Good afternoon, Madame Chairwoman, Ranking Member Boozman and distinguished Members of the Subcommittee. Thank you for giving Vietnam Veterans of America (VVA) the opportunity to offer our written comments on a number of important bills here today. I also offer these brief comments on behalf of the Veterans Entrepreneurship Task Force (VET-Force).

Three years ago we began speaking to VA officials and to Congressional staff about the problem of “rent-a-vet” masquerade businesses that were starting to plague the veteran owned business (VOB)/service disabled veteran owned business (SDVOSB) community. Basically these were “front companies” that had no organizational criteria but were ostensibly subcontracting with large companies who actually did all or virtually all of the work. There was also the companion problem of actual businesses that listed themselves as SDVOSB on the Central Contract Registry (CCR) or on the Vendor Information Pages (VIP) of the Center for Veterans Enterprise (CVE) at the Department of Veterans Affairs. As there was no verification process at that time for the VIP at VA, and there still is no verification process for the CCR, there was nothing to prevent them from getting a contract and being counted as an SDVOSB except for the due diligence of a contract officer and/or a protest from a real SDVOSB who did not receive the contract award.

The problem was compounded by the fact that at least some contract officers were overwhelmed enough that they did not check closely on anyone’s credentials to see if they were bona fide, but took the credit and got on their way with other tasks.

In response to the articulation of this problem you listened and put forth legislation that became Public Law 109-461 to address this problem and others that SDVOSB were encountering in trying to do business with the VA. Further, you expanded the pool of businesses eligible by also providing for special authorities for veterans who are not service disabled to bid on contracts at the VA on a more level playing field. We are grateful for your efforts in this regard, although the actual implementation of the law leaves a great deal to be desired.

The idea of verification by the CVE was something that we agreed with, and met several times with CVE staff, bringing into the mix several VOSB who were already successful Federal contractors in a competitive environment, as well as some who had experienced the problems that the state of California had gone through in trying to fairly administer a similar law of a state level.

The CVE at this point has made a total mess of the verification process. Even they admit that there is up to a ten month backlog for a certification that only lasts one year. In other words, one may get approved after an inordinate delay, and then less than 60 days later start the process for the following year. This smacks of bureaucratic paperwork taken to an absurd degree, and would be funny if it was not so serious a matter for the veterans involved.

Further, there is absolutely no transparency in the process so that a VOSB or SDVOSB can find out where their application is in the processing line.

Perhaps most galling is the imposition of a restriction that a veteran cannot own more than one business and that the veteran must be full time (e.g., five days per week) at that business. Otherwise the CVE has posited that the veteran is not operating and controlling the business. This is just silly, and only people who have never operated a business would come up with such a notion. Every major veteran service organization has more than one legal entity in order to accomplish various aspects of our mission. Does that mean that the elected leadership is not in control? Of course it does not. I can assure you that VVA National President John Rowan is very much in control of our organization, is truly the Chief Executive Officer, even though he lives in New York City, and our primary office is here. Electronic means of communication have in fact been invented.

The staff of the CVE has maintained that these onerous requirements are necessary because this is what will stop fraud in the program. That is just not the case, as it is just not that simple. We point out that these two requirements are not mentioned anywhere in the law, nor even hinted at in Committee reports or in testimony anywhere we can find when the current law was under consideration.

We asked where they got this idea, and were told from the Small Business Administration. Apparently they decided to model it on the theoretical restrictions imposed on 8(a) businesses, where you can only have one 8(a) per lifetime. We would note that the 8(a) program is a business development program. The veterans program is not a business development, and neither the VA nor anyone else in the Federal bureaucracy offers any meaningful assistance to SDVOSB, much less to non disabled veterans.
The 8(a) program is a socio-economic classification and program that stems from being a member of a socially or economically disadvantaged group.

On the contrary, Service Disabled Veterans earn their status as a reward for services rendered to country and sacrifices made in that service in the military. It is an earned status. For any non-disabled veteran it is also an earned status.

Women owned business owners are not limited to one business, nor are HUB zones. When we pointed this out to CVE staff the response we got was not a rational argument, but rather “I’m not going to do anything to jeopardize my retirement.”

We point out that reportedly none of the firms specifically named in the report GAO-10-306T (http://www.gao.gov/new.items/d10306t.pdf) dated December 16, 2009; “Service-Disabled Veteran-Owned Small Business Program: Case Studies Show Fraud and Abuse Allowed Ineligible Firms to Obtain Millions of Dollars in Contracts” have been debarred from doing business with the government.

It is our understanding that at least one of these firms named by the GAO has received further contracts from the VA totaling well into seven figures. None of the contracting officers has been taken to task for a lack of due diligence, nor to our knowledge have any of the managers in those areas of VA been taken to task. Lastly, apparently not only has there been no referral to the United States Attorney to investigate whether there was any collusion on the part of VA personnel in these matters, or to prosecute these crooks who posed as SDVOSB for a felony violation of the United States Code, the Inspector General has apparently not even been called in to investigate. Talk about Stolen Valor!

It is clear that the CVE has gone awry in a major way. Instead of being a source of encouragement to veteran entrepreneurs and would-be

entrepreneurs, it has somehow transmogrified from an entity that assisted our people to one that polices our veteran entrepreneurs in a rather heavy handed manner. To add insult to injury, one of the key CVE staff members spoke on behalf of VA before major prime contractors at the TRIAD conference in Las Vegas last week about being committed to diversity in subcontracting, but did not mention the words veteran owned or service disabled veteran owned small business once in their oral presentation.

We are pleased with the appointment of Mr. Tim Foreman as Executive Director for Small Business at VA, and wish him well. We stand ready to support him as he tries to get this program headed in the right direction again, after fifteen months of drift and confusion. We know Mr. Foreman from his record at the Department of Defense and at the Navy. We know him to be a decent man and a good leader, who often can get things done despite efforts by some to either obstruct or delay, or to just have a penchant for complicating a one car funeral. We are hopeful that he will provide the leadership to get things back on track, and that he will have the full backing of the Secretary’s office as he does so.

However, this problem with the verification process must be fixed. It must streamlined, made user friendly, transparent so a veteran can see where they are in the process, and it must happen in days, not many, many months or years.

When one steps back and looks at this process, you see that there are some nefarious folks who have taken advantage of this program. Instead of seeking out those culprits, inside the VA and in the private sector, and punishing them, VA has put a mountain of burdensome paperwork and bureaucratic burden on the individual veteran business owner. This is akin to blaming the kid who gets beat up and has his lunch money taken for not being careful enough, and making him go a much longer route each day and go through burdensome procedures instead of catching and punishing the bums who beat him up and stole his lunch money. It was SDVOSB who asked for assistance to protect our honor and the integrity of the program. Instead of going after the culprits, the VA is treating all of our veteran business owners like miscreants. This is just wrong.

The overwhelming majority of the owners of VOSB and SDVOSB ore good, hard working, and decent citizens who have served their country well. They

just want the opportunity to earn their piece of the American dream, to provide quality products and services at a decent price to benefit their brothers and sisters who use the VA, and to employ other veterans and disabled veterans in meaningful work at a decent wage in the process.

We ask for the help of this distinguished body to help us reason with the VA in these matters.

I will be happy to answer any questions.