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Witness Testimony of Mr. Anthony R. Jimenez, MicroTech, LLC, President and Chief Executive Officer, Vienna, VA

Good morning.  It’s a privilege to be here today.  I want to thank the committee for allowing me to share my thoughts regarding veterans’ entrepreneurship, Veteran-Owned Small Business and Service-Disabled Veteran-Owned Small Business opportunities in the federal government, and in particular, current programs funded by the federal government.  I believe that helping veterans build successful businesses is not just right for veterans, in recognition of the service and sacrifice they have given this country, but it also right for the country as a whole.  Veteran-Owned Small Businesses and Service-Disabled Veteran-Owned Small Businesses can, and should, become a powerful job creation engine and force for economic development.

I’d like to begin today by clearing up what I believe to be a misconception about the primary obstacles facing Service-Disabled Veteran-Owned Small Businesses.  My sense is that there is a widely held belief that what Service-Disabled Veteran-Owned Small Businesses need most to succeed is access to training, capital and other elements that support business development goals. 

The Small Business Administration’s Advisory Committee on Veterans Business Affairs has repeatedly reported on a number of issues facing Veteran-Owned Small Businesses and Service-Disabled Veteran-Owned Small Businesses:  The most significant of these issues included lack of sufficient representation for businesses owned by veterans at the SBA, lack of access to capital and surety bonding and a need for training and education of veteran entrepreneurs.  These factors are all significant and real, and should be addressed. But in my view, they are not the most significant factors.

In response to these perceived needs, the Veteran’s Corporation was created to provide training and business development assistance to veterans starting businesses.  The Veteran’s Corporation provides many useful tools for veterans looking to start a business, such as help with business plans, advice about contracting with the government, assistance with obtaining financing and so on.  These are all critical elements in the success of any new business and I am sure this type of assistance has helped many businesses owned by veterans grow and develop and has been gratefully received.  But, these are not the primary factors holding back businesses owned by veterans, especially Service-Disabled Veteran-Owned Small Businesses that are already established and are interested in working with the federal government. 

These companies need advocacy and opportunity more than they need start-up support or business instruction.

In fact, there are already over 9,600 Service-Disabled Veteran Owned Small Businesses and over 37,000 Veteran-Owned Small Businesses, which have negotiated all the hurdles required to become registered in the CCR.  Based on my personal knowledge and experience competing with these companies, I believe that the majority of these small businesses stand ready to deliver quality services to the government right now. 

I believe that what Service-Disabled Veteran-Owned Small Businesses need most are genuine opportunities, which allow them to demonstrate and grow their capabilities.  To date, the government’s record of identifying, setting-aside opportunities and then awarding work to Service-Disabled Veteran-Owned Small Businesses is disappointing at best.  The law mandates that the government-wide goal for participation in government awards by Service-Disabled Veteran-Owned Small Businesses is three (3) percent of the total value of all contracts awarded each year.  To date, the government has fallen far short of that goal.  In fact, between 2001 and 2005, the Department of Defense, an agency one would think would be especially sensitive to veterans issues and opportunities for veterans, has never awarded even one half of one percent of its contract awards to Service-Disabled Veteran-Owned Small Businesses; in some of those years it was significantly less than one half of one percent.  The performance of other government agencies in this area is similar.  To date, only a small number of Federal Agencies have successfully reached the prime contracting goal of 3% for Service-Disabled Veteran-Owned Small Businesses.

Let’s contrast the experience of the approximately 9,600 registered Service-Disabled Veteran- Owned Small Businesses to that of the approximately 9,900 or so businesses currently certified as 8(a) small disadvantaged.   The legally mandated goal for 8(a) set-asides is also 3% of the total value of government contracts awarded.  For 8(a) businesses, this target is met consistently through-out the government, nearly across the board.

These circumstances translate into a non-level playing field for the Service-Disabled Veteran-Owned Small Businesses.  Turning again to the SBA figures for DoD for the years 2001 through 2005, we find the total targets for both 8(a) and SDVOSB spending was over $31 billion.  This target was essentially met for the 8(a)’s.  The actual amount awarded to Service-Disabled Veteran-Owned Small Businesses was just under $7B.  This represents a deficit of nearly $25 billion in opportunities to perform and grow that were never offered to the Service-Disabled Veteran-Owned Small Businesses

Despite this disparity, according to the SBA, veteran entrepreneurs are successfully self-employed at a higher rate than any other group of American citizens.  Imagine what this group could do with the opportunities that have been afforded to 8(a) small businesses!  If we create the opportunities, veterans will respond.

Why does this disparity of opportunity occur and what can be done about it? 

I believe it has to do with two factors:  a lack of commitment to provide mechanisms for Service-Disabled Veteran-Owned Small Businesses to become successful large businesses; and, a lack knowledge of and current perceptions about Service-Disabled Veteran-Owned Small Businesses among the government contracting community.  Contract Officers and their customers are simply not aware of the depth and breadth of options available to them that can be provided by Service-Disabled Veteran-Owned Small Businesses.  I believe Contracting Officers are reluctant to set large, complex efforts aside for Service-Disabled Veteran-Owned Small Businesses for fear that the pool of respondents will be too small or their offerings too expensive or non-competitive.  This reluctance is felt by the general business community.  Large businesses are less likely to want to partner with and mentor Service-Disabled Veteran-Owned Small Businesses if they perceive resistance on the part of the contracting community or if it seems the commitment to develop, grow, and mentor Service-Disabled Veteran-Owned Small Businesses is not genuine.

With respect to the Service-Disabled Veteran-Owned Small Businesses’ ability to compete, I know from experience it can be significant.  To win our second largest contract, which was a Service-Disabled Veteran-Owned Small Business set-aside; my company had to compete against 50 other Service-Disabled Veteran-Owned Small Businesses to win the work.  We have successfully completed our base year of performance and are now in our first option year.  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 Service-Disabled Veteran-Owned Small Businesses.  We were also one of 40-plus companies to receive an award on the US General Services Administration (GSA) Veterans Technology Services (VETS) GWAC (Government-Wide Acquisition Contract).  Over 200 Service-Disabled Veteran-Owned Small Businesses bid on that opportunity in a very competitive selection process.  Another outstanding example of veteran entrepreneurship is the National Aeronautic and Space Administration (NASA) SEWP (Solutions for Enterprise-Wide Procurement) GWAC (Government-Wide Acquisition Contract).  Often referred to as one of the best GWACs in the federal government, SEWP provides the latest in Information Technology (IT) products for all Federal Agencies.  Until recently, SEWP had only large, small and 8(a) primes providing the latest in Information Technology (IT) products.  On May 1, 2007 with the award of SEWP IV, six (6) Service-Disabled Veteran-Owned Small Businesses are now prime contractors on SEWP IV.  This means that federal agencies now have the ability to procure the latest in Information Technology (IT) products from Service-Disabled Veteran-Owned Small Businesses 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 and importance of supporting small businesses 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 the charter of federally funded programs like Veterans Corporation, as well as the Small Business Administration.

Another important resource that could help create opportunities for Service-Disabled Veteran-Owned Small Business is the value that is gained when a large business partners with a Service-Disabled Veteran-Owned Small Business to create or generate opportunities.  For many years there has been an 8(a) Mentor Protégé program at the Small Business Administration (SBA) that enhances the capability of 8(a) participants to compete more successfully for federal government contracts.  The program encourages private-sector relationships and expands SBA’s efforts to identify and respond to the developmental needs of 8(a) clients, but today there is nothing similar at for Service-Disabled Veteran-Owned Small Businesses at the Small Business Administration (SBA). 

I know personally how well it can work when government and large businesses partner together to facilitate opportunities for Service-Disabled Veteran-Owned Small Businesses.  Our largest contract is with the US Department of Veterans Affairs.  As a prime contractor, we provide Enterprise Solutions for Microsoft products and associated services to the entire US Department of Veteran Affairs.  The contract is valued at over $56 million per year and is the largest contract of its kind ever awarded to a Service-Disabled Veteran-Owned Small Businesses.  This contract would never have happened had it not been for VA’s Office of Information and Technology (OIT). In particular, Mr. Craig Niedermeier and the people in his office, coupled with the great efforts from the Contracting Officer, Mr. Daniel Nascimento, and all of the great people in his office went the distance to find ways to offer this significant opportunity to service disabled veteran owned firms.  This contract is an example of VA’s commitment to Service-Disabled Veteran-Owned Small Businesses and was awarded by VA using a GSA schedule 70.

Mr. Niedermeier and Mr. Nascimento were able to identify several Service-Disabled Veteran-Owned Small Businesses that could not only provide the Microsoft products, services and solutions VA needed, but were capable of successfully delivering on such a large and complex opportunity.  Once potential Service-Disabled Veteran-Owned Small Business bidders were identified each business worked hand-in-hand with the Enterprise Solutions Team from Microsoft led by Brian Roach, Geary Brummell, and Marc MacDonald.  Several Large Account Resellers (LARs) were partnered with qualified Service-Disabled Veteran-Owned Small Businesses and a number of very competitive bids were submitted.  My company worked with Software Spectrum, who understood the three (3) percent government-wide goal and the need to mentor and assist Service-Disabled Veteran-Owned Small Businesses to meet that goal.  Our relationship with Software Spectrum continues to expand and the skill transfer and knowledge transfer that VA has hoped for has in fact taken place.  We completed our base year of performance last month and are now in our first option year.  VA is receiving top-notch products and service at a very competitive price and is very pleased with both our services and our process for delivering products and solutions.  This contract continues to be a sterling example of what can happen when the big business works with small business to create and/or expand business opportunities for Service-Disabled Veteran-Owned Small Businesses.  Without large businesses participation and support and without the government’s commitment to identify opportunities and set-them aside for Service-Disabled Veteran-Owned Small Businesses the likelihood that Service-Disabled Veteran-Owned Small Businesses will become successful large businesses is significantly diminished. 

I hope that my words have provided additional insight into veterans’ 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 Veteran-Owned Small Business and Service-Disabled Veteran-Owned Small Business have the opportunities they need to be successful.  I am convinced that the harder the government works to identify opportunities for Veteran-Owned Small Business and Service-Disabled Veteran-Owned Small Business the more success stories there will be.