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Witness Testimony of Mr. Scott F. Denniston, Office of Small and Disadvantaged Business Utilization, Director, Center for Veterans Enterprise, U.S. Department of Veterans Affairs

Madame Chairman and Committee Members, thank you for convening this hearing to assess the current state of the Federal Veterans’ Entrepreneurship Program.  I am honored to represent Secretary Nicholson, Deputy Secretary Mansfield and the dedicated employees throughout the Department of Veterans Affairs who serve our veterans daily.         

I have good news to report.  The Veterans’ Business Program is working well in VA.  Last Fiscal Year, our procurement budget was $10.3 billion.  We spent $346 million with Service-Disabled Veteran-Owned Small Businesses (SDVOSBs), approximately 3.38%.  We spent 6.35% of our total procurement dollars with Veteran-Owned Small Businesses (VOSBs).  This amounts to approximately $651 million.  I am even more pleased to report that VA will be the first Cabinet agency to sustain and increase our achievements. 

We attribute our success to 4 principal factors.  First, we are the Department of Veterans Affairs.  Supporting veterans is our mission.  Second, and most significantly, our leadership demands commitment to veterans in business.  Third, our partners share our passion for ensuring veterans’ success.  Fourth, veterans doing business with our Department have proven themselves to be solid performers.  We are now building on their successes. 

As you know, VA puts veterans first.  Our personnel are focused on veterans’ success.  Self-employment and business ownership are natural outcomes for the work accomplished in our health care and benefits administrations.  VA offers numerous opportunities for new businesses through our micro-purchase program.  We have thousands of actions under the simplified acquisition threshold where young businesses have the opportunity to flourish. We have regional and national contracting opportunities for more robust businesses.  We also require large prime contractors to tell us how they will utilize veterans and service-disabled veterans in their performance.  We have creative contracting officers who are recognized for their support of veterans in business.  All these factors together have helped us achieve prominence in this program.

Small business programs are leadership-driven.  VA was the first Federal agency to implement procurement goals for veterans and service-disabled veterans.  We did this in 1984.  VA was the first Federal agency to implement the landmark set-aside provisions of Public Law 108-183.  This tool made a significant difference in VA’s ability to comply with the mandatory 3% Service-Disabled Veteran-Owned Small Business procurement goal.  VA organized the Executive Order 13360 Work Group to encourage alignment of Federal agency strategic plans to increase utilization of service-disabled veteran-owned small businesses.  Our leadership requires that program executives personally report their accomplishments at our quarterly Senior Managers’ Meetings.  As a result of Public Law 109-461, VA is now the first agency to place service disabled veterans and veterans at the top of our priority source lists.  Plus, this law provides VA with direct sourcing authority, a tool unique among Federal agencies.  With this new program, we expect a marked increase in expenditures with service-disabled veterans and veterans in Fiscal Year 2009.  

Visionary leadership is not exclusive to VA.  Many of our accomplishments would not have been possible without the teaming provisions in the Small Business Administration’s (SBA) Service-Disabled Veterans’ rule.  Also important are the Corporate Teaming Agreement guidelines from General Services Administration (GSA) and their Acquisition Letter #V-05-12, which permits evaluating socioeconomic status as a primary factor when making a best value determination when using the Federal Supply Schedules.  This is evidence that support for veterans is wide-spread.

We celebrate and applaud the work of our partner organizations.  Our first partnership was with the Association of Procurement Technical Assistance Centers (PTACs).  Funded by the Defense Logistics Agency, these offices educate owners new to the Federal marketplace.  We include referrals to PTACs in our solicitation documents to ensure that owners understand our Federal and VA rules before they sign an offer or a contract with us.  The PTAC program is fundamental to our success.   

As you may know, VA operates the Center for Veterans Enterprise which staffs a national call center to assist veterans interested in business ownership or expansion.  This office has 16 employees, 12 of whom are veterans.  The staff in CVE talks with veterans, their families and their business partners daily.  CVE’s business coaches routinely refer callers to our partner organizations or to the volunteers who form the Government or Corporate Advocates for Veterans Enterprise.  One of our steadfast partners is the General Services Administration (GSA).  We have co-sponsored regional conferences with GSA and assisted in their Veterans Technology Services (VETS) Governmentwide Acquisition Contract (GWAC).  We look forward to using this vehicle for years to come when VA personnel need information services support.  At all of our outreach programs, we distribute the tool kit for veteran-owned small businesses, which was jointly developed and co-branded by GSA and VA.  It contains legislation and policy documents, information on how to market to Federal agencies, a list of Federal Veterans’ Business Advocates and templates to assist business owners.  This tool has proven to be so successful it is now in its fourth edition. 

We have received great support from the military services.  The U.S. Air Force was the first department to offer assistance to us in 2000.  They shared their resources with us, giving us several sessions on their cable television program, Opportunities Showcase.  Mr. Tony DeLuca, then the Small and Disadvantaged Business Utilization Director, carried our message to audiences in each of his numerous presentations.  Since then, we’ve continued our joint outreach efforts, conducting road shows with the Air Force, the SBA and VA to reach military program managers.  We are in conversation about FY 2009 and beyond activities. 

The Army’s Small Business Program Office also has a sustained partnership with VA.  We have jointly organized the National Veterans’ Business Conference for the past 3 years.  This year’s program will be June 25-28 in     Las Vegas.   With the comprehensive support of the military community, a broad-base of its defense contractors, committed volunteers from a wide range of Federal agencies and the business owners’ community, last year’s program was well-attended.  More than 1200 participants joined together to focus on how to improve opportunities for veterans, especially service-disabled veterans, in prime and subcontracts.  More importantly, the owners’ community spread the word that the National Veterans’ Business Conference is a must-attend event due to the caliber of program managers and executives and the quality of information exchanged in that forum.  We are very pleased to assist in organizing the 3rd annual conference which we hope will be even more successful.  Efforts with the Army continue throughout the year.  The Corps of Engineers routinely dispatches advance announcements of forthcoming service-disabled veteran set-asides to owners in the VetBiz Vendor Information Pages database.  These personnel conduct advance briefings to the community.  As a result, you’ll see many of their offices honored in our annual Champions’ awards program.

            We are seeing an explosion of exhibitors proudly displaying “SDVOSB” or “VOSB” on their conference banners.  Some firms are enjoying rapid growth.  GSA recently hired Len Johnson of JDG Communications for their Federal Supply Schedule advertising needs, a $25 Million award.  SBA also hired JDG for their support in Business Gateway promotions.  Quality Support won a $38.5 Million award from the State Department to process visa applications.  The Army Corps of Engineers has awarded severalIndefinite Delivery Indefinite Quantity (IDIQ) contracts using the Service-Disabled Veteran-Owned Small Business set-aside authority.  VA recently awarded a Microsoft license support contract to MicroTech, using the Corporate Teaming Agreement provisions under Federal Supply Schedules.  This award is valued at $56 Million a year for 7 years.  As a result of matchmaking facilitated by the Center for Veterans Enterprise, a service-disabled veteran-owned joint-venture was established that successfully pursued a large construction project.  VETCON1 won a $30 Million award to build a facility in Menlo Park.  This is important to VA because many of our engineers mistakenly believe that disabled veteran-owned businesses cannot obtain bonding for our larger projects.  Big awards help us get the attention of program managers who too often will say, “no small business can do my project.”  We also celebrate the smaller successes, like Joe Marchesani of Markee Distributors.  We met Joe several years ago.  He was trying to sell medical device batteries to VA but was having difficulty getting in.  Now, he’s happy to report he’s in more than 100 of our locations, doing business on purchase cards. 

VA’s Center for Veterans Enterprise hosts the VetBiz.gov web portal which enables veterans to quickly link to our partner organizations.  CVE manages the VetBiz.gov Vendor Information Pages (VIP), a database containing information about products and services offered by veterans and service-disabled veterans.  Veterans in this database may elect to receive daily extracts from FedBizOpps and extracts from VA’s Forecast of Contract Opportunities.  We also use the database to blast early alerts about future requirements or education conferences, such as the 3rd National Veterans Business Conference.  Last month, the State of Washington announced a new program to promote utilization of service-disabled veterans in their state requirements.  They will use the VIP database as their sourcing program.  We hope to see other states adopt similar measures. 

CVE offers free market research, training and other services as may be requested by our Federal partners and their prime contractors.  We recognize their hard work in our annual Champions of Veterans Enterprise Awards program each June.

I am proud to report that our work is being well-received.  The Veterans Business Journal is considered the premier trade magazine in the veterans’ business community.  Last September, it conducted its first readers’ survey.  CVE was voted the organization that provides the best support to veterans in business.  We appreciate this vote of confidence and will strive to repeat this honor in 2007.

To promote awareness and utilization of veterans in business, CVE distributed more than 3,000 posters to prime contractors and government offices last October. 

To expand awareness of start-up assistance, we dispatched Operation Business Ownership DVDs for use in Transition Assistance Program briefings.  Both SBA and CVE are highlighted under “Small Business Resources” in the Vocational Rehabilitation and Employment Program pocket guide produced by VA’s Veterans Benefits Administration.  In the annual Federal Benefits for Veterans and Dependents’ book, information about CVE appears under Transition Assistance.  In addition, each year, VA’s Compensation and Pension Service mails cost-of-living adjustment letters to disabled veterans.  Veterans receive information about start-up and expansion assistance from CVE in this letter.  Army Knowledge Online’s web site reaches 660,000 personnel.  Our web portal link is prominently displayed on that site, which we understand will soon become a DoD-wide site.  We are also prominently displayed on Military.com’s site which is generally used by veterans for a variety of information.  The VetBiz.gov link also appears in USA.gov and on the OSDBU.gov web portals.  We greatly value the assistance from these partner organizations as it expands our reach beyond our limited resources.  We teach owners that business is about successful relationships.  We think we have built some good ones.

In the commercial marketplace, more than 300 franchisors have joined the VetFran program, which VA and the International Franchise Association refreshed in 2002.  Currently, more than 700 veterans have opened franchises under this program.  In VetFran, veterans are eligible for reduced franchise fees and other support.  One example is Little Caesar’s Pizza.  In November, they began a 12-month program of benefits to veterans and service-disabled veterans to help them open pizza shops.  The benefit to a disabled veteran approaches $70,000.  We are seeing renewed interest from the corporate community to outreach to veterans.  At our June conference, we will be renewing partnership agreements with several Federal prime contractors who recognize that veterans in business are solid performers.

Before closing, I know you are interested in what more needs to be done.  We encourage other Federal agencies to continue, and increase, their use of the service-disabled veteran set-aside tool.  I would also recommend increased attention to conducting and documenting training of Federal agency personnel in using the tools available through the Federal Veterans Entrepreneurship program.  Only when we have comprehensive awareness and buy-in for this program will we see global successes.  Agencies are required to post their strategic improvement plans for enhancing achievements with service-disabled veterans in business.  Veterans who call us want to see these plans, and the annual reports, posted in an easy to identify location.  Many contracting activities are still struggling with a lack of capable businesses in specialized industries.  A method to incentivize prime contractors to incubate new small businesses in these underrepresented fields will benefit all parties.  Others will address, I’m sure, the chronic problem of access to capital.  VA will also focus on subcontracting accomplishments. 

I hope you will agree that opportunities for veterans in business are abundant and that there is widespread support for this program. 

Madame Chairman, thank you again for convening today’s hearing.  I will submit my written statement for the record.  I welcome your interest and I am prepared to answer any questions that you or the Members may have.