Chair Herseth Sandlin, 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’ (VA’s) Center for Veterans Enterprise.

The American Legion contends that the key to the nation’s economic recovery depends on a strong and vibrant small business agenda.  Small business is the engine that will pull the American economy out of its current recession and will be responsible for American’s economic growth in the foreseeable future.  Economic data constantly points out that businesses with fewer than 20 employees account for 90 percent of all U.S. firms and are responsible for more than 97 percent of all new jobs, generated $993 billion in income in 2006, and employed 58.6 million people.  There are 27 million small businesses in the U.S. and 99.7 percent of all firms are small businesses.

In FY 2007, the Small Business Administration’s (SBA’s) Office of Government Contracting reported that of more than $378.5 billion in Federal contracts identified as small business eligible, small businesses only received a total of $83 billion in prime contract awards and about $64 billion in subcontracts.  Service-Disabled Veteran-Owned Businesses (SDVOBs) were recipients of $3.81 billion, or 1.01 percent of those available contract dollars.

America has benefited immeasurably from the service of its 23.4 million living veterans, who have made great sacrifices in the defense of freedom, preservation of democracy, and the protection of the free enterprise system.  Due to the experience veterans gain in the military, the success rate of veteran-owned businesses is higher than other non-veteran-owned businesses.  The current War on Terror has had a devastating impact on the Armed Forces and has contributed to exacerbating this country’s veterans’ unemployment problem, especially within the Guard and Reserve components of the military.  According to the Department of Labor the present unemployment rate for recently discharged veterans is as high as 20 percent.   For example, one Reserve command from Wisconsin that is returning this month reports that 50 percent of its members will be attending one of 11 Job Fairs the state has planned for the next six months.  In addition, one out of every four veterans who do find employment earn less the $25,000 per year. Unfortunately, many of the thousands of service members who are currently leaving the service are from the combat arms and non-skilled professions that are not readily transferable to the civilian labor market.

One way of combating unemployment or underemployment is through the creation of new jobs.  Small business creates an estimated 60 percent to 80 percent of net jobs, therefore providing a central element for strong economic growth.  Government should assist in the creation of new jobs by encouraging qualified entrepreneurs to start and expand their small businesses.  No group is better qualified or deserving of this type of assistance than America’s veterans.

Increasingly, the growth and stability of this nation’s economy is dependent on the long-term success of the small business networks across the country.  However, during a time of war there is much to be accomplished.   Ironically, for too many years, the very men and women who served in uniform, stood ready to fight, and if necessary die in order to protect and preserve the free enterprise system, are summarily ignored by the Federal agencies responsible for meeting their small business needs.    

The Center for Veterans Enterprise

The Department of Veterans Affairs’ Center for Veterans Enterprise (CVE) according to its website “is designed to improve the business climate for veterans, to minimize access barriers and to inform the public about the benefits of working with veteran-owned small businesses.”  In addition, CVE provides opportunities for veteran-owned small businesses by collaborating with like-minded individuals and organizations who believe that veterans in business are still serving the American public.  They work and link with partner organizations to provide local support to veteran-owned small businesses, because they are the face of a local economy.  They also support acquisition teams through procurement coaching, free market research, awareness briefings and provide awards for noteworthy achievements.  Their goal is to provide smart business information for those veteran-owned small businesses that are in search of starting their business or continuing to grow their business.

P.L.109-461

Former President Bush signed P.L. 109-461 on December 22, 2006, The Veterans Health Care, Benefits and Information Technology Act of 2006.  This law not only pertains to important health care benefits, but also outlining how VA will deal with veteran-owned small businesses in the area of contacting opportunities.  Some of the provisions contains in this law is as follows: 

• Establishes a set-aside and sole-source award mechanism for Veteran-Owned Small Businesses;
• Requires the Secretary of Veterans Affairs to establish prime and subcontracting goals for SDVOSBs and VOSBs; 
• Requires registration SDVOSB and VOSB firms in VA.
• Requires VA to verify ownership and control of the company and the status of veteran owners. Providing ownership and control information to VA is optional and veterans may continue to sell to VA without verifying their status.  However, participation in the set-aside and subcontracting program is limited to eligible businesses registered Veterans Information Page (VIP); and
• Provides for debarment from VA acquisitions of those firms willfully misrepresenting their status.

VA’S IMPLEMENTATION OF PUBLIC LAW 109-461

In March 2007,  Scott Dennision,  Director of the VA’s Office of Service-Disabled Veteran-Owned Small Business Utilization (OSDBU) is quoted as stating in his department’s local newsletter the Small Business Advocate that “a major challenge to implementing P.L. 109-461 will be educating and training VA’s workforce of the significant changes brought by the law.  To that end, OSDBU is available to provide training to acquisition professionals, program officials engineering officers and personnel, purchase cardholders and anyone else involved in the acquisition process that could use this training.”   

Challenges:

• Over the past 10 years, VA has built CVE through non-appropriated funds.  CVE markets themselves as a technical training and assistance center that maintains a database of veteran-owned small businesses.  With regard to CVE’s technical assistance capabilities, this effort represents a negligible impact locally and virtually no impact nationally.  CVE maintains one small assistance center in Washington, DC, where they see a small amount of clients and field phone calls;
• Takes anywhere from one month to one year to have a company registered with VA.  One veteran complained after registering, he was deleted from the data system a few months later;
• Veterans cannot register multiple businesses at one time, and owners must work full time in their registered business;
• Qualifications of CVE staff questioned;
• A 10-case Government Accountability Office study proved approximately $100 million in SDVOSB sole-source and set-aside contracts through fraud and abuse of the program;
• The Web site is not user-friendly and needs to be improved; and,
• Not enough communicating between veteran-owned small businesses on the Web site. 

Observations:

CVE’s marquee program is their VIP database.  As the only Federal database focusing strictly on veterans-owned small businesses, the VIP database has established itself as the premiere database for veterans in the country.  CVE has successfully promoted this database commercially, as well as cross agency and has established a strong foundation and infrastructure that can easily be interwoven into other Federal databases such as the Central Contractors Registry (CCR).

VA and the Small Business Administration (SBA) should develop a comprehensive partnership to assist veterans who are interested in participating in Federal procurement.  CVE should maintain the database (VIP) and verify accurate veteran/service-connected disabled veterans’ status.  SBA should retain the responsibility for validating the business ownership, size standards, and structural integrity of the business.  SBA should have direct reporting and input authority to the VIP database through the Office of Veterans Business Development once this information is collected.  VA should maintain the eligibility status regarding veteran status.  SBA is responsible for verifying all other socioeconomic categories for the purpose of Federal procurement.  SBA already maintains the infrastructure, expertise and established regulatory guidance to include the veterans’ population within their authority.

I would like to mention that these observations have come from The American Legion’s National Small Business Task Force.  This Task Force is made up of veterans who are successful business owners, Federal agency officials and The American Legion leaders.  Their mission is to gather information, data and research regarding the current and future economic status of veteran businesses.  These individuals are the very individuals who should be using the CVE and are a part of the database that CVE is maintaining.

Conclusion

While The American Legion applauds the Federal government in setting up and implementing a program that is designed to assist Veteran-Owned and Service-Disabled Veteran Owned Small Business to start up and receive government contracts, it is our belief that this program could be improved.  The implementation of CVE is small and does not necessarily provide the right assistance to veterans.  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 the 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 resources to ensure proper implementation.

The American Legion appreciates the opportunity to present this statement for the record.   Again, thank you Madame Chair, Ranking Member Boozman, and Members of the Subcommittee for allowing The American Legion to present its views on these very important issues.