HOUSE COMMITTEE ON VETERANS’ AFFAIRS
SUBCOMMITTEE ON ECONOMIC OPPORTUNITY
APRIL 29, 2010
STATEMENT OF TIM J. FOREMAN
OFFICE OF SMALL AND DISADVANTAGED BUSINESS UTILIZATION, U.S. DEPARTMENT OF VETERANS AFFAIRS
April 29, 2010
Good afternoon, Madam Chairwoman, Ranking Member Boozman and Members of the Subcommittee. It is privilege to return here today to testify regarding the progress of Veteran-owned enterprises both in the United States and overseas. Your hearing title asks, “Are We Failing Our Veterans?” I answer on behalf of the Department that we are not failing our Veterans. In many regards, we are excelling. We are leaders in many Veteran business areas.
VA is the recognized Federal leader in its share of contracts to small business owners who are Veterans, and the provisions of the Veterans First Contracting Program authorized by Public Law 109-461 are responsible for much of our recent success and growth. Throughout this targeted expansion to service-disabled and other Veteran-owned small businesses the quality of products and services provided to our Veterans remains high. As the program grows, our Veteran clients will continue to receive quality services and products from increasing numbers of Veteran suppliers who, as fellow Veterans, better understand the needs of the community VA serves. This symbiotic aspect of VA’s program is a “win-win.” Like many programs of broad and comprehensive scope, however, we can still do better.
When I testified before your subcommittee seven weeks ago, we discussed the backlog of Veteran-owned small business (VOSB) and service-disabled Veteran-owned small business (SDVOSB) verifications at our Center for Veterans Enterprise (CVE) and the way ahead. Resolving this backlog continues to be a top priority for the Office of Small and Disadvantaged Business Utilization (OSDBU). The list of VA-verified VOSBs and SDVOSBs will eventually constitute a database that will serve as the backbone of VA’s small business contracting efforts. Careful review of the applications and site visits, where appropriate, will eliminate most status fraud in small business contracts and will streamline program administration. Resolving this backlog will be the singular focus of OSDBU’s CVE for the near future.
Madam Chairwoman, your kind letter of invitation to this hearing requested that I focus my testimony on four general areas of interest. I will address each area separately, but let me start by recognizing some of the valuable sources we consulted to address your questions, while noting some of the data limitations. VA OSDBU is most appreciative of the effort of the U.S. Census Bureau in its report titled, Characteristics of Veteran-Owned Businesses, published in 2007 that reports data collected in 2002. This excellent, albeit dated, source material was useful in preparation of this statement. Additionally, the Small Business Administration (SBA) was helpful in providing some demographic information. I would like to specifically attribute to the testimony of SBA’s Shawne Carter McGibbon who appeared before this Subcommittee in April 2009 and eloquently addressed many of the same issues before us today. That testimony addressed the demographics of, and problems facing, Veteran business owners; it also addressed the limited availability and reliability of data for analyses of Veterans in business without the support of further surveys or samples.
Overall, readily available, current data and information is scant in the areas in which you have expressed interest. It often requires comparison of multiple data sets, sometimes collected under different conditions, with different assumptions, or for different purposes. This may adversely undercut the validity of information gleaned from such a process. Additionally, Veterans who enter the business world are not required to report their Veteran status. Reporting Veteran status may be required to win contracts or to receive certain types of electronic funds transfer, but many Veterans may embark on a business career and not report that they are a Veteran. For example, it is possible that a Veteran may own a fast food franchise – he or she is simply performing as a small business without letting anyone know their Veteran connection.
Impact of Geography
You asked about the impact of geography on Veterans’ enterprises with regard to the location of the business -- for example, various types of city or rural settings.
As most VA facilities are located in or near population centers, it follows that contractors with VA perform much of their work in those locations. But, in the internet era, place specificity is not essential. We may see an increase in the proportion of all businesses, including SDVOSBs and VOSBs, that conduct work remotely. The next U.S. Census report on the characteristics of Veteran-owned businesses may reflect an increase for information, education, and certain management sectors that are not venue-based. VA will work with the U.S. Census Bureau to assure that useful Veterans’ business information is collected in future surveys and other data collection efforts. The next U.S. Census report on the Characteristics of Veteran-Owned Businesses is due in June, 2011.
Business Sector Influence
You also asked how Veterans’ enterprises are doing in the different business sectors, illustrating your point with examples that included manufacturing, retail, internet and others.
Using U.S. Census Bureau data from the Characteristics of Veteran-Owned Businesses published in July 2007, it is possible to disaggregate the 2002 data used in the report to make some general comparisons between Veteran-owned businesses and all responding businesses. According to this report, Veteran-owned businesses had a higher percentage of several business sectors than did the typical respondent. Veteran-owned businesses out-represented the industry average in mining, construction, manufacturing, wholesale trade, transportation, finance and insurance, and in the professional and scientific sectors. Veteran business owners under-represented the industry average in retail trade, information, administrative support and waste management, educational services, healthcare, arts and entertainment, and in the accommodation and food industry sectors.
The 2002 data also indicate that Veteran businesses have proportionally greater representation at 51.7 percent in the 1-4 employee size grouping than are other respondents at 47.3 percent. In all other organizational size groupings, responding Veterans tend to represent a smaller share than non-Veteran owners.
Identification of Obstacles
You asked me to identify any obstacles that these enterprises may face when doing business with the Federal Government – asking if Veterans are more successful in contracting with some Federal agencies than others.
I would associate myself with Ms. McGibbon’s April 2009 testimony before this Subcommittee in that, except for age and gender, service-disabled and other Veteran-owned small businesses mirror the business community at large, not only demographically, but for the problems that they face. She presented measures of service-disabled and non-service-disabled business problems ranked in order of importance. Some differences and anomalies were apparent.
For example, the highest “critical” problem facing non-service-disabled Veterans was, by a wide margin, the affordability of health insurance. This compares to a fifth-place ranking for this problem among service-disabled Veterans, who may have health care provided by TriCare or by VA. However, other critical problems identified were generally similar between the two cohorts. Both cohorts ranked knowledge of programs for small business in general, attaining Government resources, and knowledge of Veteran small business program opportunities very highly.
VA OSDBU is addressing these identified critical problem areas through counseling programs and partnerships. Counselors at OSDBU and CVE assist Veterans seeking small business contracts, mostly under the Veterans First Contracting Program. Additionally, OSDBU has partnerships with the Procurement Technical Assistance Centers (PTACs) that leverage VA’s information outreach and help prospective Veteran business owners get the information they most need to pursue a contract. As the survey of Veteran business owner problems referenced by Ms. McGibbon predates both the establishment of the Veterans First Contracting Program and VA’s redoubled outreach effort through counseling and partnerships, it would be valuable to repeat this survey and see where we stand today.
Additionally, when the U.S. Census Bureau releases new data regarding Veteran-owned businesses in June of 2011, VA and OSDBU will be ready to use these data to identify new areas where Veterans may seek business opportunities. Most military skills translate well into the private sector. This Administration is taking steps to assure that every soldier, sailor, airman and Marine will have skills and opportunities that translate well into the business world.
One characteristic that needs to receive universal appreciation is the work ethic, dedication, and ingenuity of America’s Veterans. Not only did they serve, they also carry a determination to succeed that will buttress any business effort. Others in the business world need to understand and value that characteristic. Unfortunately, sometimes our Veterans do not get to take those first steps because of bias by the uninformed in the business community. VA and all partners in the business world must get the word out regarding the value of Veteran-owned businesses.
Earlier this week, President Obama gave us another tool to help identify obstacles facing service-disabled and other Veteran-owned small businesses. By Executive Order, he energized provisions of the Military Reservist and Veteran Small Business Reauthorization and Opportunity Act of 2008 and established an interagency task force to coordinate the efforts of Federal agencies to improve capital, business development opportunities, and pre-established Federal contracting goals for small business concerns owned and controlled by Veterans and service-disabled Veterans. Not only will this task force allow us to identify obstacles, it will also facilitate solutions.
Veterans in Overseas Business Endeavors
Finally, you asked how Veteran enterprises are doing business abroad.
U.S. Veterans often engage various types of business in or near U.S. posts and installations globally. We also have some businesses that reach across international borders and seek work on foreign soil. The Department of Commerce and the SBA both maintain U.S. Export Assistance Centers to provide technical assistance to small- and medium-sized businesses looking to do business abroad. Every Veteran interested in such commerce should take full advantage of these resources
Madam Chairwoman, Ranking Member Boozman, and members of this Subcommittee, VA is proud to be a leader in Government for contracting with Veteran and service-disabled Veteran small businesses. We are a steadfast advocate for the value of Veteran entrepreneurship. Secretary Shinseki has reached out to fellow members of the President’s Cabinet seeking support for Veteran-owned small businesses in Government. The charge and the challenge are clear – and the VA is ready to do what is necessary to continue serving Veterans seeking business opportunities.
I would be pleased to answer the Subcommittee’s questions.