabled veteran small business owner that has been done a disservice by the Department of Veterans Affairs (VA). Specifically, the VA’s Center for Veteran’s Enterprise (CVE) has denied my company the right to be registered in the VA Vetbiz Vendor Information Pages (VIP) Verification Program. The VA’s decision is a denial of benefits and there finding is not based on fact, includes allegations that are untrue and they provide no mechanism for appeal to any higher authority.
The VA Benefits Web Site includes business assistance as one of the benefits offered to veterans. Unfortunately the VA is not managing this program as an assistance program; rather they have taken an adversarial approach. The VIP Verification Program is a benefit for veterans in that it allows for access to preferential contracting for veteran owned businesses. The VA should be assisting Veteran’s and their companies with becoming registered in this program instead of focusing on punishing small business by using the weight of their bureaucracy as a hammer.
My company, Trinity Applied Strategies Corporation (TAS-Corp) first applied online for the program in February of 2011. We did not receive a response until June 1, 2011 and on that date we were asked to submit around 300 pages of documents within a seven day time period. The CVE gave us until June 7, 2011 to submit these documents or our application would be removed from the system. Now, while my company was able to gather these documents within this time frame it was not without a great cost to the company, three employees were pulled off of other projects to gather the documentation for the application. A program that is promoted as a “benefit” for Veterans should not place such unnecessary burdens on the Veteran during the application process. Additionally, on its face this 7 day requirement seems to conflict with federal law which mandates 60 days be allowed for the submission of requested documents.
TAS-Corp submitted the required paperwork by the June 7, 2011 deadline. On August 8, 2011 TAS-Corp received an un-signed letter from Gail Wegner that was stamped with the date of July 15, 2011; this letter denied TAS-Corp from inclusion to the VIP Verification Program. The reason for the denial was that the CVE determined that TAS-Corp could not prove that the Service-Disabled Veteran, myself, controlled and managed the business. We disagreed with this determination and felt that it was a misunderstanding of how our by-laws are written. I attempted to contact Ms. Wegner and was told that she no longer worked for the VA and had left a while ago (Pre-dating the letter we received with her name on it). Eventually, I was able to speak with David Eckenrode (Acting Deputy Director of the Center for Veterans Enterprise) and attempted to request a meeting with the VA to explain how our board was organized and demonstrate my control of the company. A meeting was never achieved but in my conversations with Mr. Eckenrode he seemed to understand that this was simply a junior analyst who reviewed our documents not understanding corporate structure and that we would easily be able to clear up the issue. I requested a properly signed letter be issued to TAS-Corp and Mr. Eckenrode agreed and identified that our time to appeal of thirty days would run from the date of the new letter.
I was also able to speak with Tom Leney (Executive Director of Small and Veterans Business Programs) and I realized that he has a very different view of what his office should be doing. He indicated that the role of the office (CVE) is no longer “assistance”, rather it is a regulatory function whose primary mission is to prevent companies that cannot prove eligibility from being in their database. I understood from our discussion that he, and his staff, would like to be in the assistance business but their understanding of their mission is to be the regulatory enforcer. Mr. Leney also told me that when you seek a second review (i.e. question any of their findings) the CVE goes through the entire package again so (as in this case), I questioned their finding and they added another one. Instead of seeking to help the veteran address the original issue and submit evidence of it being corrected, the VA process requires another complete review (of items already reviewed and found acceptable). Mr. Leney consistently blamed “the regulation” that VA issued for the problems and felt his hands were tied when it comes to improving the process. I reminded him that the regulation came from his office and if he knew it was flawed he was obligated to fix it, he did not agree with my assessment.
A new letter from the VA was issued on August 25, 2011 and contained their original finding regarding control and management and added an additional finding of outside employment that also prevented me from “controlling” TAS-Corp. The new letter concludes that I am a full time employee of my consulting firm (McDonnell Consulting Group), however there is no evidence of that…in fact the only evidence they had from our original filing on June 7, 2011 was TAS-Corp payroll records (which show me being paid for full time work) and my personal taxes. I am now, and have been, a full time employee of TAS-Corp, their allegation to the contrary is false and unsubstantiated.
In response to their new letter of August 25, 2011 I submitted a response letter with over 70 pages of additional documents. In this submission we provided new board of director resolutions that 1) reduced our board of directors to one individual, myself; 2) prevented any officer of the company from enacting any policy that restricts my control of TAS-Corp, and 3) a resolution clarifying my title as CEO and Chairman of TAS-Corp. In addition to the board resolutions and in order to address the outside employment concern of the CVE I submitted time accounting records for 2009, 2010, and through the current time period in 2011 that showed my full-time employment with TAS-Corp. I also included my W-2 showing my full-time salary from TAS-Corp and an explanation detailing that the sole source of McDonnell Consulting Group’s revenue is from my payments as Chairman of the Board of TAS-Corp. Additionally, another Board Resolution was included which requires the CEO to be employed full-time and restricts outside activity. This packet was a comprehensive response to every concern that the CVE listed in its revised August 25, 2011 letter.
As of November 2011 we had received no communication from the CVE regarding our response, on November 8, 2011 we were told that we would receive a response on or about December 7, 2011. On December 21, 2011 I received an email from an Amanda Abbey a paralegal contractor for the CVE identifying that “the Examiner expressed a need to obtain the original documents that was part of your company’s initial verification application or 0877 application. Is it possible for you to forward the documents to me by e-mail?” This email was surprising for any number of reasons including that it seems they were only just getting around to reviewing my submission more than 110 days later. However my main concern, and my response to the email, was to ask “What happened to the documents that we originally submitted? Were they lost, misplaced, etc.”
A substantial amount of business sensitive information was included in these documents. In my response I asked for clarification as to what she was requesting and an explanation for the missing documents. Ms. Abbey responded “The Center for Veterans Enterprise has your tax documents. However, CVE does not have additional relevant information needed to make a determination on your Request for Reconsideration. The CVE Examiner has asked for the following: Bylaws, Articles of Incorporation, Résumés for the Vet and owners of more than 20% of the concern, and Stock Certificates/ledger.” All of this information was sent previously to the CVE, in fact they even cited their review of these documents in their letters denying our registration into the VetBiz VIP Program. At this time I again tried to engage Mr. Leney and Mr. Eckenrode I sent both emails attempting to find out how my documents are missing and why. Mr. Leney failed to respond and Mr. Eckenrode initially repeated the request that these documents were needed until I pointed out to him that their letter actually cites reviewing these records. We were never given a reason that the documents were asked to be resent and finally on January 18, 2012 we received another letter denying TAS-Corp’s registration into the VetBiz system. In summary, the documents were never missing…they were not truthful about that and it is my opinion they simply said they were missing in order to shift blame for the delay to me.
In their most recent letter of January 18, 2012 the VA, through CVE, agreed that my board resolutions confirm that I am the sole director but still found that “my managerial responsibilities with McDonnell Consulting Group (MCG) prevent me from devoting sustained and significant amount of time in the concern.” Nowhere in the CVE’s three page letter do they address the 70 pages worth of documents that I submitted showing my full-time employment with TAS-Corp and identifying that the only income my consulting company has is from my chairman of the board payments from TAS-Corp. This accusation is a flat out lie, I come to work in my TAS-Corp office every day and they have abused their position of public trust by in effect accusing me of fraud through misrepresenting my employment status.
Finally, in addition to ignoring the documentation that I submitted the CVE issued instructions preventing my company from submitting a new application until six months’ time had elapsed. Only on May 9, 2012 was my company eligible to once again submit to this process. The law gives the VA no punitive authority; they have created it for themselves.
I hope this letter properly describes the substantial time and effort that this Service-Disabled Veteran-Owned Small business has put into this application for inclusion into a database that is supposed to be a benefit for veteran small business owners. As you can see from the description above this process is broken. How many other less sophisticated or not as financially stable veteran-owned companies are being kept out of a database that was created for them and should be an aid to developing their business?
I agree 100% that there should be certain qualifications that any business wishing to be listed in the database must satisfy, but the CVE shouldn’t be flat denying businesses that don’t initially meet these requirements on paper. Why can’t the CVE perform a review and if the company is deficient identify the documents that they would need to submit to be approved? The VA, and specifically the CVE, should never be in the position of acting as a regulator of the veterans that have served this country. The VA and CVE should act as a facilitator of the success of veterans. The CVE should be assisting veteran owned businesses with entry into the VetBiz VIP Program not doing everything in their power to keep them out. I hope that you will direct the VA’s Center for Veteran Enterprise to review not just the application of my company but the overall process for veteran-owned businesses in general. I am happy to meet with members, staff, the VA, or any interested party and explain what my company went through and what I think we can do to fix this process.
I attempted to meet with the Secretary, the Deputy Secretary; the Secretary’s Director of Client Relations and was rebuffed at every turn. I began my discussions with the VA naively thinking this was an oversight by senior leadership and that once they understood the issue they would immediately fix it. I have been an SES in two agencies and looked at this as an issue that was low hanging fruit for improvement. That being said, the VA seems to be comfortable having an office that is penalizing small businesses, denying benefits without due process and empowered to issue official government findings that are incorrect. I would like to believe that Secretary Shinseki would do the right thing if he were aware of what his staff was doing but he either condones this or it is being hidden from him. Since starting this effort a year ago I have come to the unfortunate conclusion that he must be aware of the issue and has chosen to ignore it.
It is ironic, that during a period in which other agencies such as DHS, DOD, DOS and DOE are expanding their support of veteran owned small businesses the one agency that is funded specifically to assist veterans is making it difficult to run a business. We have spent thousands of dollars in wasted labor, submitted hundreds of pages of documents and spent additional money in legal fees to resolve this issue and the VA has done nothing to assist. Alternatively, when I had a concern at DHS some time back I asked for a meeting with the Chief Procurement Officer and he graciously met and then handed me off to the head of their office of small business utilization…who I’ve called for advice on several occasions and has been open and provided guidance and assistance. I have had similar experiences with DOS and DOE which demonstrates that this adversarial and harmful role that the VA has taken on is not government wide.
Finally, it seems inconsistent that the head of CVE not be someone who has owned a business, the person at the top of this process shouldn’t be a guy who has never been in my shoes. He’s never put all his personal wealth into a company, created jobs (30 so far including 13 veterans), and had to explain to his wife that if the company fails our house could be taken. Starting and running a small business is stressful enough without having government employees paid to assist me feeling free to lie and manipulate a system to make it more difficult to do business.
We have not, and do not intend to submit another package to the same people at the VA. They have proven themselves to be untrustworthy, willing to “move the goalpost”, misrepresent facts and create their own rules. They have no appeal process and until there is a change I feel it is simply a waste of time to deal with them. We submitted a FOIA request on March 6th to prepare for legal action but the VA has not been forthcoming with documents (probably violating another law they are supposed to follow but choose not to).
I thank you for your time and attention to this matter. I have attached a list of potential legislative remedies for your consideration.
James F. McDonnell
Chairman & CEO
Trinity Applied Strategies Corporation
LEGISLATIVE INITIAIVES TO ASSIST SDVOSB/VOSB
1. Clarify that the VIP Database inclusion and preferred contracting status is a defined veteran’s benefit.
a. Direct the VA to manage this process as provision of, or denial of, a benefit; mandate local VA office assistance for submittal and review with approval of the benefit at the local level and any denial elevated to HQ; authorize use of United States Court of Appeals for Veterans Claims to resolve disputes.
b. Direct that the VA cannot issue blanket denials, rather that they must provide and “interim approval” with guidance on how to become permanently eligible and provide the veteran assistance in submitting paperwork.
i. All “interim approvals” should provide a 90 day window in which the business is listed in the VIP database while the veteran provides any specific additional information,
ii. If the veteran requests an appointment to discuss the interim decision the VA must meet with the veteran to seek to approve the request for benefits. The 90 day period shall begin on the date of the face-to-face meeting to prevent the veteran from being penalized for VA delays. The VA representative shall, at the time of the meeting take one of the following actions:
1. Approve the benefit
2. Identify shortfalls and provide guidance to the veteran and schedule a follow-on meeting for approval
3. Advise the veteran that the package will be forwarded to HQ for a denial of benefits review if requirements cannot be met within 90 days.
iii. If the VA believes a submission was fraudulent the package shall be forwarded to the US Attorney for review and consideration for civil or criminal penalties.
2. Direct that the Director and Deputy Director of CVE be Limited Term SES Appointments (a position in which new directors rotate in from the private sector every 2-3 years) and meet the following requirements: (the incumbents would not qualified for this role)
a. Have owned and controlled as SDVOSB/VOSB for a minimum of 5 years.
b. That company must have provided products or services to the federal government as a prime contractor.
c. The company must have had a minimum of 15 full time employees for at least 3 of the 5 years.
d. Shall be a veteran with honorable discharge or retirement.
3. Direct that only the Director of CVE may recommend a company for denial of benefits and that the Deputy Secretary must personally review and sign any denial letters. (This action is similar to actions that would destroy a military career and should have the same weight as a DOD action against a service member).
4. Direct the VA to forward to the SBA any approved company that is owned by a disabled veterans (above 30% disabled) for inclusion in the 8a program.
a. Amend 8a statute to include SDVOSB where the owner is >30% disabled