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Witness Testimony of Mr. Richard F. Weidman, Vietnam Veterans of America, Executive Director for Policy and Government Affairs

Madame Chairwoman, Ranking Member Boozman, and distinguished Members of this Committee, thank you for the opportunity for Vietnam Veterans of America (VVA) to present our views here today regarding veterans’ entrepreneurship and small business development. VVA appreciates the bi-partisan leadership this Subcommittee continues to show on this important set of issues. VVA also appreciates the tenacity and positive tone that you have been able to set and maintain in the face of the continued passive aggressive behavior toward veteran owned and service disabled veteran owned businesses and self employment of veterans on the part of so many in the Executive branch. We truly admire that you have not only kept a positive perspective, but that you persevere on our behalf.

The overall view of efforts to assist veterans, particularly disabled veterans, to start and successfully operate their own small business is a decidedly mixed picture. Certainly those of us who have been at this for decades thought that we would have much more in the way of substantive services in place for the young men and women returning home form military service today than currently exists.

It has been almost eight (8) years since the passage of Public Law 106-50 “Veterans Business Act of 1999” which gave a goal of 3% of ALL business done by ALL agencies of the Federal Government to go to Service Disabled Veteran Owned Businesses (SDVOB), and which among other things set up of The National Veterans Business Development Corporation which is now generally known as The Veterans Corporation (TVC).  Yet at this time both the agencies and the TVC have yet to meet their goals.

Without men and women ready, willing and able to serve in the Army, Navy, Marine Corps, Air Force or Coast Guard the Department of Defense (DOD) would not be in existence. Without those willing to serve to defend our Constitution against all enemies foreign and domestic, and place their life and limb on the line in order to do so, we as a nation would be in dire straights. More importantly, our Nation would be vulnerable to the many enemies of our democracy and the western way of life.

When men and women separate from the Armed Forces, and thus become veterans, not all will need additional medical services nor educational benefits nor other important services, at least not immediately. They will each need a job, or a way to be gainfully employed. For some that will mean that they will work for a private company or a government agency. For some, particularly disabled veterans, self-employment may well be the best option unless they can secure “niche” employment.

As to how the various elements that are supposed to be assisting veterans, by far the most useful to the most veterans is the Center for Veterans Enterprise (CVE) at the United States Department of Veterans Affairs (VA). The CVE has counseling and referral services that are generally very useful to most veterans, and the Veterans’ Information Pages (V.I.P.) that are maintained by the CVE staff. Furthermore, the Center for Veterans Enterprise, after some initial problems getting off of the ground, seems to be not only effective in conceiving and building practical programs like the “VET-FRAN” program that creates business options available to veterans on favorable terms, but appears to be striving to learn how to do a better job in each of its aspects, on an on-going basis. The CVE recently initiated a contract with an outside vendor to do nationwide focus groups to learn more about the problems that are operated by the VA and by CVE directly. While we know that the final “de-briefing” on this work and report has been delivered to CVE, we do not know the results. Hopefully some of this data will be shared with you today.

The real point about CVE is that they are doing a good job, and trying to do a better job. Part of the reason that they are able to do this is the unwavering strong support of the Secretary of Veterans Affairs, R. James Nicholson, and Deputy Secretary of Veterans Affairs Gordon Mansfield.

The Veterans Entrepreneurship Task Force or VET-Force is co-sponsoring a “Veterans’ Accountability Conference” with the CVE on June 14, 2007, at the Grand Hyatt Hotel in
Washington, D.C.
As you know, June 14 is not only the birthday of the army, but is also observed as Flag Day. Among other activities that day will be a Awards Luncheon with Secretary of Veterans Affairs as the featured speaker, delivery of the “Report Card” on how well Federal Agencies have performed (or not performed) in regard to the long standing requirement to ensure that a minimum of 3% of all contracts and 3% of all sub-contracts go to Service Disabled Veteran Business owners, workshops on key business skills, and we will end the day with a VET-Force planning meeting, which will be open to all participants and the public. Staff from both personal offices as well as committee staff has been invited to participate without charge, and we hope that your staff can join us for at least part of the day, even though it is likely that your busy mid-week schedules will preclude any of the Members being able to attend.

It is worth noting that VA is till struggling to change the corporate culture when it comes to procurement, particularly in construction and in acquisition of goods and services by the Veterans Health Administration. As you know, the regulations are still pending that will implement the provisions of Public Law 109-461 giving VA additional tools in order to increase the number and dollar amounts of contracts and sub-contracts that go to Veteran Owned Businesses (VOB) and Service Disabled Veteran Owned Businesses (SDVOSB). While it is our hope that this will help enormously, and we thank you for your strong leadership in promulgating this statute.

It is worth noting that the VA, on the orders of Deputy Secretary Mansfield and with the whole hearted support of Secretary Nicholson the VA has put achievement of the 3% goal in procurement into the performance evaluations of key managers. This has helped a great deal in focusing attention on this issue. VET-Force contends that every department and agency needs to emulate this strong leadership, and do the same thing with their key managers at each Federal agency. We are having serious discussions now with the Department of Defense in regard to doing a similar move.

One troubling development that seems to be cropping up at VA however is that some contract managers appear to be rushing contracts, particularly multi-year contracts, toward consummation prior to the new regulations taking effect next month, in order to circumvent the new regulations and to avoid having to contract with qualified SDVOSB and VOB. We are frankly not sure how widespread this phenomena is (and we hope it is only the few incidents we have documented), but have asked VA to investigate. If this is in fact happening, it is our view that those involved should be appropriately sanctioned, in addition to VA stopping these improper actions.

Additionally, VVA would certainly like to see much more overt and concerted activity on the part of the VA Vocational Rehabilitation sections across the country in regard to assisting veterans who wish to become self-employed or start a small business, particularly those with significant disabilities.

In sum, one has to give the VA high marks for virtually all aspects of their activity for veteran owned business and service disabled veteran owned businesses.

SBA

The Veterans Business Development Office of the Small Business Administration (SBA) is more problematic. While since the arrival of new Administrator Steve Preston at the SBA last September the SBA as a whole has become much more responsive. It certainly appears that both Administrator Steve Preston and Chief of Staff Joel Szabat are engaged and committed to making SBA much more veteran friendly, but it would appear that it is more than a bit of an uphill struggle. I must say that they are both open to reasonable communication, and have been extraordinary in reaching out to the veterans’ business community, particularly to VET-Force participants.

For the first time in recent memory, top SBA officials spoke about our common duty as Americans to assist veterans, and especially service disabled veterans, who are in business or attempting to start their own business during Small Business Week early this month. While there still are very few awards or no awards for VOB or SDVOSB categories in comparison to other groups, particularly in regard to contracting and subcontracting, their efforts were clearly visible and I believe genuine. Only time will tell whether they are able to follow this up with concrete action.

The addition of a person in the Veterans Business Development office who does contracts full time is a significant addition, and it has been an aid to some businesses. It is still, however, far short of the efforts extended by SBA for other categories of small businesses such as 8(a) and women owned businesses.

As to what steps can be considered useful steps and concrete actions that can be taken by the SBA, those include the following steps:

  1. Create a dedicated section in the contracts office with at least the same number of contract specialists devoted to 8 (a) contracting. (It is worthy noting that there are 12,700 service disabled veteran owned businesses listed on the VIP at VA, while there are less than 7,400 certified 8(a) businesses. Since there are many more SDVOSB than 8(a), having the same number of contract specialists does not seem to be too much to ask.)
  2. The Administrator should take steps to create a capital formation program specifically for VOB, with an emphasis on SDVOSB. This should not be just for “start up capital” but also for so-called “mezzanine funding” to help businesses expand to a sustainable phase beyond the first few years of the small start phase.
  3. As noted below, the $25 million dollars that The Veterans’ Corporation people have been running all over Capitol Hill seeking should be added to the budget of the Veterans Business Development Office for use primarily as grants to localities to operate projects and expand existing services to better reach veteran entrepreneurs and would-be entrepreneurs. These grants should go to expand services of particularly effective Small Business Development Centers, to ensure that there is continued funding for such efforts as the fine project in
    St. Louis
    operated by Pat Heavey, and for special projects reaching out to wounded service members or to veterans for purposes of helping them become self-employed or to start micro businesses.
  4. The Administrator should issue a long overdue Administrator’s Order implementing all of the statues that have been enacted in the past eight years, plus putting more teeth into Executive Order 13-360 in regard to services delivered by SBA or funded through SBA.
  5. The Administrator should undertake a review of all SBA programs to ensure that veterans, particularly disabled veterans, are receiving full and proper access and maximum services from each of the SBA services and programs for which those individuals would otherwise be eligible. In other words, for example, this internal review, and appropriate corrective action as needed, would determine if women veterans were being properly reached in numbers commensurate with their incidence in the population and given the full range of services available to the maximum extent legally permitted.
  6. The Administrator should specifically review all that is being done for those citizens serving in the National Guard or Reserves who activated, and determine what more can be done under existing law to better assist these individuals, and work with the Congress and The White House to determine what else can and should be done by changing the law or by Executive Order.
  7. Closely related to the above point, but slightly different, is that we as a nation have to figure out how we can better support those businesses who have National Guard and Reserves members as employees who are now subject to frequent deployments for longer periods of time. This is a matter of national defense, but it is also a veterans re-employment and employment issue because the negative side of hiring and employing those who serve in the National Guard and Reserves is being disproportionately borne by a relatively small segment of the employer community. It is also having a negative impact on veterans’ employment and on the advancement of those who are employed within their company. This is the real world, where the bottom line must be addressed, and not the ideal world of what is fair, so we must find practical ways to solve this problem.
  8. The Associate Administrator for Veterans Business Development and all other officials of the SBA (and other agencies for that matter) should by this point know better than to keep saying in public and in private that “there are not enough service disabled veterans to do the 3% contracting, they are not sophisticated enough to do the work, and we have to teach these poor old veterans how to compete” before we can move forward on contracting and sub-contracting goals, or with other programs that would better enable veterans to have access to capital or international markets. Frankly, none of this is true, and these negative stereotype “straw men” set up by those who continue to say these things are a manifestation of “VETism” or an ugly set of prejudices and stereotypes that is every bit as ugly and inappropriate as sexism or racism.

While there are many more specifics that I could list here, suffice it to say that there is much that can and should be done by and at the SBA, but VVA has confidence in the top leadership of SBA in regard to doing right by ’s veterans for the first time in a very long period of time. I personally have more confidence in Administrator Steve Preston than any Administrator since James Sanders departed, and that was in 1985. I pledge that both VVA and on behalf of the VET-Force to work cooperatively with him and his management team to accomplish much in the next two years. However, time will tell. We shall keep you posted of any and all progress.

The National Veterans Business Development Corporation

The National Veterans Business Development Corporation, more commonly known as The Veterans Corporation or TVC, was set up by the same PL 106-50 and formed in 2000.  Frankly, the actual mess that we have today, and for much of the existence of TVC, is so far a field from what some of us hoped would be a vehicle for positive changes, that I feel like one of a team of surgeons known as Drs. Frankenstein.

The bottom line is that what started out as a noble experiment has been an utter failure, and TVC should be either radically changed in regard to governance, or just eliminated from wasting any more taxpayer dollars or the efforts of any more good people in the veterans’ community on this debacle.

Since that time TVC has gone through numerous management changes and Board upheavals. AT one point, under the current President, they fired all of the veterans on staff, including at least two who were special disabled veterans in favor of hiring non-veterans. Under the current Board composition and management they have not only not raised any appreciable outside funding, as required by the law, but have been saying that they do not think this is the direction they wish to take!

In the past year or so, the officers and the staff of TVC, which is virtually 100% funded with Federal dollars, have been running all over Capitol Hill seeking legislation that would relieve them of the mandate to raise private funds, and seeking more Federal dollars. Frankly, the last time VVA looked, spending Federal dollars to brazenly seek more Federal dollars and pay lobbying staff is just plain illegal, not to mention just a wrong thing to do.

 The only section of their mission that has been accomplished is partially funding two “Veterans Business Resource Centers” that were not started by the TVC and to which TVC has no appreciable expertise to contribute. The funding for these two projects should come from the Veterans Business Development Office at SBA, and eliminate the needless overhead and the six figure salaries of the TVC.

I will not waste the time of this distinguished panel by reviewing their “accomplishments” because we believe there frankly are no accomplishments. There is nothing that is “value added” here that cannot be accomplished by the SBA and the CVE at VA. Let us please stop this charade, give the TVC $250,000 in funds to either close it down or to find private resources to continue, but let us invest the hard earned cash of $ 25 Million in tax payer dollars in something that will yield a return on investment, and that is certainly not at The Veterans Corporation

Madame Chairwoman, thank you again for the opportunity to appear here today to share our views. I would be pleased to answer any questions you or your distinguished colleagues may have.