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Witness Testimony of Mr. Eric A. Hilleman, National Legislative Service, Deputy Director, Veterans of Foreign Wars of the United States

MADAM CHAIRWOMAN AND MEMBERS OF THIS COMMITTEE:

Thank you for allowing the Veterans of Foreign Wars of the U.S. (VFW) to testify today.

In 1999, Public Law 106-50 established a “Government-Wide Participation Goal” for SDVOSB, requiring “not less than three percent of the total value of all prime contract and subcontract awards for each fiscal year.”  This law was designed to provide a minimum standard of participation for service-disabled veterans.  To date, the government has not met this goal.

In 2003, Public Law 108-183 expanded government procurement to allow for sole-source contracting with SDVOSB.  Sole-source contracting was made available for all fair and reasonable contracts under $5 million for industrial and/or manufacturing, and under $3 million for all other contracts.  The intent of this law was to grant government procurement officials grater flexibility when contracting with an SDVOSB. 

The VFW stands by its resolution, Number 658, Mandating Three Percent of Federal Contracts for Service-Disabled Veteran-Owned Small Businesses.  To date, the government has failed to meet the three-percent goal prescribed by 106th and enhanced by the 108th Congresses.  We applaud this subcommittee for exercising oversight on this issue.  We believe the lack of adherence to this goal has been due to an absence of Agency leadership and Congressional oversight.  Agencies such as the Department of Defense, Department of Veterans Affairs, the Department of Labor, Small Business Administration, and General Services Administration must play an important role in promoting this goal.  

On October 20, 2004, President Bush issued an Executive Order to strengthen opportunities in federal contracting for service-disabled veteran-owned businesses.  This Executive Order lays out the structure for government-wide implementation of the three-percent procurement goal.  It promotes agency accountability, training for government procurement officers, and agency executives’ implementation planning and cooperation.  We believe this Order is a necessary step toward realizing adherence to the three-percent goal. 

We urge the Congress, and specifically this committee, to continue to investigate federal procurement practices.  Federal agencies must be required to adhere to this Executive Order.  Reporting standards have been further defined by law and outlined in the Executive Order.  We ask that this committee continue to highlight this issue – with the purpose of promoting SDVOSB participation in all government-wide prime contract and subcontract awards. 

Fair contracting practices will remain a priority of the VFW until SDVOSBs are given equal participation as other priority contracting groups.  Service-disabled veterans have faced disadvantages in the market due to lenders’ unwillingness to extend credit to disabled individuals.  Disabled veterans are seen as a greater credit risk by finical institutions and are often perceived as less capable.  The three percent set-aside for government procurement is a means of enabling SDVOSBs.  The set-aside provides that opportunity for service-disabled veterans, granting empowerment within the market through increased customer base and access to capital.

Madam Chairwoman and members of the subcommittee, this concludes the VFW’s testimony. We again thank you for examining this issue and including us in this important discussion.