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Federal Contractor Compliance.

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SEPTEMBER 29, 2010

SERIAL No. 111-102

Printed for the use of the Committee on Veterans' Affairs





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BOB FILNER, California, Chairman


VIC SNYDER, Arkansas
JOHN J. HALL, New York
TIMOTHY J. WALZ, Minnesota
JOHN H. ADLER, New Jersey
GLENN C. NYE, Virginia

STEVE BUYER,  Indiana, Ranking
HENRY E. BROWN, JR., South Carolina
BRIAN P. BILBRAY, California
DAVID P. ROE, Tennessee




Malcom A. Shorter, Staff Director


JOHN H. ADLER, New Jersey
JOHN BOOZMAN, Arkansas, Ranking

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records of the Committee on Veterans' Affairs are also published in electronic form. The printed hearing record remains the official version. Because electronic submissions are used to prepare both printed and electronic versions of the hearing record, the process of converting between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process is further refined.



September 29, 2010

Federal Contractor Compliance


Chairwoman Stephanie Herseth Sandlin
    Prepared statement of Chairwoman Herseth Sandlin
Hon. John Boozman, Ranking Republican Member
    Prepared statement of Congressman Boozman


U.S. Department of Labor, Les Jin, Deputy Director, Office of Federal Contract Compliance Programs
    Prepared statement of Mr. Jin
U.S. Department of Veterans Affairs, Jan R. Frye, Deputy Assistant Secretary for Acquisition and Logistics
    Prepared statement of Mr. Frye

American Legion, Joseph C. Sharpe, Jr., Director, National Economic Commission
    Prepared statement of Mr. Sharpe
American Veterans (AMVETS), Christina M. Roof, National Deputy Legislative Director
    Prepared statement of Ms. Roof
National Association of State Workforce Agencies, Rochelle L. Webb, D.M., President, and Administrator, Employment Administration, Arizona Department of Economic Security
    Prepared statement of Dr. Webb
Veterans Entrepreneurship Task Force (VET-Force), Joe Wynn, Treasurer
    Prepared statement of Mr. Wynn


Consortium for Citizens with Disabilities Veterans Task Force: Heather Ansley, Co-Chair, VetsFirst/United Spinal Association; Karen Bower, Co-Chair, Bazelon Center for Mental Health Law; Susan Prokop, Co-Chair, Paralyzed Veterans of America; and Leonard Selfon, Co-Chair, Paralyzed Veterans of America, joint statement
Hosmer, Charles R. , Laguna Niguel, CA, letter
Sierra Group, Inc., King of Prussia, PA, Janet Fiore, Chief Executive Officer, letter
Vietnam Veterans of America, Richard F. Weidman, Executive Director for Policy and Government Affairs, statement


Post-Hearing Questions and Responses for the Record:

Hon. Stephanie Herseth Sandlin, Chairwoman, Subcommittee on Economic Opportunity, Committee on Veterans' Affairs, to Rochelle L. Webb, D.M., Administrator, Employment Administration, Arizona Department of Economic Security, President, National Association of State Workforce Force Agencies, letter dated October 6, 2010, and response from Bob Simoneau, Deputy Executive Director, National Association of State Workforce Force Agencies, letter dated November 17, 2010

Hon. Stephanie Herseth Sandlin, Chairwoman, Subcommittee on Economic Opportunity, Committee on Veterans' Affairs, to Joseph C. Sharpe, Jr., Director, National Economic Commission, American Legion, letter dated October 6, 2010, and response, letter dated December 2, 2010

Hon. Stephanie Herseth Sandlin, Chairwoman, Subcommittee on Economic Opportunity, Committee on Veterans' Affairs, to Christina M. Roof, National Deputy Legislative Director, AMVETS, letter dated October 6, 2010, and Ms. Roof's responses

Hon. Stephanie Herseth Sandlin, Chairwoman, Subcommittee on Economic Opportunity, Committee on Veterans' Affairs, to Mr. Joe Wynn, Treasurer, Veterans Entrepreneurship Task Force, letter dated October 6, 2010 [NO RESPONSE WAS RECEIVED]

Hon. Stephanie Herseth Sandlin, Chairwoman, Subcommittee on Economic Opportunity, Committee on Veterans' Affairs, to Les Jin, Deputy Director, Office of Federal Contract Compliance Programs, U.S. Department of Labor, letter dated October 6, 2010, and DOL responses


Wednesday, September 29, 2010
U. S. House of Representatives,
Subcommittee on Economic Opportunity,
Committee on Veterans' Affairs,
Washington, DC.

The Subcommittee met, pursuant to notice, at 1:15 p.m., in Room 334, Cannon House Office Building, Hon. Stephanie Herseth Sandlin [Chairwoman of the Subcommittee] presiding.

Present:  Representatives Herseth Sandlin, Boozman, and Bilirakis.


Ms. HERSETH SANDLIN.  Good afternoon, ladies and gentlemen.  The Committee on Veterans' Affairs Subcommittee on Economic Opportunity hearing on Federal Contracting Compliance will come to order. 

Before I begin my opening statement, I would like to state that the Vietnam Veterans of America, the Consortium for Citizens with Disabilities' Veterans Task Force, and Mr. Chuck Hosmer have asked to submit written statements for the hearing record.  If there is no objection, I ask for unanimous consent that their statements be entered for the record.  Hearing no objection, so ordered. 

Some of the witnesses testifying before the Subcommittee today may recall that we previously held a Federal Contract Compliance hearing on May 14, 2009.  In that hearing, we received testimony from stakeholders highlighting several concerns, which include the Office of Federal Contract Compliance Programs (OFCCP) lack the resources to enforce Federal laws; the Veterans' Employment Training Service-100 (VETS-100)  list was not available for public viewing; and job listings as required by Vietnam Era Veterans Readjustment Assistance Act (VEVRAA) were not available or easily accessible to veterans seeking employment. 

Unfortunately, the written testimonies we received for today's hearing expressed the same sentiments, such as limited outreach efforts by contractors, and a failure to post announcements in the appropriate job listing services.  This hearing is an important one that seeks to build upon our reviews of previous hearings to hold responsible parties accountable in ensuring that our veterans are provided the employment opportunities that they rightfully deserve.

As many of my colleagues know, the U.S. Department of Defense (DoD) along with the U.S. Department of Veterans Affairs (VA) are among the top Federal agencies with regard to contracting opportunities.  Contractors are not only required to meet their contractual obligations, but are also required to meet legal authorities that are in place to provide employment opportunities to disabled veterans, combat veterans, and recently discharged veterans in addition to preventing discrimination among certain individuals.  While DoD was unable to be here with us for this important hearing, I am glad to have VA present so we can learn more about how they enforce existing laws. 

I look forward to hearing from stakeholders and Administration representatives to determine if Congressional action is needed to address some of the concerns raised in our previous hearing and that we are anticipating hearing today as well. 

I now recognize our distinguished Ranking Member Mr. Boozman for any opening remarks he may have. 

[The prepared statement of Chairwoman Herseth Sandlin appears in the Appendix.]


Mr. BOOZMAN.  Thank you very much, Madam Chair.  Before we begin, I would like to thank you for the way that you have worked with myself and our staff, thank you and your staff for the past 6 years.  As you know, I will not be returning to the House next year and I wanted you to know how much I value the working relationship that we have had, and I appreciate your leadership.  I wish that all of our Committee assignments were this collegial and productive throughout the rest of our responsibilities. 

But I think more than our professional relationship as Chair and Ranking, the most important result is that veterans have benefitted in many ways from the work of the Economic Opportunity Subcommittee.  I am proud of what we have done.  And I hope that the Subcommittee, and I know that the Subcommittee, will continue its success in the 112th Congress.

Madam Chair, the law regarding the obligations of Federal contractors to take affirmative action to hire veterans is clear.  What appears less clear is the government's commitment to enforcing the law.  Staff tells me that the VETS-100 Report is widely known to be merely a paperwork exercise that is largely ignored once it reaches Washington.  I, in a way I can understand why if the data supplied by our witnesses is even close to accurate.  The small staffs to enforce the law, there is clearly no practice way to police 200,000 contractors, many with multiple contracts and subdivisions.  I would also offer that with the consolidation of our industrial base as well as companies providing services, it is unlikely that an agency will debar a company that is a sole provider of a critical item or service. 

So I hope that we can eventually come up with something more effective to ensure contractors meet the law's requirement to hire veterans.  With that I yield back.

[The prepared statement of Congressman Boozman appears in the Appendix.]

Ms. HERSETH SANDLIN.  Thank you, Mr. Boozman.  I would now like to invite the witnesses for our first panel to the witness table.  Those testifying before the Subcommittee today include Dr. Rochelle Webb, President of the National Association of State Workforce Agencies (NASWA); Mr. Joseph Sharpe, Director of the National Economic Commission for the American Legion; Ms. Christina Roof, National Deputy Legislative Director for AMVETS; Mr. Joe Wynn, Treasurer, Veterans Entrepreneurship Task Force (VET-Force).  Welcome to all of you, and we look forward to your testimony.  As you all know, your written statements have been made part of the hearing record so we ask that you keep your statements to 5 minutes.  Dr. Webb, we will begin with you.  You are recognized. 



Dr. WEBB.  Chairwoman Herseth Sandlin, Ranking Member Boozman, my name is Rochelle Webb.  I am the Administrator of the Employment Administration of the Arizona Department of Economic Security.  I also serve as President of the National Association of State Workforce Agencies, known as NASWA.  On behalf of NASWA, I am especially thankful for the opportunity to speak on the hiring practices of Federal contractors and on the performance of the Office of Federal Contractor Compliance Program, OFCCP, within the U.S. Department of Labor (DOL).  I commend your leadership on this very critical issue. 

State workforce agencies are vital to meeting the employment needs of veterans through the Disabled Veterans Outreach Program, known as DVOP, and the Local Veterans Employment Representatives, known as LVERs.  With an unemployment rate of 11 percent among veterans who have served since 2001, we must do everything possible to ensure that there is no ambiguity in our existing laws.  While my written testimony addresses the specific questions in your invitation letter, I would like to discuss two major program limitations in the employment of veterans and offer potential recommendations.  They are as follows.

One, a lack of a comprehensive Federal contractor list impedes the efforts of States to conduct outreach activities with Federal contractors.  NASWA recommends the creation of a Federal contractor list.  This list should be made available to all State workforce agencies.  Currently, no such list exists and States are frustrated over the lack of a comprehensive, official, and accurate Federal contractor list. 

Such a list would do the following: enable DVOPs and LVERs and one stop staff to facilitate employment opportunities for veterans with Federal contractors, and it would empower NASWA's national labor exchange, known as the NLX, to compile all jobs appearing on corporate jobs' Web sites and import them into State job banks at no cost.  Without an official list, States cannot be confident that we are speaking with Federal Contractor Job Listing (FCJL) contractors. 

Two, there is an inconsistency of the Vietnam Era's Veterans Readjustment Assistance Act, or VEVRAA.  While contractors are listing employment opportunities, the ability to do so is undermined by the inconsistent interpretation of VEVRAA regulations in some States.  Since this Subcommittee's hearing in May of 2009, NASWA has sought a dialogue with OFCCP.  Yet little progress has resulted despite the fact that NASWA has offered a national solution. 

As shown in the chart before you, NASWA's NLX is a free, sophisticated job search engine and the only tool allowing all employers, especially multistate employers, to download jobs in all States.  The NLX is based on an agreement between NASWA and the DirectEmployers Association, a trade association of over 550 employers.  The NLX provides jobs from over 5,000 corporate Web sites to State job banks.  Combined with the jobs from local outreach efforts, over 740,000 jobs are in the NLX daily.  Since 2007, the NLX has provided over 8 million jobs.  Approximately 3 million of those jobs were FCJL jobs.  Yesterday in my State of Arizona, the NLX brought in over 9,000 jobs from 1,500 employers.  Of these jobs, 4,039 were FCJL jobs. 

The statements and interpretation of OFCCP about the validity of the NLX as a compliance mechanism have created confusion for employers and State workforce agencies.  NASWA strongly recommends OFCCP to meet with NASWA and find a solution to address these issues and provide consistent guidance. 

In conclusion, the U.S. DOL should clarify and communicate the appropriate roles and responsibilities of all involved Federal agencies and State entities.  There are still significant barriers limiting the effectiveness of OFCCP.  It is NASWA's belief that we can work through these issues on behalf of our veterans.

Thank you again for the opportunity to comment.  NASWA stands ready to work with your Subcommittee, the U.S. DOL, and all interested stakeholders.  Thank you.

[The prepared statement of Ms. Webb appears in the Appendix.]

Ms. HERSETH SANDLIN.  Thank you, Dr. Webb.  Mr. Sharpe, you are now recognized for 5 minutes. 


Mr. SHARPE.  Madam Chair, Ranking Member Boozman, and Members of the Subcommittee.  Thank you for the opportunity to present the American Legion's view on Federal contractor compliance. 

In the Federal Register of August 8, 2007, OFCCP significantly expanded the responsibilities of Federal contractors concerning their affirmative action plan for veterans.  The Federal Register noted that Federal contractors are required to conduct active outreach to find veterans going far beyond posting internet listings.  Some of the organizations that Federal contractors are directed to partner with to ensure appropriate outreach for eligible veterans are the Local Veterans Employment Representative and the Local Employment Service Office nearest the contractor's establishment; the Department of Veterans Affairs Regional Office nearest the contractor's establishment; the veteran counselors and coordinators, (Vet-Reps), on college campuses; the service officers of the national veterans groups active in the area of the contractor's establishment; can local veterans groups service centers near the contractor's establishment. 

Based upon dialogue with local Veterans Employment Representatives, veterans, and other organizations across the country, the American Legion found that Federal contractors have not consistently enlisted the assistance and support of the above mentioned persons and organizations in recruiting, developing on the job training opportunities for qualified disabled veterans recently separated, or other protected veterans and armed service medal veterans, to fulfill its commitment to provide meaningful employment opportunities to such veterans. 

The American Legion recommends that a VETS-100 report should no longer be filed electronically because it goes around the law's intent of bringing employers and one-stop career centers together to discuss and develop employment opportunities for veterans.  The American Legion also recommends VETS-100 be amended to measure direct compliance with OFCCP regulations.  Additionally, the American Legion recommends that a Federal contractor's Federal employment program be created and placed under the direction of the Department of Labor's Veterans' Employment Training Service so this program can receive proper oversight as well as input and guidance from stakeholders. 

It is vital that eligible veterans receive a fair proportion amount of employment from Federal contractors so these veterans and build and maintain a good quality of life while they contribute to the United States economy.

Madam Chair, this concludes my remarks.  I would be happy to answer any questions you may have.

[The prepared statement of Mr. Sharpe appears in the Appendix.]

Ms. HERSETH SANDLIN.  Thank you, Mr. Sharpe.  Ms. Roof, welcome back to the Subcommittee.  You are now recognized.


Mr. ROOF.  Thank you.  Madam Chair, Ranking Member Boozman, and distinguished Members of the Subcommittee.  On behalf of AMVETS I would like to extend our gratitude for being given the opportunity to further discuss and share with you our views and recommendations on Federal contract compliance.

AMVETS believes that the use of qualified service-disabled veteran-owned small businesses (SDVOSBs), veteran-owned small businesses, and individual veterans themselves in Federal procurement activities, is vital to the reintegration and business success of our veterans community.  Furthermore, AMVETS believes that transparency, uniform policies, oversight, and enforcement are key factors in ensuring the integrity of the Federal procurement system and the laws that were designed to protect and further the entrepreneurial and employment success of our veteran community.  We have submitted our complete statement for the record so our testimony today will address further concerns AMVETS believes are hindering VA's acquisition and procurement program.  And more importantly, these hindering experiences are taking jobs away from veterans at a time when the veterans unemployment rate continues to stay in the double digits. 

AMVETS has many serious concerns with regards to the current State of VA's acquisition controls policies and procedures.  Even more concerning is the fact that VA has allowed their entire procurement program to deteriorate to such levels where it is affecting our veteran community.  The individuals VA has vowed to protect are now the ones being most negatively affected by the lack of policies and procedures, lack of proper training of contracting officers, lack of a data exchange system, and the absence of enforcement of consequences to those who choose to defraud VA.  AMVETS strongly believes that preventative and proactive controls are the most effective way to minimize fraud and abuse.  Continual monitoring is an important component in detecting and deferring fraud.  Monitoring and detection within a fraud prevention program involves such activities as data mining for fraudulent and suspicious applicants, and evaluating firms to provide reasonable assurance that VA contracts continue to meet all of the compliance requirements. 

Currently, the only process in place that the U.S. Small Business Administration (SBA) can use to detect fraud and abuse is through the bid protest process they administer.  In the bid protest process, interested parties self-police the SDVOSB program by exercising their right to challenge an award.  AMVETS believes this is an ineffective control measure to handle oversight.  Furthermore, SBA regulations state that firms misrepresenting themselves as service-disabled veteran-owned small businesses may be suspended or debarred from government contracting and may furthermore suffer civil or criminal penalties for knowingly making false statements to SBA.  To date, the SBA program office has not referred any firm for debarment or suspicious proceedings even though  the U.S. Government Accountability Office (GAO) and the Office of Inspector General (OIG) have testified numerous occasions, to this Committee, on companies that are defrauding VA.  GAO's last investigation found that in just the ten cases they investigated they showed the consequences of this lack of control to include approximately $100 million of sole source and set aside SDVOSB contracts being awarded to ineligible companies that have figured out ways to manipulate the current system.  AMVETS strongly believes this is a direct result of the continued lack of enforcement in compliance. 

Even more troubling to AMVETS is the fact VA is still allowing many of these companies (that are ineligible) to continue to work on VA contracts and receive funds that were originally allocated to the set aside program, even after GAO presented VA with the names and details of these companies and the contracts.  AMVETS finds it reprehensible that VA has not acted or even sought to terminate these openly fraudulent contracts or to impose any fines or legal measures and attempt to recover their lost funds.

AMVETS finds the continued and inexcusable lack of oversight and enforcement of compliance is resulting in the direct lost employment opportunities for our veterans, that need them most.  AMVETS respectfully asks why no actions have been taken to fix these problems and alleviate the system of fraud clearly outlined?

Finally, AMVETS recommends the immediate implementation of regular internal audits by an outside firm, until VA has the staff and procedures in place to conduct proper contract compliance audits themselves.  Again, AMVETS cannot stress enough that VA must protect the shortcomings in order to protect the integrity of the procurement process and the authorities given to them.

AMVETS again thanks this Subcommittee for allowing us to share.  And your continued efforts in bettering something that, quite frankly, needs to be bettered to help our veterans.  Thank you.

[The prepared statement of Ms. Roof appears in the Appendix.]

Ms. HERSETH SANDLIN.  Thank you.  Mr. Wynn?


Mr. WYNN.  Thank you.  Good afternoon Madam Chair, Ranking Member Boozman, and other Members of this Subcommittee. On behalf of the Veterans Entrepreneurship Task Force, VET-Force, and all other of our offices and Members want to thank you for the opportunity to share our views on the status of Federal contractor compliance today.  I also want to thank both of you for accepting our VET-Force Veterans Congressional Leadership Award at our conference the other day.  Thank you.

For years the veterans service organizations (VSO) community has maintained a very close working relationship with the Local Veterans Employment Representatives and the Disabled Veterans Outreach Program Specialists, as we refer to them as LVERs and DVOPS.  They are on the front line and we listen carefully to what our local DVOPS and LVERs have said.  The loudest complaints we have heard over the years from them, in every part of the country, regarding the Federal contractor program.  For years they have complained that businesses that are not in compliance do not receive sanctions.  And the VSO community has long stood together in seeking severe consequence for businesses that are out of Federal contract compliance in the terms of the Jobs for Veterans Act.  Access to the historical records of the VETS-100 is a far cry from knowing when a local business has been awarded a contract and is ready to hire.  They are of little practical use to the DVOP and LVERs community at the one stops.  The VETS-100 might serve a purpose in the Department of Labor in Washington, but it serves no purpose for veterans staff working in the local one stops. 

With a few mandated changes the VETS-100 submission process could serve a very meaningful purpose.  By far the most helpful change would be a discontinuation of the practice of employers simply electronically submitting the VETS-100 form.  Electronic submission of a local compliance form that does not contain enough information subverts the local nature of employment and training and severely undercuts the staff at the one stops.  Requiring a LVER signature on the VETS-100 form would accomplish just that, as well as satisfy the OFCCP affirmative action outreach requirements in the process. 

OFCCP also requires that every business of over 50 employees have an appointed veterans affirmative action person.  Their name, signature, and contact information should be required on the new VETS-100 form.  This establishes a meaningful link between LVERs and each and every Federal contractor, without having the LVER ever leave their office.  In the Jobs for Veterans Act, Congress gave the LVER mandated employer relationships responsibilities.  Requiring a LVER's signature on the VETS-100 is the most cost effective way of interacting with local employers likely to hire veterans.

Subcontractors are also required to abide by the terms of the Jobs for Veterans Act in terms of affirmative action in hiring and promotion.  There currently is no way for LVERs or DVOPS to identify local subcontractors or out of area doing subcontract work locally.  The only way to identify these subcontractors is to require contractors submitting the VETS-100 to identify their subcontractors and where the work is being performed.

The Veterans' Employment and Training Service of the Department of Labor has been a sideline player.  At the least they should be coordinating the existing efforts of VETS Central, and Hoover and Johnson.  The active cooperation would make it possible for both to connect with the central contract registry so that every job listing and every new contractor's name and address has a contact name with telephone number.  Only the Veterans' Employment and Training Service can make this possible.  The Office of Federal Contract Compliance needs to do so as well.  The message needs to get out that there are consequences to noncompliance. 

For an additional recommendation, the Director of OFCCP should require that each Federal contractor's veterans affirmative action person make a monthly contact with the LVER, providing updated information on employment positions open within their company and with any of their qualified subcontractors.  The LVER should in turn be required to ensure that such information is forwarded to any veterans groups or veterans service centers that are actively engaged in assisting veterans with employment, particularly those groups who have received DOL grants under the Veteran's Workforce Investment Program, Homeless Veterans' Reintegration Program, Women Veterans and Incarcerated Veterans Programs.

In conclusion, it all starts with the Veterans' Employment and Training Service stepping up to the plate integrating and coordinating the existing efforts including the work of OFCCP, Hoover and Johnson, and the Vets Central, and making the needed changes to the VETS-100.  The pieces are there, they need to mesh for things to work.  Local veterans across the country deserve to share the benefits of having a leg up in hiring and promotion in businesses that profit from government business.  That only becomes a reality when the program that surrounds the listing is working in a cohesive manner.

Thank you, and I appreciate the opportunity for being able to submit my statement.  Thank you.

[The prepared statement of Mr. Wynn appears in the Appendix.]

Ms. HERSETH SANDLIN.  Thank you, Mr. Wynn.  Thank you to all of our witnesses.  I would like to just start out the questioning with a general one, and it may touch on the end of Mr. Wynn's testimony.  I know that some of you have commented either in your testimony today or your written statements about perhaps the need for a compilation, some sort of national listing, an official listing.  For anyone that wishes to respond, who is in the best position to compile and maintain a list, in your opinion?

Dr. WEBB.  Madam Chairwoman, NASWA believes that an accurate list is needed and it needs to be through a collaboration of all the Federal agencies that are involved in contractor compliance.  So we would look for not only OFCCP to be involved, but agencies such as Office of Disability Employment Policy dealing with disability employment, as well as representatives from the State workforce agencies through our association, and representing veterans, we also believe vets needs to be involved.  One part of the puzzle will remain one part of the puzzle.  We need all pieces working together to have a comprehensive solution that will work for both State and Federal agencies.  Thank you. 

Ms. HERSETH SANDLIN.  Anyone else?

Mr. WYNN.  Madam Chair, I would just like to say that between the Veterans' Employment and Training Service, the Department of Labor, and OFCCP, between the two they should be maintaining a list of Federal contractors who are required to submit information about employment opportunities for veterans.  And it is very important, too, that we get information included in that listing, or if there needs to be an additional listing, on subcontractors.  There are a lot of employment opportunities available through subcontracts.  There are thousands of subcontracts tied into each prime Federal contractor.  But that list needs to be compiled, made readily available, and made available throughout the year not just, you know, at one time when the submission of the best one hundred is done.  Thank you.

Ms. HERSETH SANDLIN.  Well thank you, Mr. Wynn.  Ms. Roof?

Mr. ROOF.  Just a really quick comment.


Mr. ROOF.  AMVETS is looking forward to seeing the outcome of the Presidential Executive Order bringing these agencies together, DOL, OFCCP, SBA, so they can get a good understanding and start doing things like preventing duplication of efforts, taking this knowledge, this wealth of knowledge and building a database.  So we are looking forward to see what comes out of that as well.  Thank you.

Ms. HERSETH SANDLIN.  That is a good point.  We know how important the interagency collaboration is in so many other areas.  But I think in addition to the collaboration we, if we are going to make this happen, somebody needs to ultimately bear the responsibility of maintaining it.  Right?  And being the point of communication.  That leads me to my follow-up question in terms of the VETS-100 report.  A number of you made different suggestions.  Mr. Wynn just made mention of subcontractors.  I think, Dr. Webb, you may have in your written testimony as well.  What kind of oversight and verification is needed over the VETS-100 report to make it a meaningful exercise? 

Dr. WEBB.  Madam Chairwoman, NASWA believes that the oversight needed is first of all to review. And perhaps a study would be useful here to see what type of information reported on the VETS-100 could actually help increase the effectiveness of contractor compliance.  The way the VETS-100 report is now, it is an annual report.  It is a static snapshot in time.  It is immediately outdated once it is submitted and as Mr. Wynn has indicated earlier, it is very difficult for State agencies to know within their  State who are the entities that receive subcontracts, because the major contract could have been in another State.  But there are employment opportunities that are lost unless they are uncovered by our DVOPS and our LVER staff within the States on their outreach.  But in Arizona, where we have over 140,000 employers, it is very difficult for a staff of just over 60 veterans staff to outreach that many employers to try to uncover which of those jobs are out of compliance or should be listed and are not. 

Mr. WYNN.  Madam Chair, I would also like to followup on that by again, a couple of comments made in my statement with regard to the VETS-100.  That the contact name of the affirmative action person should be included on that form.  We think that that would be very helpful in being able to then reconnect with the employers.  I mean, the whole idea here is to try and build relationships with the employers between the local DVOPS and LVERs and then the other veterans service organizations who are also working with veterans and employment.  And so we need a contact name, we need somebody to reconnect with.  And if they are going to, if that is provided on the VETS-100 form that would be very helpful along the way.  Thank you.

Ms. HERSETH SANDLIN.  Mr. Bilirakis?  Do you have any questions?

Mr. BILIRAKIS.  Thank you, Madam Chair.  I appreciate it very much.  Dr. Webb, can you give, I do not know if you can hear me so I will hold this up.  Can you give us some details regarding OFCCP's reluctance to use Job Central?  And how would you support matching contract awards with these new job openings? 

Dr. WEBB.  Congressman Bilirakis, thank you for the opportunity.  Yes, for example the inconsistencies of the Office of Federal Contractor Compliance has been difficult for NASWA.  OFCCP's refusal to consider the National Labor Exchange as a replacement for America's Job Bank, which is no longer funded and supported by the Department of Labor, has caused confusion.  This national approach that we have available to all States bring jobs into every single State, into the State job banks, at no cost to the State and can be at no cost to employers.  So, what we are advocating for is a comprehensive system and recognition that the National Labor Exchange meets the compliance reporting requirements of the Department of Labor.  And through this process employers, and most importantly veterans, become aware of all employment opportunities in all States.  Not just currently the State that they reside in, but any potential State where they would consider moving or transitioning to for another job opportunity.

Mr. BILIRAKIS.  The next question is for the entire panel.  Do you believe that the VETS-100 and other veterans hiring compliance issues should be monitored and complied by the Veterans' Employment and Training Services rather than OFCCP?  For the entire panel. 

Mr. SHARPE.  We believe it should come under the jurisdiction of the Department of Labor's VETS Program.  The problem that we see when we talk to our DVOPS and LVERs across the country is that they are unaware of the program.  We are told that it is a good program on paper only.  But as far as it being an actual program that they can use, they believe it is nonexistent. 

Mr. BILIRAKIS.  Anyone else?

Mr. WYNN.  Yes, sir.  I would like to respond to that.  Actually that is a good question, whether DOL Veterans Employment' Training Service or OFCCP should be responsible.  I tend to agree also with Mr. Sharpe, American Legion, that the Veterans' Employment Training Service, DOL, should take the lead.  But if we already have established an Office of Oversight for Federal Contract Compliance, the question that keeps coming up year after year is the enforcement and the oversight.  Are they doing it?  And we are not seeing evidence that it is being done.  Because we continue to have all these Federal contractors who we are unsure of as meeting their requirement.  So whoever is going to do it, whether it is DOL, or whether it is OFCCP, it needs to be done.  And there needs to be enforcement penalties associated with those Federal contractors that fail to comply. 

Dr. WEBB.  And that would be the opinion of NASWA as well.  It is immaterial as to which Federal agency has oversight of the program.  It is the intent of the law that we need to be sure is followed.  And we stand ready to help assist in any way we can to do that, regardless of whichever agency has responsibility for the program. 

Mr. ROOF.  AMVETS agrees.  The biggest problem right now we see with the VETS-100 is it is totally self-reported.  And there is no, and I do not know if it is lack of staff, lack of funds, you know, not clear which agency should do it.  But what is being self-reported is not being checked.  And that is unacceptable.  Because people, obviously we continue to have these hearings, they are defrauding this system and taking jobs from veterans.  So I agree with the other panelists that regardless of who does it, it needs to be done and it needs to be done quickly.

I have also heard that a lot of these VETS-100 forms will sit in piles on desks because of not enough staff to go through them.  And they sit there.  So. 

Mr. BILIRAKIS.  Okay.  Thank you very much.  Madam Chair, I appreciate it.  I yield back. 

Ms. HERSETH SANDLIN.  Thank you, Mr. Bilirakis.  I have one, maybe two follow-up questions.  A number of you mentioned the need for consequences for noncompliance.  Anyone want to elaborate in more specificity what you think some of those consequences should be to incentivize compliance?  To penalize for noncompliance?  To try to grapple with the problem that clearly is plaguing the system?

Mr. WYNN.  Madam Chair, just a brief response to that.  Noncompliance by Federal contractors would, the penalty would be associated with contracts going, awarded to them in the future.  They would either be afforded the opportunity to receive fewer contracts in the future, or face some type of financial penalty associated with any additional contracts going forward.  The same holds true with those Federal contractors who fail to subcontract with service-disabled veteran-owned businesses.  I think I would probably submit the same type of recommendation there as well. 

Mr. ROOF.  AMVETS believes that it has gotten to the point where any type of penalties need to be enforced.  Like I said earlier, GAO pointed out $100 million that was supposed to go to service-disabled veteran-owned businesses did not.  And VA has not done anything.  There has been no debarments.  No financial, there has been no financial penalties.  And I honestly think it comes down to the size of the contract, and the availability of other contractors to fill that.  If you are dealing with a company like Boeing, I really doubt that they would be debarred from the Federal contract system.  But impose strict, severe financial penalties.  People have to understand that it is not okay to defraud this system, and to take jobs from our veterans.  Thank you. 

Mr. SHARPE.  I believe with the other panelists.  A fine, disbarment. 

Dr. WEBB.  I agree as well.

Ms. HERSETH SANDLIN.  Okay.  Mr. Sharpe, a followup, I had asked a question earlier about sort of a national listing of Federal contractors.  In your testimony you recommend that a Federal contractor veterans employment program be created.  That would be something separate, some sort of national listing.  And if so, what would such a program entail?  Could you elaborate on what the American Legion would envision for this type of program?

Mr. SHARPE.  We are envisioning that it be part of the VETS program within the Department of Labor.  That they create a section where they could actively monitor and be the main point of contact. 

Ms. HERSETH SANDLIN.  So it would monitor compliance versus necessarily recommending that this would be the program within VETS that would compile, and maintain an official listing?  Or perhaps it could do that as well?

Mr. SHARPE.  Yes.  Because the problem as we see it is that they are not actively involved.  When you call the particular States across the country, and they are telling you that they are not involved in the program, they have never seen the reports, they do not have certain access.


Mr. SHARPE.  They are more concerned with actual hiring of veterans, and the program currently cannot give them that information.  That is why we tend to feel that it should definitely be part of the Department of Labor.  Because they are, that is the agency that seems to really be concerned if veterans are being hired or not. 

Ms. HERSETH SANDLIN.  If such a program would exist it would then go, Mr. Wynn, to solve the problem that you had identified, right?  Where the LVERs and the DVOPS have had their access to the names of Federal contractors revoked.  Is that a problem that exists? And was this an internal decision made by Department of Labor?  Are you aware?  What do you think?  Why was this access revoked?

Mr. WYNN.  I am not sure why.  But it is my understanding that it was the Department of Labor's decision to revoke access a few years ago. 

Ms. HERSETH SANDLIN.  But again, this is to try to get at this problem, right?  Having a program ongoing, active within VETS?

Mr. SHARPE.  Right.

Ms. HERSETH SANDLIN.  To be able to work directly with those out on the ground?  DVOPS, LVERs—

Mr. SHARPE.  Exactly.

Ms. HERSETH SANDLIN.  Okay.  I think that is all that I have.  I thank you for your testimony, and I appreciate your continued service to veterans.  While I am not sure that we will be having another Subcommittee hearing in the 111th Congress, I thank you all for your working relationship with our Subcommittee, with our counsel, and staff.  We look forward to continuing to work to meet these shared goals in this Congress and the next.  Thank you. 

I would now like to invite our second panel to the witness table.  Joining us is Mr. Les Jin, Deputy Director for the Office of Federal Contract Compliance Programs, U.S. Department of Labor; and Mr. Jan Frye, Deputy Assistant Secretary for Acquisition and Logistics, U.S. Department of Veterans Affairs.  I thank you both for being here, the time that you have spent in hearing from our prior panel.  As you know, your written statement is made part of the record.  Mr. Bilirakis and I have questions for both of you, so we will go ahead and get started.  Mr. Jin we will recognize you first.  You are recognized for 5 minutes. 



Mr. JIN.  Chairwoman Herseth Sandlin, Ranking Member Boozman, although I think he has left, and Members of the Subcommittee, thank you for giving me the opportunity to testify about the Office of Federal Contract Compliance Programs, OFCCP, and the critical work we do to enforce VEVRAA and Section 503 of the Rehab Act.  Last Friday marked the 45th anniversary of OFCCP.  Under the leadership of Secretary Solis and Director Patricia Shiu, we have worked to rebuild OFCCP and refocus our efforts on three priorities.

Priority one is strengthening enforcement.  Over the past year, Director Shiu has shifted our enforcement activities to hold contractors accountable for their employment practices.  For example, we instituted a new protocol that requires OFCCP compliance officers to go on-site and verify how contractors are treating protected veterans and people with disabilities rather than simply accepting contractors' self-reporting.  In fiscal year 2010, roughly 30 percent of all on-site reviews conducted by OFCCP found recruitment violations pertaining to protected veterans. 

Priority two is implementing the regulatory agenda.  In our conversations with veterans across the country, we know that they need reentry services, and some of them have told us that they are afraid to disclose their status as a disabled veteran, and sometimes even their service, to their employers for fear of being discriminated against when hiring, compensation, and promotion decisions are being made.  In response, OFCCP announced a proposal to revise our VEVRAA regulations.  The notice of proposed rulemaking, scheduled to be published this winter, will strengthen the current programs and measure the effectiveness of their equal employment opportunity efforts.  In addition, last week we closed public comment on how we could strengthen our regulations implementing Section 503. 

Priority three is identifying individual complaints through outreach.  In recent years, OFCCP has not prioritized individual complaints.  However, cases involving protected veterans and persons with disabilities rarely raise systemic issues.  Increasing the number of individual complaints we receive and investigate will increase our ability to protect veterans.  Director Shiu has created a new team dedicated to focusing on community-based engagement as part of our outreach strategies, including specific strategies as it involves veterans and disabled veterans.

Next, let me address some of the specific questions raised.  Our complete answers are submitted in written testimony.  First, the Chairwoman asked how the Department of Labor monitors contract compliance.  As I mentioned earlier, there are two primary procedures OFCCP utilizes.  One, scheduled compliance evaluations of Federal contractors, and two, investigations of individual or class complaints, which are filed by veterans who allege discrimination.

The Chairwoman asked if the VETS-100 report is sufficient to provide insight into contractor compliance.  Yes, we believe the reports can be used by our compliance officers in the evaluation process but only as high-level indicators of the number of protected veterans hired by a company compared to the total number of new hires, as well as to the proportion of protected veterans in the company's workforce.

Next, the Chairwoman asked if Federal contractors are meeting their obligations to list employment opportunities in the Federal Contractor Job Listing Program.  OFCCP's investigative procedures during an on-site investigation includes verification that the employer is listing appropriate job openings with the Employment Service Delivery System so that veterans may be given a priority in referral.  In fiscal year 2009, 174 contractors were cited for recruitment violations impacting veterans, including failure to comply with mandatory obligations to post job listings, conduct outreach, and fulfill other requirements for veterans.  OFCCP negotiated conciliation agreements in all of these cases to correct the violations. 

In conclusion, Madam Chair, Secretary Solis and Patricia Shiu have been very aggressive in trying to enforce the provisions of the VEVRAA Act.  And Secretary Solis has this vision for the Department of Labor of good jobs for everyone.  And we believe that the Secretary and Patricia Shiu is leading the agency in a direction to enforce VEVRAA in a very effective way, and we expect that that will continue in upcoming years.  Thank you very much.

[The prepared statement of Mr. Jin appears in the Appendix.]

Ms. HERSETH SANDLIN.  Thank you, Mr. Jin.  Mr. Frye, welcome back to the Subcommittee.  You are now recognized for 5 minutes. 


Mr. FRYE.  Madam Chairwoman, Ranking Member Boozman, and distinguished Members of the Subcommittee.  Thank you for the opportunity to appear before you today to discuss the Department of Veterans Affairs acquisition operations with regard to Federal contractor compliance.  It is a privilege for me to represent the many dedicated and hardworking acquisition and logistics professionals throughout the Department who provide mission critical support everyday to ensure quality care and benefits delivery for America's veterans. 

The Subcommittee requests VA respond to six questions regarding employment of veterans and Federal contracting.  I am pleased to respond to those questions today and address any other concerns the Subcommittee may have on this topic.  The Subcommittee asked for information on how VA monitors contractor compliance with Section 503 of the Rehabilitation Act of 1973 and the Vietnam Veterans Readjustment Assistance Act of 1974, as amended.  VA follows the provisions prescribed in the Federal Acquisition Regulation (FAR), Part 22, which require contracting officers to verify vendor compliance prior to award or modification of a contract.  VA contracting officers also include compliance causes and provisions in VA solicitations and contract.  In addition, VA contracting officers rely on the U.S. Department of Labor's Veterans' Employment and Training Services-100, also known as VETS-100 database, to ensure successful offerors are compliant with and complete reporting requirements for the appropriate reporting year.  Additionally, as a verification mechanism, VA's Electronic Contract Management System allows VA to conduct reviews of statistically significant random samples of contract files to ensure the appropriate clauses and provisions are included in contracts.  As part of the Office of Management and Budget Circular A-123 acquisition reviews, each VA contracting activity is reviewed at least biannually for compliance in many areas of acquisition law and regulation.  During Circular A-123 Reviews, VA uses this opportunity to sample a contracting activity's contracts for compliance with FAR Subpart 22.13.  The results of our most recent sampling, covering three VA organizations and conducted during the last 12 months, indicates all contracts in the sample contained the required contract provisions and clauses, and all contractors in the sample were fully compliant with the Department of Labor's reporting requirements. 

The Subcommittee also asked if VETS-100 is sufficient to provide insight into contractor compliance.  We believe that the data are sufficient to provide the necessary insight with regards to contracting officers' responsibilities. 

The Subcommittee asked if VA contractors are listing employment opportunities in the Federal Contractor Job Listing Program.  Ensuring VA contractors are listing opportunities using the Federal Contractor Job Listing Program is the responsibility of the Office of Federal Contract Compliance Programs, U.S. Department of Labor.  As such, VA must defer to OFCCP in this matter.

The Subcommittee asked for information on any action taken by VA to address noncompliant contractors, and whether noncompliance affects a company's ability to do business with VA.  Based on VA's Office of Management and Budget Circular A-123-Reviews for fiscal year 2009 and fiscal year 2010, we currently do not have any noncompliant contractors.  Noncompliance may affect a company's ability to contract with the VA.  Contractors deemed noncompliant are subject to provisions prescribed in FAR Part 22.  The first step VA will take in such a case is to notify the Department of Labor and initiate efforts to remedy contractor noncompliance.  Failure of the contractor to become compliant with the terms and conditions of the contract has consequences, which could result in the termination of the contract for default or cause and could ultimately lead to the suspension or even debarment of the contractor from Federal contracting.

The Subcommittee asked if VA received any complaints from veterans on this issue.  As part of VA's Office of Management and Budget Circular A-123-Reviews previously mentioned, each contracting activity is reviewed at least biannually for compliance in many areas including VETS-100 reporting.  During fiscal years 2009 and 2010, the Office of Acquisition and Logistics has not received complaints from veterans regarding Federal contractor noncompliance with legal authorities. 

And lastly, the Subcommittee asked for information on steps VA took to improve VA contractor compliance since the May 14, 2009, hearing.  I am pleased to note that a significant step taken since the hearing is our effort to enhance VA's electronic contract writing system.  This enhancement integrates a mandatory feature, which requires contracting officers to record an entry when they query the VETS-100 database prior to award or the exercise of a contract option.  This mandatory entry is a fail/safe mechanism, which will prevent contracting officers from releasing award or contract modification through the system without certifying first that current VETS-100 reports have been submitted by the successful offeror.  This enhancement allows VA to confirm compliance for all data entered into the electronic contract writing system.  In addition, after last year's hearing VA reinforced its policy which requires all VA acquisition professionals to operate in compliance with VETS-100 reporting requirements as described in FAR Part 22.  VA's policy was recently updated to incorporate the use of the new VETS-100 Alpha, 100A, reporting document..

Madam Chair, in closing I would like to thank the Subcommittee for the opportunity to testify today on the Federal Contractor Compliance Program at VA, as well as for the Subcommittee's continuing support for America's veterans.  I will be pleased to respond to any questions you or the Subcommittee's Members may have.  Thank you..

[The prepared statement of Mr. Frye appears in the Appendix.]

Ms. HERSETH SANDLIN.  Mr. Bilirakis? 

Mr. BILIRAKIS.  Thank you, Madam Chair.  Thank you for your testimony, gentlemen.  Mr. Jin, what are your concerns with regard to NASWA's Job Central system?

Mr. JIN.  Congressman, I think that the key thing is that we want to make sure that there is a system in place so that the priority referral provision for veterans is handled in a way that works for everybody.  Works for the veterans, works for the State and local organizations that are to put this together.  And so I do not have a specific concern.  But I think that we have system in place that was developed and, you know, we would be happy to have conversations with the organization about any issues they want to raise.  As far as I know, we have not done that, and they have not reached out to us in that regard. 

One of the things that I want to mention is that we have regulations, proposed regulations, as I mentioned.  And during that process we took a lot of comments from a lot of different stakeholders.  We, Director Shiu met with a lot of organizations.  She had a Webinar where she talked with over a thousand organizations and individuals concerned about veterans issues.  She did town halls in New Orleans and Chicago and San Francisco.  So she has received a lot of input.  And we just want to make sure that whatever changes we make are fully reviewed and everything is integ