Honorable Bill Johnson
Good morning. This hearing will come to order.
I want to welcome everyone to today’s joint hearing on the Center for Veterans Enterprise. I thank the members of the Subcommittee on Economic Opportunity for their participation today and their efforts in improving the process for veteran-owned and service-disabled veteran-owned small businesses to conduct business with the VA.
The two Subcommittees have worked throughout this Congress to improve the certification process for veteran-owned and service-disabled veteran-owned small businesses, or VOSBs and SDVOSBs. We have patiently waited for signs of progress following the installation of a new Executive Director of Small and Veteran Business Programs at the VA. While some improvements have been made, unfortunately the goals established nearly a year ago, have yet to be achieved.
This Committee has an oversight responsibility to the American people to ensure that tax dollars administered by the VA are going to legitimate, qualified, veteran owned businesses. I am hopeful that today’s hearing will encourage and assist the VA in reaching their goals of improving the CVE once and for all.
As this Committee’s own investigations and multiple Government Accountability Office investigations have shown, the ad hoc processes implemented by the CVE to verify and re-verify businesses are not working. The recommendations made by GAO and the VA’s Inspector General go unheeded. Regardless of the reasons, the time has come for the CVE to take a hard look in the mirror, dig down to the root of the problem, and fix it.
With the attention this issue has received, the findings of the recent GAO study “Service-Disabled Veteran-Owned Small Business Program: Vulnerability to Fraud and Abuse Remains” are troubling. One of the many flaws in the system substantiated by GAO includes the VA’s providing GAO with seven different counts of how many SDVOSBs were verified by the CVE under the Veterans Benefits, Health Care, and Information Technology Act of 2006 and the Veterans Small Business Verification Act of 2010. Given the amount of resources we have urged the VA to commit to the CVE, it is safe to say we expected better than this.
Over the past several months, this Committee provided the Department with feedback and input regarding the CVE’s re-verification problem. With this in mind, we welcome the Secretary’s recent announcement that the VA will move from annual re-verification to a bi-annual re-verification, something this Committee had been strongly urging the VA to do for a long time. While this move is commended, the problems plaguing the CVE go beyond re-verification.
For instance, the VA’s decision to ignore the Small Business Administration’s regulations regarding ownership and control of a business has resulted in unnecessary problems. The VA’s choice to create its own standards for ownership and control has led to the CVE applying inconsistent standards to businesses applying for verification. In some instances, these arbitrary requests are invasive and have needlessly hurt legitimate, veteran owned small businesses.
It is not only the legislative branch that believes the CVE’s improvised standards and reasoning is lacking, but also the judicial branch. This past March, a Federal District Judge for the District of Columbia stated in an opinion that “several of the grounds cited by the CVE as a basis for denying the application for inclusion in the VetBiz VIP database are described in such generalized and ambiguous terms that the Court is essentially left to guess as to the precise basis for the agency’s decision.”
Unfortunately, this characterization describes the experience of many businesses who have applied for certification and been denied.
On July 11, Chairman Stutzman and I sent a letter to Secretary Shinseki detailing these and other problems, and we continue to await a response. Today’s hearing provides an opportunity to candidly discuss CVE’s failures, and where and how it can improve.
I want to thank all of our witnesses for their participation today, and I look forward to your testimony. I now yield to Chairman Stutzman of the Subcommittee on Economic Opportunity for his opening statement.