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.
Witness Testimony of Mr. Anthony R. Jimenez, MicroTech, LLC, Vienna, VA, President and Chief Executive Officer
Good Afternoon, Chairwoman Herseth Sandlin, Ranking Member Boozman and distinguished members of this committee. It is a privilege to be here today. I want to thank the committee for allowing me to share my thoughts regarding Federal Procurement and the Three Percent Set-Aside for Service-Disabled Veteran-Owned Small Businesses and I look forward to providing my views on ways to improve the Government’s utilization of Service-Disabled Veteran-Owned Small Businesses.
My name is Tony Jimenez and I am the Founder as well as the President and CEO of MicroTech, LLC, a Service-Disabled Veteran-Owned Small Business located in Vienna, Virginia. I retired from the Army in 2003 after serving 24 years on active duty. I considered opening MicroTech immediately, but opted to wait and first went to work for a large and very successful Government Contractor here in the Washington DC area. I was aware that the Veterans Entrepreneurship and Small Business Development Act of 1999 (P.L. 106-50) had been signed into law on August 17, 1999 and that it created a Government-wide goal that 3% of the total value of all Federal prime and subcontract dollars be awarded to Service-Disabled Veteran-Owned Small Business (SDVOSB) Concerns, but I thought that large business experience I would gain coupled with the experience I obtained as a veteran would better prepare me for small business ownership.
The Veterans Benefits Act of 2003 (P.L. 108-183) was signed by the President on December 18, 2003. It was at that point that I decided I could no longer wait and that it was time to start my own company. Three months later, I resigned from my very lucrative position as a Director of Enterprise Operations to open MicroTech, LLC (www.microtechllc.com) and pursue my dream of small business ownership and in April 2004, my partners and I started MicroTech, LLC.
On May 5, 2004 the SBA and the Federal Acquisition Regulatory (FAR) Council concurrently published interim final rules implementing the procurement provisions of the Veterans Benefits Act of 2003. The new regulations permitted contracting officers to either restrict competition on contracts or issue sole source contracts to SDVOSBs within specified dollar thresholds in accordance with statutory requirements. The regulation also establishes procedures for protesting the status of an SDVOSB. I and many others inside and outside the Federal Government were convinced that at last Veterans and Service-Disabled Veterans would have the plethora of opportunities we so desperately needed to be successful.
Since that date, the Federal Government has consistently fallen well short of the 3% statutory goal. Less than 10% of the Government agencies who are required to meet the statutory goals have done so and only a handful of agencies are making more than a negligible effort to set-aside work for SDVOSBs. The Department of Defense, an agency responsible for creating Service-Disabled Veterans continues to struggle and to date has still been unable to award even 1% of its contracts to Service-Disabled Veteran-Owned Small Businesses yet it consistently meets its other small business goals.
The good news (yes, there is good news) is that there are people in the Federal Government who are doing their part, in fact they are doing more than their part. The US Department of Veteran Affairs (VA), The United States Army (US ARMY), and The General Services Administration (GSA) have all established very aggressive SDVOSB programs that are designed to increase opportunities for Veteran and Service-Disabled Veteran Owned Small Businesses (as have many other agencies) these agencies have provided the resources needed, have put excellent people in charge of running their programs, and they have developed a winning strategy with measurable goals that will create opportunities for our nations Veterans and Service-Disabled Veterans. These small business champions are getting the word out, educating contracting officers, identifying opportunities and advocating change, but those three agencies and a hand full of others cannot do it by themselves. If you and the other law makers who truly care about our nations Veterans and Service-Disabled Veterans expect to see the Federal Government reach their 3% goals in our lifetime you are going to have to make some changes and fix how business is being done in the Federal Government.
You may be aware, there are over 13,500 SDVOSBs registered in the Central Contractor Registration (CCR). They have done everything they can possibly do to position themselves for contracts with the Federal Government and are anxiously pursuing the opportunities they thought P.L. 106-50 would bring (3% of the total value of all Federal prime and subcontract dollars).
To fully accomplish the objectives of this legislation, Government Agencies have to be held accountable. Many of those agencies have been called up to the Hill and all of them have told you and other committees members about the great things they intend to do for SDVOSBs, but over the last four years only a few have turned those words into actions. What stops them from dusting off the last testimony they gave and giving you the exact same story about what they are going to do for SDVOSBs when you call to check progress? My question is where is their report card? What is their plan for going from F to A+? Who is responsible for meeting the SDVOSB goal in their agency and what are the consequences of not meeting the 3% goal?
Here are my recommendations for helping those agencies meet their goals and for fixing the problems going forward:
- Protect the dollars! Last time I testified before this committee it was recommended that those dollars be set-aside for the use of SDVOSBs. I agree with that recommendation.
- Hold Secretaries and Agency Administrators directly responsible for meeting the 3% goal established in P.L. 106-50. Each Department or Agency has a Director of Small Business, but they are not the people who control the acquisition process. The acquisition process is controlled by the Assistant Secretaries for Acquisition, the Heads of the Contracting Agencies (HCAs), and the Agencies’ Chief Acquisition Officers. Have Assistant Secretaries for Acquisition, the Heads of the Contracting Agencies (HCAs), and the Agencies’ Chief Acquisition Officers testify and require that they present a measurable and realistic plan for reaching the 3% goal. If after a year they do not meet the 3% goal, ask them to come back – with their bosses, and testify. I promise you that you will see a change in the numbers!
- Lock down the small business goals for all Large Business Contracts. Often times Large Business will fight to reduce the percentage of work they must give small business. Do not let that happen. Ensure that all large businesses develop a small business-subcontracting plan that mirrors the requirements of the Federal Government and then ensures that large businesses are penalized when they fail to meet their small business subcontracting goals.
- Hold Procurement Officials and Contracting Officers responsible for meeting the 3% goal for SDVOSBs. Make the 3% goal for SDVOSBs a requirement in their performance measures and a condition of their performance award. If a Department or Agency does not meet their 3% goal for SDVOSBs then reduce the amount of their award by the percentage they failed to achieve. In other words if they only achieve 1% (33% of the goal) then they only get 33% of the performance award they would have otherwise received.
Madame Chairwoman and Distinguished Committee Members, thank you very much for this great opportunity. This concludes my testimony and I would be happy to answer any questions you may have.