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Witness Testimony of Mr. Joe Wynn, Veterans Enterprise Training and Service Group, Inc. (VETS Group), President, Member, Veterans Entrepreneurship Task Force (VET-Force)

In the past few years, two major pieces of federal legislation have really set the stage for the emergence of today’s veteran entrepreneurs.  When Congress passed the Veterans Entrepreneurship and Small Business Development Act of 1999 (Public Law (PL) 106-50), it stated in its findings that America had not done nearly enough to ‘assist veterans, particularly service-disabled veterans, in playing a greater role in the economy of the United States by forming and expanding small business enterprises.’

PL 106-50 thus called for the creation of new entities and the restructuring of existing ones in order to assist veterans in pursuit of entrepreneurship.  Under this law, SBA’s Office of Veterans Business Development, the Department of Veterans Affairs’ Center for Veterans Enterprise, and the National Veterans Business Development Corporation, were created.

While PL 106-50 also established a 3% procurement goal for federal agencies and prime contractors to purchase goods and services from service-disabled veteran owned businesses, it did not go far enough in giving contracting officials a vehicle by which to achieve the goals.  Thus, a second piece of major legislation was enacted as part of the Veterans Benefits Act of 2003 (Public Law 108-183).  Section 308 called for the creation of a Veterans Procurement Program and made it mandatory, that federal agencies and prime contractors procure a minimum of 3% of all of their goods and services from service-disabled veteran owned businesses.

The insertion of that mandatory language into the legislation effectively created quite a stir in the federal procurement community.  Wherein agencies were still paying little attention to veteran owned small businesses, the mandatory language has caused them to stop and take notice.

And to bring further fuel to the fervor, the President of the United States issued an Executive Order in October 2004, directing agencies to carry out the law now!  Agencies have been instructed to designate a senior-level official, to be held accountable for submitting a strategic plan showing how and when they will achieve the 3% contracting goal for service-disabled veteran owned businesses.

The VETS Group is proud to have been a part of the collective effort of those veterans’ advocates who pushed for the development and implementation of these landmark decisions to expand veterans’ entrepreneurship.

But after more than 7 years, two new laws and a Presidential Executive Order, federal agencies and prime contractors are still scrambling to find service-disabled and veteran owned businesses that are capable and qualified to satisfy their requirements.  And unfortunately, of the 3 government entities created for veteran business owners, one appears to be misdirected, the other is still buried in the shadows, while the third is just beginning to show some promise.

INTRO:

Good Afternoon, Chairwoman Herseth-Sandlin, and other members of this Subcommittee.       

Let me first thank you for the opportunity to come before you today to share some of my views and the collective views of many Veterans and Service Disabled Veteran Business Owners; veterans who served with honor, and many who received distinguished honors for displaying valor and courage during their periods of military service for this country.  Though my time of service was many years ago, as a veteran of the US Air Force with the 66th Strategic Missile Squadron, I still have a very vivid memory of the military experience.

As a lifetime member of the National Association for Black Veterans, I have spent the past 16 years assisting Veterans, and in recent years serving as a Commissioner of the Congressionally appointed Veterans Disability Benefits Commission, Treasurer for the Veterans Entrepreneurship Task Force (VET-Force), as Senior Advisor to the Vietnam Veterans of America, and President of the Veterans Enterprise Training & Services Group (VETS Group).  

In serving in these roles, I have seen that veterans often risk their lives to preserve the American Dream of freedom and prosperity.  However, too little is being done to assist veterans, particularly service-disabled veterans, to achieve the American Dream they fought so hard to protect.  It is well known that one of the best ways to get ahead is by obtaining a good job.  But by starting or expanding your own small business, you may achieve financial independence.

Since the Vietnam Era, America has been involved in numerous conflicts, missions, and peacekeeping endeavors.  And since the tragedy that overtook America on September 11, 2001, we have been engaged in the Global War on Terrorism, and even now continuing to increase the number of troops in Iraq and Afghanistan despite the overwhelming opinion to the contrary.  A new generation of veterans now exists; they are well trained, loyal, battle-tested and under-employed.  ‘As a Nation, we have been unsuccessful in providing the originally promised assistance our veterans have earned, deserved, and required so that they would have the opportunity to be as successful in their civilian pursuits as they were in their military assignments.’  (VET-Force Report to the Nation 2005).

If veterans and service-disabled veteran owned businesses are to succeed in the public sector they will have to overcome a number of impediments: (1) The pervasive ignorance of the law and resistance to change across all agencies; (2) No enforcement of prime subcontracting plans; (3) Inaccurate agency data, miscodings, and double counting; (4) The perception that the procurement pie for small businesses is shrinking; and (5) Contract Bundling.

Veteran service providers must assist in identifying and registering the capabilities of veteran business owners where required, become knowledgeable of all prime contractors and their subcontractor needs, develop relationships with agency procurement officers, and develop the ability to match veteran businesses with procurement opportunities.

Though the legislation referred to above has created an urgent need for service-disabled and veteran owned businesses, it did not create a business development program for veterans.  However, it did create the Veterans Corp, the Office of Veterans Business Development and the Center for Veterans Enterprise to fill that need.

THE VETERANS CORPORATION (TVC)

The entity that was supposed to be the National Advocate for Veteran Business Owners, has just not measured up to the task and continues to be struggling for the right direction.  Much has been said about the seemingly poor performance of the National Veterans Business Development Program, aka the Veterans Corporation (TVC) to implement a program to assist veterans across the Nation with starting or expanding their own small businesses.  And seemingly, there has been even less evidence of TVC providing support for those Service-Disabled Veteran Owned Businesses participating in the federal marketplace.

TVC’s performance continues to be viewed by many as less than adequate in light of the more than $14 million appropriated to TVC by Congress over the past few years.  This has continued to be the big point of controversy within the veteran’s community - just how much should or could have been done with that much money in 6 years.  Since TVC started, it has been under the leadership of at least 4 Executive Directors, had 3 strategic plan changes, and at least 2 program changes.  Staff levels have since been reduced and the service offerings are still mostly contracted out or performed by other organizations.  Most of the Board members have been very distant and detached from the veteran’s community. 

Many veterans still do not know that the Veterans Corporation even exits, partly because they have no physical facility in the community that bears the name of the Veterans Corporation nor any public space where veterans are welcomed to come and obtain information about their services or their business needs.  Their new offices are now located on ‘Lobby Row’ (downtown K Street N.W., Washington D.C. where many of the highest paid lobbyists are reported to have offices). 

By working in the veterans community for more than 16 years as a member of several veteran service organizations, including the Veterans Entrepreneurship Task Force (VET-Force), and President of the Veterans Enterprise Training and Services Group, here are some of the concerns I continue to receive from veterans, veteran business owners, and others familiar with TVC and Public Law 106-50. 

The number of veterans visiting a website (hits), whether for information or education, is not a true measurement of the number of new veteran entrepreneurs, nor does it indicate the number of veteran businesses that expanded.  Folks want to know did TVC do something to expand the pool of capable and qualified veteran and service disabled veteran owned businesses or were they instrumental in helping a veteran obtain a contract.  And if so, who are these veteran business owners, how many are there, what types of businesses increased or were created, and where are they located?

There are a lot of websites on the internet that provide information about starting or expanding a small business.  Is adding the TVC website to the list the big difference for veterans?  The SBA has been recognized for its excellent website for providing small business information and training for years.  And since PL 106-50 directed the SBA and its SBDCs to provide more services to veterans, why should TVC duplicate what is already available and funded?

There are already more than 1400 small business development centers around the country, each having access via a website and most affiliated with a college or university.  The small business development centers also provide one-on-one counseling, classroom training, workshops and seminars.  TVC provides limited funding for 4 Veteran Business Resource Centers via other service providers.  At the rate of 4 limited centers in 6 years, how long will it take them to match the 1400 centers already in operation by the SBDCs?  In addition, the number of veterans contacting these centers is counted as success instead of the number of veteran businesses started and contracts awarded.

Since Congress established a 3% goal for Federal Contracting with Veteran and Service Disabled Veteran Owned Businesses, including a 3% goal for Prime Contractors.  (Primes are those large businesses that have contracts over $500,000 with the Federal Government), it’s not hard to see why many veteran business owners and potential veteran business owners were looking to learn how to do business with the Federal Government.  After all, there are only a couple of states that support a percentage goal directed toward veterans. 

So TVC should consider developing more programs to offer assistance in federal contracting.  Many members of the veteran’s community viewed PL 106-50 as an inside track to federal contracting.  However, from the perspective of the federal contracting community, the OSDBUs, the Contracting Officers, and the Procurement Officials, it was just viewed as another program with a "nice idea."  When veteran business owners began to pursue federal contracts they were told all to often, "PL 106-50 is just a goal.  There are no teeth in it.  We still don't have the mandatory authority to set contracts aside just for veterans." And with no apparent help from TVC the veterans community turned to the Veterans Entrepreneurship Task Force (VET-Force) and other veteran service organizations.

So VET-Force, the nonprofit, informal, organization comprised of representatives from veteran service organizations, veteran business owners, and other members of the community, the group that had initiated the movement to push for and oversee the implementation of PL 106-50, began to call for additional legislation to correct the apparent shortcomings regarding federal contracting for veteran business owners.

As a result of their efforts, of which TVC representatives were always invited to participate in the planning meetings of the Task Force, corrective language was drafted and inserted into the Veterans Benefits Act of 2003 under Section 308 (PL 108-183).  That language called for the creation of a Veterans Procurement Program and made it "mandatory" that the Federal Government and its Primes procure a minimum of 3% of all of its goods and services from Service Disabled Veteran Owned Businesses.  Yet even after passage of this new legislation, which was obviously an extension of what was called for under PL 106-50, TVC continued to stay on the track of small business start ups with no special assistance for veteran or service disabled veteran business owners seeking to enter the federal marketplace.

In the winter of 2004, President Bush issued an Executive Order, 13-360, through the Office of Federal Procurement Policy and the SBA, directing federal agencies to develop and implement a strategic plan to increase contracting opportunities for service disabled veteran owned businesses so that they could begin to receive the intended benefits of PL 108-183 and PL 106-50.  After several months of delay, many agencies began to develop and make public their strategic plans.  But many of them would point out that: "even though PL 108-183 created a mandatory requirement to contract with service disabled veteran owned businesses, it did not provide any funding to assist with the development of veteran businesses."

So agencies and veterans turned to the Veterans Corporation for assistance with developing veteran businesses for federal contracting, only to be disappointed.  TVC now promotes programs for Surety Bonding and Access to Capital, but they have indicated that only a few veterans are even in the process of applying for these programs.  And it appears that each veteran must pay a $99 referral fee to TVC to find out even if these programs will work for them.

As part of the directives of the Executive Order, agencies were told to increase their outreach efforts to veteran business owners to make them more aware of the procurement opportunities that exist within the federal marketplace.  So many agencies have been organizing procurement conferences, expos, trade shows, etc. targeted to SDVOBs.  Yet the Veterans Corporation, with its $14+ million in appropriations, has yet to organize a conference on behalf of the thousands of veteran business owners across the nation.

Even after many veterans were complaining about the ineffectiveness of the Government sponsored events, TVC still never stepped up to the plate to organize a veterans procurement event from the perspective of the veteran business owners.  Yet they did co-sponsor a DOD procurement event for veterans last year (by default), and planning to co-sponsor a DOE small business event this year which is not targeted to veterans.  However, the VA and the Army have responded with 2 national veterans procurement conferences based on the feedback of the veterans business community and a 3rd one is already scheduled.  Other agencies have since done likewise.

If you talk to anybody from the OSDBUs to the contracting officers to the small business specialists to the small business owners themselves, they all will tell you that building relationships with government customers is key and often essential to obtaining government contracts.  But veteran small business owners are not unlike other small business owners when it comes to time and resources and the shortage thereof.  So it becomes a challenge to track down and spend time developing relationships with potential government customers while attending to the present workload

Since there are very few veteran sponsored conferences, the government-sponsored conferences become a way to meet several potential customers all in one place.  But often what is missing is a voice of authority preceding or backing up the veteran business owner when they interact with a federal agency representative who can help clarify and reinforce the requirements of the legislation and the importance of contracting with SDVOBs.  Since TVC has not been that voice, that support, that advocate, veteran business owners have turned to the VET-Force and now also NaVOBA (the National Veteran-Owned Business Association).

And finally, on cash flow and access to capital, many believed in the beginning that PL 106-50 would provide some actual cash to veteran owned businesses.  TVC started to promote access to capital also.  But when it became clear that direct cash loans were not included, veterans were referred to the SBA loan guarantee programs instead.  Now TVC will refer you to their Access to Capital Program, but it requires a $99 referral fee to TVC before services will be provided.

THE OFFICE OF VETERANS BUSINESS DEVELOPMENT (OVBD)

The SBA, the agency responsible for the development of US small businesses, has received very little in federal dollars to assist veterans in pursuit of entrepreneurship.  Other agencies have only received dollars for promotional activities, such as conferences, exhibits, and materials but not for veterans’ business development, education, and training.  Thus veterans wanting to enter the federal marketplace must work their way through a maze of disassociated and often disinterested and sometimes untrustworthy business resource providers in order to get what they need to compete.  Not to mention dealing with the inconsistency of fees for services from one resource provider to another.

An even more compelling reason to develop programs to assist veterans interested in entrepreneurship is the War on Terrorism being waged in Afghanistan and Iraq.  This war has dislocated thousands of men and women in the Armed Forces, National Guard, and Reserves.  Many of these veterans have sustained debilitating injuries, which will limit their ability to return to or obtain meaningful occupations.  These are our new service-disabled veterans.  With the veterans procurement legislation, a viable alternative for many is entrepreneurship or some form of self-employment.  But without some business development assistance, this alternative will be more than difficult to achieve.

The SBA Office of Veterans Business Development (OVBD) which was created under the legislation (PL 106-50) also created a position of an Associate Administrator.  OVBD has increased its headquarters staff size but has been given limited resources to operate four veteran business outreach centers and to provide assistance to veteran business owners with federal contracting, though efforts have been made to educate the veterans of the Guard and Reserves.

The OVBD is located in the headquarters building in Washington, D.C.  But it is not situated in such a way that it is easily accessible to the public.  As a matter of fact, very few people even know that the office exits.  Usually when SBA veteran’s representatives participate in a small business outreach event, they are from the SBA District Office in that City or State. 

Each District Office throughout the country has a person who is designated as the veteran’s rep.  But the level of assistance they provide varies by location and their other assigned duties. However, under the leadership of the newly appointed Administrator, Steven Preston and his Chief of Staff, Joel Szabat, SBA is starting to direct some resources toward assisting veteran business owners as evidenced by the increase in staff for the Office of Veterans Business Development and their open working relationship with the Veterans Entrepreneurship Task Force, SDVOBs, and members of the Guard and Reserves.

Recently, the SBA Associate Administrator, reported increases in the number of loans to veteran business owners, including disaster relief loans, as a measure of SBA’s success for veterans.  Yet it is noted in a March 2007 report from Senator Kerry of the Senate Small Business Committee, that ‘as the loans have gone up, they are not proportional to the loans made to small businesses as a whole.’

There’s very little information provided by SBA regarding the success of the business relative to the amount of the loan received.  However, here recently, I have spoken to several veterans of the National Guard, who have had difficulties after receiving loans.  But they seem to be having even more difficulty getting someone to address their concerns.

One of the benefits of having the OVBD as part of the SBA is that it can draw from the variety of offices already established to assist small business owners.  And since Veteran Business Owners represent the diversity of Americans:  male, female, young, old, Black, White, Hispanic, Disadvantaged or Other; many may qualify for other small business programs offered by the SBA.

The SBA has its cadre of Small Business Offices and small business resource partners located throughout the U.S., i.e., the Small Business Development Centers, SCORE, Business Information Centers, and Women Information Centers.  However, none of these resource providers are veteran-specific.  While they are accessible to veterans, they are primarily designed to address the small business needs of the entire community.

I believe this often leads to the lack of identity of the OVBD.  More often than not, when referring to the OVBD, people refer to the SBA.  And when you access the SBA website for services, those for veterans are not obvious.  So if services via the SBA for small business owners are less than adequate, then the same will probably be said of those services for veterans.

THE CENTER FOR VETERANS ENTERPRISE (CVE)

Under Public Law 106-50, the Center for Veterans Enterprise (CVE) was created under the Dept. of Veterans Affairs Office of Small and Disadvantaged Business Utilization Office.  CVE is located in the District of Columbia and serves as an information resource for veterans primarily interested in the federal marketplace. Since its inception over 5 years ago, CVE is the entity that is showing the most promise and has managed to create a unique role among the 3 primary government-assisted veterans entrepreneurial programs.

The VA will soon be the first federal agency to implement legislation that will prioritize the use of Service Disabled Veteran Business Owners and Veteran Business Owners in federal contracting. Under PL 109-461, Sec 502-503 (recently passed legislation to increase contracting opportunities for VOBs & SDVOBs within the Dept. of Veterans Affairs) the VA will: (1) Establish Contracting Goals & Review Mechanisms; (2) Noncompetitive, Sole Source, & Restricted Competition; (3) Required Registration in the VIP Database – VetBiz.gov; (4) Verification of Veteran Status & Ownership, Penalties for Misrepresentation; (5) Survivorship – 10 yrs if 100% disabled; (6) Contracting Preferences & Priority; (7) Annual Reports & 3-Year Study.

CVE is the office that has developed and manages the VIP database that contains thousands of records of data on veteran and service-disabled veteran owned businesses and accessible to the public, agencies, and primes.  VIP stands for Vendor Information Pages though some refer to it as the Veterans Information Pages; because, to be registered in the VIP database, the company must be owned and operated by a veteran or service-disabled veteran.  And soon the verification of veteran and disability status will be mandatory.

CVE has followed the directives of the Executive Order 13-360 since it was first initiated.  They used their site to post all of the Strategic Plans required by each agency.  Though there has been some confusion by SBA as to the annual revisions and reporting requirements under the Execution Order, CVE continues to post the plans.

CVE has several program analysts that assist veteran business owners with understanding the federal procurement process and the VA’s federal procurement requirements and supply schedules.  Though these analysts are not clearly identified on their website, they have recently started to provide more assistance to Agencies and Prime contractors seeking to identify capable and qualified service disabled veteran owned businesses.

CVE participates in a number of small business conferences, events, and training sessions to reach out to veteran business owners all across the country.  This will be there 3rd year of Co-sponsoring the National Veterans Small Business Conference and Expo.  And each year for the past 5 years, CVE has organized an event to pay special recognition to veteran business owners, agencies, and large prime contractors that have demonstrated their support for the veterans procurement program.

As program manager of SDVBs first federal contract for facilities management and operations at the Veterans Administration Headquarters Building in Washington, D.C., I shared the honor of receiving a Distinguished Service Award in 2002 from the Center for Veterans Enterprise for providing excellent service while creating over 40 jobs for veterans and other people with disabilities.

The Service Disabled Veterans Business Association (SDVB), is a non-profit, community rehabilitation program that provides employment and entrepreneurial opportunities for service disabled veterans by identifying procurement contracts for services in accordance with the Javits-Wagner O’Day Act (JWOD Program) and creates partnering arrangements with corporate and established business entities referred to as “Patriot Partners.”

CVE works in association with the VA’s Office of Small and Disadvantaged Business Utilization (OSDBU) under the leadership of Scott Denniston, who has been very supportive of the VET-Force, the VETS Group, and other organizations actively promoting the use of veteran business owners.  By utilizing the services of the VA OSDBU and outside resource partners, CVE greatly expands its outreach capacity.

In Summary:

The federal marketplace is a trillion dollar industry.  And 3% of that annual budget is easily in the billions.  Not to mention the prime vendors procurement budget and other non-federal procurements.  Both Federal agencies and commercial vendors are faced with the time consuming task of identifying and screening capable and qualified veteran owned small businesses to meet their requirements.  And veteran business owners need as much help as they can to be ready.

Following the recently publicized events related to the treatment of veterans at Walter Reed Army Medical Center, it should be abundantly clear to all that our service members, their families, and citizens throughout the United States are taking note of how this new generation of service members are being treated. The actual and perceived treatment of our Nation’s Veterans, especially those returning from the War on Terrorism, will be a symbol of how valued their sacrifice was and a clear signal to any future enlistees on the ultimate value of their service to the Nation.

The veteran business owners not only need access to capital, resources, technical assistance, and training, they need an entity that can advocate on their behalf before our law-makers, our Government Agencies, and the White House.  They need an entity that will help to ensure that the laws are implemented once they have been passed; and an entity that can ensure that services are provided as advertised.

As stated in the Report to the Nation, developed by members of the VET-Force, ‘the presence of successful and prominent veterans within and across our nation’s business communities is a testimony of a grateful nation—a nation that honors and respects the sacrifices made by Veterans in behalf of our country, both today and tomorrow.  Veterans are uniquely qualified to work as contractors to the Federal Government because of their service experience and their dedication to providing quality products, on time and at a reasonable cost. Effective legislation such as PL 106-50, PL 108-183, and Executive Order 13360, has provided a good beginning in allowing America to honor the service of Veterans who continue to serve by helping to build a stronger economy. More needs to be done.’

RECOMMENDATIONS:

  1. TVC, OVBD, and CVE should include veteran service organizations, community based organizations, and veteran business owners in the decision-making process regarding outreach programs and services.
  2. TVC should establish at least one state-of-the-art training facility for veteran business owners seeking to start or expand their own small commercial or federal contracting business.  TVC should not be required to build new resource centers across the country until they have at least matching funds to operate them.  And both OVBD and CVE should make accommodations for veterans easily access program offices.
  3. Congress should require a Strategic Operating Plan from any program office for veterans that is funded by tax-payer dollars, PRIOR to receipt of the funding.  And the agency head and senior level designated official responsible for the operation of the program should be held accountable. 
  4. Since TVC is a government funded program but moving toward a full non-profit organization, the Board of Directors should hold at least 4 public meetings per year and not always in Washington, D.C.  The veteran’s community should know the Board.  And Board members should participate in veteran business outreach events (whenever possible). 
  5. Members of the TVC, SBA, and CVE Executive Staffs should participate in federal acquisition council meetings with the heads of all federal agencies and report their findings back to the veteran’s business community regularly. 
  6. As TVC is the quasi-governmental entity, they should serve as an advocate for veteran business owners and become more aggressive in alleviating barriers to federal contracting opportunities for veteran business owners. 
  7. Neither TVC, SBA-OVBD, or CVE should continue to receive millions of taxpayer dollars to implement programs that do not support the primary goals and objectives of the majority of the veteran’s business community.  There has to be more accountability and penalties for waste, abuse, and of course fraud.
  8. Clarify the “Rule of Two.”  The Rule of Two as introduced under PL 108-183 is contained in Part 19 FAR, and the Code of Federal Regulations (CFR) 13 CFR, Part 125.  The Rule of Two states if a contracting officer knows of two or more SDVOBs that can do the work, then the requirement must be competed.  But if only one SDVOB is available to do the work, then a sole source award can be made. 
  9. Create a level playing field for veteran business owners as with the 8a and Hubzone programs.  The use of “May” for SDVOBs should be changed to “Shall” as with 8a and Hubzone owners. The order of priority for contracting preferences among the three groups should be equal.
  10. Strengthen the SDVOB program by increasing contract awards, resources, and support without including SDVOBs into an inefficient 8a program.  The 8a program was created to help alleviate the more than 100 years of wrongful discrimination and exclusion of minorities from the full benefits of American society, including the federal marketplace.  The SDVOB program is intended to be inclusive of any American who served in this country’s armed forces, guard or reserves.  The SDVOB program should retain its own identify for “those who have borne the battle.”
  11. Congress should consider appropriating funds in the form of grants to be directly awarded to community-based organizations that provide supportive services and programs for veterans seeking to become entrepreneurs.  TVC could be designated as the administrator of those funds.
  12. Congress should also consider adapting a program for service-disabled veterans that would be modeled after the JWOD program.  Under the JWOD program, federal agencies are required to make every effort to procure their goods and services from small businesses that have agreed to hire at least 60% of their labor force from people with severe disabilities.  This could prove to be a win-win for the government, service disabled veteran owned businesses, and seriously disabled veterans.
  13. TVC, OVBD, and CVE should establish partnership agreements to share small business resources and information to improve the outreach efforts to target veteran business owners and to increase the pool of capable and qualified veteran business owners around the country.

Thank you for your attention to these matters.  This concludes my statement.