Legislative Issues

STATEMENT

VIETNAM VETERANS OF AMERICA

SUBMITTED BY

RICHARD WEIDMAN
DIRECTOR, GOVERNMENT RELATIONS

BEFORE THE

COMMITTEE ON SMALL BUSINESS
UNITED STATES HOUSE OF REPRESENTATIVES

REGARDING

PENTAGON PROCUREMENT POLICIES AND THEIR IMPACT ON VETERAN-OWNED BUSINESSES

JUNE 20, 2001

Chairman Manzullo, Ranking Member Velasquez, and distinguished Members of the Committee, Vietnam Veterans of America (VVA) appreciates the opportunity to share our views here today. VVA was a strong advocate of the legislation that became Public Law 106-50, and continues to press for full and proper implementation of the law at the earliest date. We are grateful to this Committee and all of the other many key players in the Congress who helped shape and pass this landmark legislation.

A significant part of the current efforts of VVA and other veteran small business advocates is our concern in regard to the Department of Defense (DoD) procurement policies, practices, and performance as they pertain to small business, particularly service disabled veteran owned businesses. As DoD does more than half of the procurement activity of the Federal government, it is natural that we should look to them as well as the Department of Veterans Affairs (VA) to be the leaders by example in the Federal government in surpassing the 3% minimum for procurement from service disabled veteran owned businesses.

The Small Business Administration (SBA) estimates that there are more than 4 million veteran-owned businesses in the United States. Between two and three hundred thousand of these are service disabled veteran owned businesses, although nobody knows the true number of service disabled veteran owned businesses because nobody has counted. Even when Congress mandated that such a study be done in late 1997, the Office of Management & Budget prevented any scientifically valid survey being done.

Many of these service disabled veteran business owners are Vietnam veterans. Many are members of our organization. Given its enormous and multifarious needs, one would think that the Defense Department would take maximum advantage of the talents and services offered by these former service members-turned-business owners. Unfortunately, this is simply not the case.

Even acquiring data on the number of veteran-owned businesses DoD contracts with is difficult. For example, on June 15 of this year, my office contacted the DoD Directorate for Information Operations and Reports’ Washington Headquarters Service seeking information on the number of service disabled owned businesses and other veteran-owned businesses with either prime or subcontracts with DoD. We were told that 2001 was the first year that their office had actually added a field in their database to track this kind of information…an astonishing admission that speaks volumes about the low priority the Department places on this issue.

As of this date DoD estimates that there are 32 veteran owned businesses with prime contracts totaling .02% of all procurement activities. As of yet, DoD has no mechanism for even tracking the service disabled owned businesses, and thus has no figures. Similarly, no information regarding subcontracts is apparently available.

DoD’s outreach efforts regarding procurement opportunities are also anemic. There is no hyperlink on the Department’s internet portal site—DefenseLINK (http://www.defenselink.mil/)—to DoD’s Office of Small and Disadvantaged Business Utilization (http://www.acq.osd.mil/sadbu/). Even OSDBU’s own website does not yet contain information specific to the needs of veteran business owners. OSDBU’s “Veteran Owned Small Business Program” page is “currently being developed.” This is also astonishing in light of the fact that it has been nearly three years since Congress passed PL 106-50, The Veterans Entrepreneurship and Small Business Development Act of 1999. Section 502 (a)(2) of PL 106-50 mandates that

“The Government-wide goal for participation by small business concerns owned and controlled by service-disabled veterans shall be established at not less than 3 percent of the total value of all prime contract and subcontract awards for each fiscal year.”

The bi-partisan intent of Congress was quite clear when it passed this law: each federal agency, department, and entity was to move out smartly to actively encourage and otherwise assist service disabled veteran entrepreneurs to secure a minimum of 3% of federal contracts and subcontracts. To date, we have no evidence that this has happened at DoD. Indeed, the Department seems not to have noticed that PL 106-50 even existed until just this year.

VVA would also note that the Small Business Administration (SBA) has made no move to ensure that agencies are taking reasonable steps toward implementation. In a hearing before this panel a month ago, it was revealed that SBA has even allowed agencies to illegally establish minimum standards of less than 3%, even some with 0% minimum! (Some cynics in the advocacy community for service disabled owned business report that those agencies are not even achieving the 0% goals.) To our knowledge, SBA has not yet corrected this illegal activity.

We must note, however, that the new Administration itself has not as of yet issued implementing regulations regarding PL 106-50. Our understanding is that while said regulations have been drafted, they still await final concurrence from the Federal Acquisition Regulations Council and OMB. It is our understanding that there is a “logjam” of paperwork that is pending as a result of all regulations being returned to the agency of issue on January 20, 2001. We believe that it is highly unlikely that President Bush even knows that this problem exists. That makes it incumbent on this Committee to let him know that it is his duty to cut the bureaucratic red tape and move forward on this commitment to service disabled veteran business owners.

VVA is having great difficulty understanding why this Administration—which campaigned on a “veteran friendly” plank—are taking so long to implement a law that will only enhance the well being of the economy as a whole and the lives of veteran entrepreneurs in particular. We believe that it is because his staff has not informed him and key advisors to the President, who have the power to move forward quickly, that this chronic problem has developed.

Mr. Chairman, while VVA realizes that implementing new policies and statutes can sometimes take time, we also expect that executive branch agencies will work to implement said policies and laws in good faith and with all due and deliberate speed. In the case of opening up Pentagon procurement opportunities to veteran entrepreneurs, this has simply not happened.

The Task Force for Veteran Entrepreneurship (Task Force) has virtually all of the veterans organizations represented, from the American GI Forum to the Veterans of Foreign Wars (VFW) to the Disabled American Veterans (DAV) to the Black Veterans for Social Justice to the Paralyzed Veterans of America (PVA), plus more than twenty other groups and veteran owned business leaders. Although not formally a part of the Task Force, The American Legion works closely with the Task Force and often hosts our meetings at their Washington headquarters. This collection of advocates has worked together since 1999 for the goals set forth in Public Law 106-50. The Task Force continues to meet monthly (except August) pressing for full implementation of both the letter and the spirit of the 1999 law.

The Task Force charged the Chairman with writing the attached letter to the President in regard to this issue of no progress on procurement minimums for service disabled veteran owned businesses. A copy is attached. A similar letter from this Committee and your distinguished partners in the other body of Congress would be helpful as well.

The Task Force also had Mr. Tim Forman of the Office of Small & Disadvantaged Business Utilization (OSDBU) at DoD as a speaker at our last meeting, on June 12, 2001. Mr. Forman expressed a willingness to work with us, and admitted that not nearly enough has been done thus far to even begin to properly implement the law.

We have proposed to Mr. Forman that Task Force members continue to meet with him informally to devise workable strategies, tactics, and program models that will be effective in advancing the objectives of P.L. 106-50. We are attempting to arrange for our regular July meeting and conference call at the Pentagon. The Task Force has urged DoD to issue a “Policy Letter” on the 3% minimum for service disabled veteran business owners to all of DoD, as it apparently takes up to seven years to get a Policy Directive issued by the Secretary of Defense.

In order to help rectify this problem, VVA strongly believes that the Committee should commission the General Accounting Office to:

1. Investigate the specific plans, practices, and performance as to how each Federal department, agency, and other entity are moving to implement PL 106-50.

2. Monitor each agency’s compliance with PL 106-50 on an annual basis for a period of not less than 10 years beginning in FY 2002.

3. Whether there is any evidence of an informal network, practices, or tacitly agreed methodologies for circumventing the 3% minimum for disabled veteran owned businesses at Federal agencies.

VVA also believes that this Committee should consider what sanctions might well be appropriate for agencies or for individual mangers and procurement decision makers who fail, deliberately or otherwise, to comply with PL 106-50 requirements, or with other goals for procurement set by the Congress.

VVA urge the Committee to also consider legislation that would accomplish several things to make the intent of the Congress crystal clear to the bureaucracies. First, VVA urges that it be made clear that the 3% minimum applies to both contracting and subcontracting at each and very Federal agency. Second, that the Congress make it clear to the General Services Administration (GSA) and to each Federal agency that purchases from the GSA Schedule are subject to the same 3% minimum for special disabled veteran owned businesses, as well as other similar goals established by law. Third, that the Congress mandate that all agencies hold back 1% of all prime contract payments until such time at the end of the contract and until the prime contractor can demonstrate that all subcontract volume and percentage pledged to service disabled veteran owned businesses and all other small businesses has been in actuality met. (This would go a long way toward correcting the problems of “bundling” for all small businesses.

Mr. Chairman, both Vietnam Veterans of America (VVA) and the Task Force on Veterans Entrepreneurship are not interested in giving Federal officials who are sent up here a hard time, nor in wholesale bashing on “bureaucracy.” We do, however, believe in accountability of Federal officials in both appointed and civil service/senior executive service being held accountable, including subject to criminal sanctions if and when such officials act in an illegal manner or collude to acting in an illegal manner.

VVA is interested in results of actual contracts and that Public Law 106-50 be implemented in such a manner as to achieve that objective. Right now many of the permanent employees of agencies within the Department of Defense and each of the components of the major services (e.g. Army, Navy), SBA, the Department of Transportation, an on and on think they can ignore the Congress and the law with impunity…….and thus far the true bureaucrats (as opposed to the true public servants) have been proven to be correct in this assumption. We ask that this Committee, Mr. Chairman, take the steps to ensure that flaunting the law is punished and mocking the Congress is ended.

Richard Weidman serves as Director of Government Relations on the National Staff of Vietnam Veterans of America (VVA). He served as a medic with Company C, 23^rd Medical Battalion, Americal Division, located in I Corps of Vietnam in 1969.

Mr. Weidman was part of the staff of VVA from 1979 to 1987, serving variously as Membership Service Director, Agency Liaison, and Director of Government Relations. He left VVA to serve in the Administration of Governor Mario M. Cuomo (NY) as Director of Veterans Employment & Training for the New York State Department of Labor.

He has served as Consultant on Legislative Affairs to the National Coalition for Homeless Veterans, and served at various times on the VA Readjustment Advisory Committee, the Secretary of Labor’s Advisory Committee on Veterans Employment & Training, the President’s Committee on Employment of Persons with Disabilities on Disabled Veterans, Advisory Committee on veterans’ entrepreneurship at the Small Business Administration, and numerous other advocacy posts in veteran affairs.

Mr. Weidman was an instructor and administrator at Johnson State College (Vermont) in the 1970s, where he was also active in community and veteran affairs. He attended Colgate University (B.A., 1967), and did graduate study in business and public administration at the University of Vermont.

The national organization Vietnam Veterans of America (VVA) is a non-profit veterans membership organization registered as a 501(c)(19) with the Internal Revenue Service. VVA is also appropriately registered with the Secretary of the Senate and the Clerk of the House of Representatives in compliance with the Lobbying Disclosure Act of 1995.

VVA is not currently in receipt of any federal grant or contract, other than the routine allocation of office space and associated resources in VA Regional Offices for outreach and direct services through its Veterans Benefits Program (Service Representatives). This is also true of the previous two fiscal years.