Chairwoman Herseth Sandlin, Ranking Member Boozman, and distinguished members of the subcommittee, on behalf of AMVETS, I would like to extend our gratitude for being given the opportunity to share with you our views and recommendations regarding the U.S. Department of Veterans’ Affairs Center for Veteran Enterprise (CVE). Due to the recent lack of leadership at CVE, AMVETS believes this hearing to be vital in the success of CVE.

AMVETS feels privileged in having been a leader, since 1944, in helping to preserve the freedoms secured by America’s Armed Forces.  Today our organization prides itself on the continuation of this tradition, as well as our undaunted dedication to ensuring that every past and present member of the Armed Forces receives all of their due entitlements.  These individuals, who have devoted their entire lives to upholding our values and freedoms, deserve nothing less.

By way of background, CVE is a subdivision of the Office of Small and Disadvantaged Business Utilization that extends entrepreneur services to veterans who own or who want to start a small business.  CVE also aids other Federal contracting offices in identifying veteran-owned small businesses, in response to Executive Order 133600. In the past VA faced many obstacles, from lack of leadership to best practices with their entrepreneurship programs, which prevented the success of veteran owned businesses. For this reason, VA established the program entitled the Center for Veterans Enterprise (CVE) with the passage of the Veterans Entrepreneurship and Small Business Development Act of 1999. Furthermore, on December 22, 2006, President Bush signed Public Law 109-461, the Veterans Benefits, Health Care, and Information Technology Act of 2006 in an effort to successfully identify and grant status to SDVOSBs.  Effective June 20, 2007, this legislation authorized a unique “Veterans First” approach, specific to VA contracting.

As we move through the 21st century, during a time of war, the VOSB and SDVOSB population continues to rise at a rate not seen since the end of World War II. As America’s war fighters transition back into civilian life, many are choosing to pursue lives as entrepreneurs. Given the almost 30% influx of VOSB and SDVOSB, it is vital that the Center for Veterans Enterprise 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 a lack of leadership over the past year, we have seen CVE slowly move from the role of assisting VOSB and SDVOSBs to that of an information and referral agency for other federal and state agencies. AMVETS believes the Center for Veteran Enterprise must be brought back up to par with what it was originally tasked to do: assisting our veteran population in all aspects for their entrepreneurship endeavors. In order to effectively accomplish this CVE must be properly staffed, trained, and funded.

Recently, AMVETS has heard from our membership about the many obstacles veteran business owners are facing when working with CVE. Most recently, we have gotten an influx of calls on the lengthy time periods veteran business owners are experiencing when applying for their certification as an SDVOSB. While AMVETS has always requested an accurate certification process of SDVOSB status, we do not believe that extensive waiting periods by an SDVOSB are in the best interest of our membership, or any other SDVOSB. It is unclear to AMVETS the exact causes of this extensive waiting period, be it lack of staff or lack of training. However, we do ask this committee to ensure that CVE is properly equipped with all necessary resources to effectively reduce this waiting period.

On February 8, 2010, the final CFR rules regarding “VA Veteran-Owned Small Business Verification Guidelines” were published. The document affirms as final, with changes, an interim final rule that implements portions of the Veterans Benefits, Health Care,and Information Technology Act of 2006. This law requires the Department of Veterans Affairs (VA) to verify ownership and control of veteran-owned small businesses, including service-disabled veteran-owned small businesses. This final rule declares that it defines the eligibility requirements for businesses to obtain verified status, explains examination procedures, and establishes records retention and review processes. However, the newly published rule fails to outline any solid changes or improvements to the SDVOSB verification process, and does not offer any clarification on how a CVE examination of SDVOSB should be conducted. AMVETS believes that the newly published rules focused on control and ownership definitions, yet provided no clarification on the specifics of the verification process by CVE. AMVETS believes that these updates to 38 CFR, Part 74 regarding P.L. 109-461 still leave the integrity of the SDVOSB verification system open to fraud.  This continued lack of clarity and uninformed inconsistent status verification processes will cause the same unwanted results of many veteran owned businesses not receiving the protections they are entitled to under the law.

At present, vendors desiring to do business with the Federal Government must register in the Central Contractor Registration (CCR) database, and those who indicate they are veterans or service-connected disabled veterans, self-certify their status without verification.  P.L. 109-461, required VA to establish a Vendor Information Page (VIP) database to accurately identify businesses that are 51 percent or more owned by veterans or service disabled veterans. This database was originally designed to act as a reliable, centralized database providing all federal agencies a single source in the identification of possible SDVOSB and VOSB for consideration during their procurement processes. As of April 15, 2009 approximately 18,000 SDVOSB were registered in the CCR and Vet Biz databases, and unfortunately, an unknown number were still awaiting certification as a legitimate SDVOSB.

Furthermore, according to the federal register updates of February 2010, entrepreneurs will now be allowed only one company at a time in the contracting program and must work full time in the business, according to the new rule. AMVETS believes this change will hinder the overall entrepreneurship spirit of the veteran community, and unfairly leaves out any VOSB or SDVOSB that may have grown due to their success.  AMVETS is in no way implying that all contracts should be awarded to the larger, more dominant firms, but rather should not hinder a veterans’ business growth.

As a part of the 2011 Independent Budget AMVETS recommended all federal agencies be required to certify veteran status and ownership through the VA’s VIP program before awarding contracts to companies claiming to be veteran or service-disabled veterans who own small businesses. We also recommended that Congress take the immediate and necessary actions in requiring all federal agencies to use a single source database in all verifications of veteran ownership statuses, before unknowingly awarding contracts to companies on the basis of claiming SDVOSB or VOSB preference.  AMVETS final recommendation regarding P.L. 109-461 is for the immediate internal promotion and education on proper usage of the database should coincide with implementation of database use. As the Veteran Owned and Service Disabled Veteran Owned Small Business population continues to rise, it is of the utmost importance that the Center for Veterans Enterprise be ready and able to meet the growing demand for their services.

AMVETS strongly believes that VA must help eliminate the barriers that veterans face in regard to the formation and development of their business ventures. Madam Chairwoman, this concludes my testimony and I am happy to answer any questions you or the committee may have for me.