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73–751 2001

HEARING WITH RESPECT TO SBA PROGRAMS FOR

VETERANS AND THE NATIONAL VETERANS

BUSINESS DEVELOPMENT CORPORATION

HEARING

BEFORE THE

COMMITTEE ON SMALL BUSINESS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

WASHINGTON, DC, MAY 23, 2001

Serial No. 107–10

Printed for the use of the Committee on Small Business

(

(II)

COMMITTEE ON SMALL BUSINESS

DONALD MANZULLO, Illinois, Chairman

LARRY COMBEST, Texas

JOEL HEFLEY, Colorado

ROSCOE G. BARTLETT, Maryland

FRANK A. LOBIONDO, New Jersey

SUE W. KELLY, New York

STEVEN J. CHABOT, Ohio

PATRICK J. TOOMEY, Pennsylvania

JIM DEMINT, South Carolina

JOHN THUNE, South Dakota

MIKE PENCE, Indiana

MIKE FERGUSON, New Jersey

DARRELL E. ISSA, California

SAM GRAVES, Missouri

EDWARD L. SCHROCK, Virginia

FELIX J. GRUCCI, JR., New York

TODD W. AKIN, Missouri

SHELLEY MOORE CAPITO, West Virginia

NYDIA M. VELAZQUEZ, New York

JUANITA MILLENDER-MCDONALD,

California

DANNY K. DAVIS, Illinois

WILLIAM PASCRELL, New Jersey

DONNA M. CHRISTIAN-CHRISTENSEN,

Virgin Islands

ROBERT A. BRADY, Pennsylvania

TOM UDALL, New Mexico

STEPHANIE TUBBS JONES, Ohio

CHARLES A. GONZALEZ, Texas

DAVID D. PHELPS, Illinois

GRACE F. NAPOLITANO, California

BRIAN BAIRD, Washington

MARK UDALL, Colorado

JAMES R. LANGEVIN, Rhode Island

MIKE ROSS, Arkansas

BRAD CARSON, Oklahoma

ANIBAL ACEVEDO-VILA, Puerto Rico

DOUG THOMAS, Staff Director

PHIL ESKELAND, Deputy Staff Director

MICHAEL DAY, Minority Staff Director

(III)

C O N T E N T S

Page

Hearing held on May 23, 2001 ............................................................................... 1

WITNESSES

Elmore, William, Associate Administrator for Veterans Affairs, U.S. Small

Business Administration ..................................................................................... 3

Glassman, Robert, Chairman, National Veterans Business Development Corporation ................................................................................................................. 5

Ortner, Blake, Associate Legislative Director, Paralyzed Veterans of America . 7

Eiland, Anthony, Special Assistant for Veterans Employment, Veterans of

Foreign Wars of the U.S. ..................................................................................... 9

Crandell, William, Director of Government Relations, Association for Service

Disabled Veterans ................................................................................................ 11

Weidman, Rick, Director of Government Relations, Vietnam Veterans of

America ................................................................................................................. 13

APPENDIX

Opening statements:

Manzullo, Hon. Donald .................................................................................... 30

Velazquez, Hon. Nydia ..................................................................................... 32

Prepared statements:

Elmore, William ................................................................................................ 34

Glassman, Robert ............................................................................................. 43

Ortner, Blake .................................................................................................... 47

Eiland, Anthony ................................................................................................ 56

Crandell, William ............................................................................................. 61

Weidman, Rick .................................................................................................. 66

Additional Information:

Letter from SBA in response to questions posed in hearing ........................ 73

(1)

VETERANS BUSINESS DEVELOPMENT

HEARING

WEDNESDAY, MAY 23, 2001

HOUSE OF REPRESENTATIVES,

COMMITTEE ON SMALL BUSINESS,

Washington, DC.

The committee met, pursuant to call, at 10:04 a.m. in room 2361,

Rayburn House Office Building, Hon. Donald Manzullo (chairman

of the committee) presiding.

Chairman MANZULLO. We will come to order. Good morning, and

welcome to this hearing of the Committee on Small Business. A

special welcome to those who have traveled a long distance to come

here.

The Small Business Administration is required by statute to provide special consideration to veterans in the administration of its

programs. In the past, there have been complaints the SBA and

other agencies have been ignoring the needs of those veterans with

aspirations to start or grow a small business.

The subject of the hearing is the performance of the Small Business Administration in providing financial and entrepreneurial assistance to veterans. Specifically, this hearing will look into the

performance of the SBA in implementing Public Law 106–50, the

Veterans Entrepreneurship and Small Business Development Act

of 1999, which was signed into law in August of that year.

This law provides that technical, financial and procurement assistance be given to veterans. I am happy to say that special emphasis is given in the law to providing assistance to small businesses owned and controlled by service disabled veterans.

Basic to this hearing is remembering our veterans and the sacrifices they made for this nation. Memorial Day is a day of remembrance. I can assure you that we in Congress have not forgotten

you.

I look forward to a lively and informative discussion of the issues

presented. Again, welcome to the hearing. I yield to the Ranking

Member, Mrs. Velazquez, for her opening statement.

[Chairman Manzullo’s statement may be found in appendix.]

Ms. VELAZQUEZ. Thank you. Good morning. Thank you, Mr.

Chairman. Good morning.

It is often said in the business world everyone is paid in two

coins, experience and cash. You should take the experience first,

and the cash will come later. For every business owner in today’s

marketplace, no truer statement has ever been spoken, but for our

veteran small business owners experience is something they have

2

in abundance. What they need is the capital and technical assistance to grow and expand their companies.

All of us in this room know what veterans have sacrificed in the

last 225 years to ensure that this country and our people remain

a free democratic society. For all that they have done for us, it is

now our duty to return that sacrifice to those who want their piece

of the American dream.

Unfortunately, in recent years we have seen a decline in the

numbers of veteran business owners and entrepreneurs in spite of

a growing economy. There has long been a growing concern that

veteran small business owners were, for whatever reason, unable

to access those components necessary to start and grow a new business.

This Committee responded to those concerns during the 106th

Congress by drafting, passing and getting signed into law the Veterans Entrepreneurship and Small Business Development Act. This

new law had several important goals, but one overriding theme.

Provide technical, financial and federal procurement assistance to

veteran-owned businesses.

While this legislation has achieved many of its goals, there is certainly more that can and must be done for these small business

owners. For example, this Committee has been very active in pursuing the interests of all small firms as they try to do business

with the federal government.

Rest assured, our work on this issue will continue until the

Members of this Committee are satisfied that small businesses,

whether they are owned by women, men, minorities or veterans,

are given every possible opportunity to compete for federal prime

contracts.

With that said, let me make one important point about today’s

hearing. As we come together today to review the progress of this

legislation, we must do so in the context of how we are best serving

all of our nation’s small businesses.

The fact is our nation over the last decade has experienced the

greatest period of sustained economic growth in our history. We

have an unemployment rate that stands at a little over four percent. Personal income has quadrupled, and the price of consumer

goods continues to fall. Still, key economic indicators such as increased layoffs and business closings in technology show that we

are clearly facing a financial situation with more questions than

answers.

With that in mind, we need to improve ways for small firms to

access capital. We should not be eliminating the tools to help rebuild the foundation of our economy, but help entrepreneurs live

out their dream.

All of these issues and a whole host of others make up just some

of the obstacles that small business owners will face in the coming

months and years. More importantly, the communities that these

economic anchors call home are going to have to face these issues

as well unless we do something to help them.

In closing, Mr. Chairman, let me say again that the 5,000,000

veteran small business owners know what sacrifice is all about.

Frankly, within the business community I think that that gives

them unique qualifications for being a small business owner. They

3

understand what their company’s success can mean for their families and their community at least, just as they understood what

their military service means to this country.

It is important to remember that while this hearing today focuses on how we can help them succeed in today’s economy, we

cannot forget that we also have a responsibility to ensure that all

small business owners are given the tools and the opportunities to

grow and prosper. After all, the veterans that sit before us today

have done a great deal to protect America’s future. It is now time

to do our part.

Thank you, Mr. Chairman.

[Ms. Velazquez’s statement may be found in appendix.]

Chairman MANZULLO. Thank you for that excellent opening

statement.

We may have a lively day on the Floor today. I am not quite sure

what is going to happen. I would ask that you respect the lights.

When the yellow light comes on, that means you have one minute.

When the red light comes on, that means that you are out of time.

I know five minutes is not a lot of time to tell your story, but

I would ask that you limit it to that. Then we will have plenty of

time for questions.

We will start with Bill Elmore. Bill is the associate administrator

for Veterans Affairs with the U.S. Small Business Administration.

Mr. Elmore, welcome this morning.

STATEMENT OF WILLIAM ELMORE, ASSOCIATE ADMINISTRATOR, VETERANS BUSINESS DEVELOPMENT, U.S. SMALL

BUSINESS ADMINISTRATION

Mr. ELMORE. Thank you. Mr. Chairman, Ranking Member, and

other Members of the Committee, I am William Elmore, the first

associate administrator for Veterans Business Development at the

SBA. Thank you for this opportunity to appear before you today.

I would like to request that my written testimony be entered into

the record.

Chairman MANZULLO. All of the written testimony of the witnesses and Members of Congress will be entered in the record without objection.

Mr. ELMORE. Thank you.

In 1973, Congress deleted Section 1813 of Title 38, eliminating

the small business loan guarantees for veterans created in the GI

bills of World War II and Korea. Correspondingly, in January,

1974, Congress mandated that SBA begin providing special consideration to veterans, their dependents or survivors in all of our programs.

In 1983, SBA created the Office of Veterans Affairs. On July 24,

2000, I was hired to run the new Office of Veterans Business Development. Before I left my small business to come to government,

I was a veteran small business advocate appearing before this and

other Committees in that capacity. Now as an Administration representative, I am learning that implementing real and substantive

change is a challenge that requires time, resources, allies and cooperation.

I understand that Public Law 106–50 requires and veterans deserve a thorough and complete implementation. In addition to my

4

written testimony, the following provides a synopsis of what has

been done so far.

SBA. has made significant improvements to our website. We

have created distance learning courses specifically for veterans. We

have compiled information on government procurement and disseminated this to approximately 20,000 service disabled and other

veteran owned small businesses.

The federal procurement data system has been modified to collect

procurement data on veterans and service disabled veterans. We

have mined information out of SBA databases and compiled a list

of approximately 80,000 service disabled and veteran owned small

businesses. We are providing them ongoing information on federal

procurement opportunities.

We have developed a quarterly newsletter that is sent to veteran

small business owners, SBA staff and veteran serving organizations. SBA has reviewed, revised and we are planning to expand

the Veterans Business Outreach program. We are planning a national training conference for SBA district Veterans Affairs offices

and will invite our resource partners to participate.

We are organizing special outreach efforts through ten of our

SBA district offices. We are developing a national outreach poster

to be provided to 5,000 plus veteran serving locations. We are assisting the Office of Advocacy with research that examines veteran

and service disabled veteran business ownership, their needs, their

engagement with SBA and other services.

We are updating and revising our previously successful Veteran

Entrepreneur Training program. We are meeting with and providing guidance to each program office of the SBA to assist them

in implementing data collection that will capture veteran, service

disabled veteran and veteran eligible information.

We worked with the Small Business Development Center program on their program announcement to improve their services to

veterans and service disabled veterans. We organized a meeting

with the SBA Office of Capital Access and representatives from the

veteran serving community to explore capital and technical assistance programs for veterans.

We asked more than 200 former SBA state and national veteran

advocate winners to assist us in ensuring special consideration is

delivered at the local level. We have reviewed more than a decade

of SBA services for veterans and are developing recommendations

for the next administrator based on this review.

We have solicited program recommendations from the Veterans

Affairs officers in SBA district offices. We are creating a database

of small business media, veterans media, veterans serving locations

and small business associations to provide them print and electronic tools regarding SBA services and procurement opportunities

for service disabled and other veterans.

We assisted the start up on the National Veterans Business Development Corporation, including hosting their first board meetings. We have and are continuing to develop recommendations for

the next Administrator for strengthening his Administrator’s order,

and we are exploring options to improve ProNet for service disabled

veteran and veteran entrepreneurs.

5

I note that since October, 2000, the number of service disabled

veterans registered in ProNet has risen by more than 28 percent,

and the number of veterans registered in ProNet has risen by almost 17 percent. This reverses years of decline.

In closing, we anticipate a renewed commitment from the new

Administration because of their stated interest in veterans and

small business success. We are aware that veterans and service

disabled veterans have not historically received the attention they

deserve. With the support of the new Administration, Congress, our

resource partners and the veteran entrepreneurs themselves, we

will change this.

Thank you.

[Mr. Elmore’s statement may be found in appendix.]

Chairman MANZULLO. Mr. Elmore?

Mr. ELMORE. Yes, sir?

Chairman MANZULLO. You read a list that was not in your written testimony. If you could make available that list to us?

Mr. ELMORE. I would be pleased to, sir.

Chairman MANZULLO. Would that be okay?

Mr. ELMORE. Absolutely.

Chairman MANZULLO. Obviously you have updated your written

testimony. I appreciate your taking the extra effort on that.

Our next witness is Robert Glassman. He is the chairman of the

National Veterans Business Development Corporation.

Mr. Glassman, welcome.

STATEMENT OF ROBERT A. GLASSMAN, CHAIRMAN, BOARD OF

DIRECTORS, NATIONAL VETERANS BUSINESS DEVELOPMENT CORPORATION

Mr. GLASSMAN. Thank you, and good morning, Chairman Manzullo, Ranking Member Velazquez, and Members of the Committee.

I am very honored to be here to address you, but I must admit that

the memory that will last a lifetime will be that my fellow board

member sitting immediately behind me is retired Army Major General Jim Klugh. It is very rare that an ex lieutenant can be backed

up by a Major General, and I will always remember that.

Chairman MANZULLO. Could you stand up, please? Welcome.

Major General KLUGH. Thank you, sir.

Mr. GLASSMAN. Before I describe the progress we have made, I

would like to thank Congress for creating the National Veterans

Business Development Corporation. Many members of the veterans

community have been working on this endeavor for over a decade,

and Members of your Committee have been involved with this legislation for the last three years.

However, I must note our corporation, which is one of the products of these efforts, is now only in the seventieth day of our funding. While the law was fairly specific in its direction to the corporation and board structure, clients to be served and coordinating role

with public and private resource partners, it was less specific as to

how we should implement the directive for the corporation to become self-sustaining in a four-year period.

That gives the independence to achieve self-sufficiency in a variety of ways and the opportunity to evolve into an organization with

a broad reach into the veterans community. The corporation inVerDate 11-MAY-2000 14:59 Sep 26, 2001 Jkt 075151 PO 00000 Frm 00009 Fmt 6633 Sfmt 6602 E:\HEARINGS\75151 pfrm09 PsN: 75151
6

tends to act in the same entrepreneurial manner, spirit and ethic

which we are tasked to provide to the 4,000,000 veteran owned

businesses, 300,000 service disabled veteran owned businesses and

the 200,000 members of the military transitioning to the civilian

sector each year.

We intend to carry through this entrepreneurial ethic in all our

activities. For example, the corporation will provide expanded entrepreneurial technical assistance to veterans, including service

disabled veterans. One path to that goal is to provide veterans with

a virtual technical assistance center by creating a user friendly

website that will provide information, links to service providers and

contracting opportunities in the public and private sectors.

In addition, we will establish community based veteran business

assistance centers in partnership with key service providers

throughout the U.S. We will seek to export the federal three percent service disabled veteran procurement goal to the private sector

in the form of a set of procurement principles.

I would like to turn to some of the concrete steps we have taken

to build infrastructure. This law was signed on August 22, 1999.

Our first board members nominated by Congress and appointed by

the President met in September, 2000. Since that time, the board

has been meeting on a quarterly basis.

Presently there are eight volunteer private sector directors with

one seat open. In 2002, there will be two more vacancies and three

more in 2004. To assist in furthering the goals of this corporation,

it is most important that the new members be individuals who

have built and managed successful businesses, have raised capital,

are familiar with the new economy and in a technological sense

have the ability to think out of the box.

Furthermore, some of these members should have broad backgrounds in state and federal government and procurement expertise with these entities. I cannot overstate the importance of finding the most qualified individuals to be board members in order to

ensure the continued success of the corporation.

Our present board members represent private industry, state

and non-profit service providers. They are veterans of World War

II, Korea, Vietnam and peacetime service. Additionally, there are

three non-voting directors representing DOD, VA and SBA. I particularly want to thank Mr. Elmore at my right here, the associate

administrator for Veterans Business Development at SBA, for his

contributions.

In March of 2001 when we received the appropriated funds, we

continued to develop the corporation’s infrastructure. We hired interim staff, established bank accounts, secured temporary office

space. We are also conducting a national search for a permanent

CEO. We have retained an accounting firm specializing in providing financial services for non-profit organizations. We are in the

process of securing services for printing database design and fund

raising.

In the next few months, we anticipate we will provide written

materials for our customers and for fund raising purposes, build

the website and reach out to our federal partners to coordinate our

activities.

7

We have retained VetSolutions to develop our strategic plan.

VetSolutions is a national business development firm providing

training and consulting and research services to veteran owned

businesses. Founded by three disabled Vietnam veterans with extensive backgrounds in business, program development and veterans affairs, these gentlemen were involved in the legislative and

planning process underlying P.L. 106–50.

As part of the planning effort, they have interviewed board members, staff and major stakeholders. When approved at our next

meeting, we expect that plan to be the corporation’s road map for

future activities.

While my written submission speaks to the infrastructure and

framework we are building, it should be remembered that the most

important component is the strategic planning effort of how best to

employ an amount of funding that is approximately ten minutes

worth of the VA budget.

While this legislation can be viewed narrowly task by task on behalf of the veterans we are serving, I prefer to look at it through

a wide angle lens, to think of it as an investment program with the

federal government as its lead investor. In this context, it may arguably be said that this public/private initiative may be the most

important piece of social venture capital since the GI bill.

On a personal note, I would like to extend my thanks. Thirty

years ago I was a beneficiary of that GI bill, and I would not be

privileged to be presenting to you were it not for the wisdom of the

Congresses that preceded you.

I wanted to say a personal thanks. When I returned from Vietnam, the GI bill was an enormous help to pay my graduate school

tuition, and I wanted to extend my thanks for that.

[Mr. Glassman’s statement may be found in appendix.]

Chairman MANZULLO. I bet you never thought you would be testifying before Congress 70 days after you got started.

Mr. GLASSMAN. I hardly know how to respond to that.

Chairman MANZULLO. You already have.

Our next witness is Blake Ortner. Blake is the associate legislative director of the Paralyzed Veterans of America.

Welcome, Blake. We look forward to your testimony.

STATEMENT OF BLAKE ORTNER, ASSOCIATE LEGISLATIVE

DIRECTOR, PARALYZED VETERANS OF AMERICA

Mr. ORTNER. Chairman Manzullo, Ranking Member Velazquez,

Members of the Committee, the Paralyzed Veterans of America appreciates this opportunity to testify regarding the performance of

the Small Business Administration’s assistance for veterans.

The issue of small business ownership is important to PVA.

PVA’s members are veterans disabled by catastrophic injury or diseases. The many challenges still facing individuals with disabilities

as they seek employment have resulted in an unemployment rate

higher than that of any other category of citizens in the United

States.

The lack of benefits provided by traditional employers often

make it more difficult for the disabled to enter the work force.

Small business ownership and self-employment is a bridge for

many of these individuals.

8

Last year, when PVA testified, we believed the SBA had been unreasonably slow in implementing P.L. 106–50. Admittedly, SBA has

moved forward. The National Veterans Business Development Corporation awaits only one more appointment, and funding has been

secured. In addition, PVA believes the veterans have a strong and

supportive voice in Bill Elmore and the staff at the Office of Veterans Business Development.

Unfortunately, few other improvements have been made. It is the

belief of PVA that the culture at SBA, if not anti-veteran, is certainly no more than veteran neutral. SBA simply pays lip service

to supporting veterans.

S.B.A. has not pushed for the regulations needed to implement

P.L. 106–50. The missteps of the FAR Council are a prime example. Section 502, paragraph 2, clearly states 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 three percent of the total value of all prime contract and

subcontract awards for each fiscal year.

The FAR Council chose to ignore this clear statement and instead wrote regulations which only included service connected disabled veterans as a part of an overall goal. Where was SBA monitoring of the regulation process that allowed a not less than three

percent to become a goal to only include service disabled veterans?

When it was determined that a technical amendment was necessary, SBA did not aggressively pursue this change and, as far as

PVA is aware, discussed the amendment with only one Democratic

Member. This again demonstrates SBA’s traditional indifference to

veterans.

These delays in regulations can be disastrous for veterans’ businesses. An additional regulation is at OMB and waiting to be published. I am told it should be published in the next few weeks,

nearly two years after passage of P.L. 106–50. These regulations

apply to Section 402, Assistance to Active Duty Military Reservists,

and concern the availability of loan deferments and disaster assistance funds for small businesses who have service members ordered

to active duty.

These regulations need to be implemented quickly. Military operations involving reservists have been ongoing, and the next two

months will see approximately 3,000 members of the National

Guard and Reserves from 18 states, including myself, mobilized for

duty with peacekeeping forces in the Balkans. The availability of

these disaster loans can make the difference between a business

surviving or failing during a soldier’s deployment. Mr. Chairman,

I want the men and women that I command concentrating on the

mission and not the condition of the checkbook back home.

There also seems to be some questions whether National Guardsmen qualify for these mobilization benefits. A mobilized National

Guard unit is a federal entity and is treated as such. To make a

distinction between these two reserve forces is unfair.

Mr. Chairman, what can SBA do to change its direction? PVA

would like to see, one, special loan product for disabled veterans,

programs such as micro loans and procurement initiatives aimed

directly at veterans, particularly disabled veterans.

9

Two, the expansion of veterans’ business outreach. PBA fears

that with the creation of the NVBDC, SBA now believes it need not

concern itself with encouraging veterans’ businesses because someone else can do it. Mr. Chairman, the corporation in no way relieves SBA of its obligation to veterans to provide congressionally

mandated services.

Third, resources for significant outreach. In Washington, a department or office’s budget often details its importance. PVA awaits

the fiscal year 2002 budget of the Office of Veterans Business Development. This funding level will be an indication of any change

at SBA.

The previous Administration had provided no fiscal year 2001

funding for the Veterans Office. However, some funding was secured by this Administration to allow for some programs. PVA

views this as a question of priorities, and so often it seems that

SBA’s priorities do not include veterans.

Finally, we ask the Committee to closely oversee the activities of

SBA’s veterans’ programs and require SBA to abide by congressional mandate. Unless SBA is held accountable for providing quality programs to veterans, it will continue the indifference it has

shown in the past.

Mr. Chairman, veterans deserve quality services whether in

health care, prosthetic devices or advice in training on small business ownership. At the SBA, veterans should be the priority and

not just an afterthought.

I thank the Committee for this opportunity to present PVA’s

views and would be happy to answer any questions.

[Mr. Ortner’s statement may be found in appendix.]

Chairman MANZULLO. Thank you very much. There is a Major

General back there going amen, amen.

Mr. ORTNER. Thank you, sir.

Chairman MANZULLO. We have to give them more than 70 days.

Mr. ORTNER. Absolutely.

Chairman MANZULLO. What I hope to do is to either have a follow up hearing or assemble everybody in our office, our joint offices, to make sure we monitor and give the support that you need

and make sure the job gets done.

Our next witness is Anthony—is it called Eiland or Eiland?

Mr. EILAND. Eiland.

Chairman MANZULLO. Eiland, special assistant for Veterans Employment of the Veterans of Foreign Wars of the U.S.

Mr. Eiland, welcome.

STATEMENT OF ANTHONY L. EILAND, SPECIAL ASSISTANT, NATIONAL VETERANS EMPLOYMENT POLICY, VETERANS OF

FOREIGN WARS OF THE UNITED STATES

Mr. EILAND. Chairman Manzullo, Ranking Member Velazquez,

and Members of the Committee, thank you very much for inviting

the Veterans of Foreign Wars to have an opportunity to speak

today before the Committee and also to address how important we

think that the Small Business Administration’s dealings with the

board is.

Mr. Chairman, for some veterans the normal routine of the job

environment is not a practical or feasible solution for employment.

10

For these veterans, most disabled, self-employment is not just a

dream, but also a necessity for ensuring the peace of mind that

comes from providing a secure atmosphere and livelihood for themselves and their family members.

For these courageous individuals, Public Law 106–50 was created

to be a tool to enable them to succeed in returning to the work

force as taxpaying employers with the goal of creating more small

business to stimulate economic growth in our communities. To

make this a reality, Congress instituted one of the most potentially

effective initiatives ever, the Veterans Entrepreneurship and Small

Business Development Act of 1999 and, in turn, the Small Business

Development Corporation.

The VFW sees the Veterans Entrepreneurship and Small Business Development Act of 1999 as the first step of many in repairing

the trust between the government and the veterans’ community.

We look forward with hope that not only will this letter of the law

be protected, but also the purpose of the law will be enforced. In

addition, it will also help to streamline the process to ensure that

the veterans community, that the veteran and the disabled veteran

will be seen as a valuable resource and an asset to the economy

as a small business owner.

Mr. Chairman, many veterans have harbored the belief that the

Small Business Administration has either been blind or simply ignorant to their small business concerns, especially those of disabled

veterans. They feel they have had nowhere to turn for support or

guidance in establishing private ownership, let alone assistance in

maintaining a small business.

They were in turn forced to deal with a bureaucratic agency that,

in their opinion, did little to address and support their wishes,

problems or needs, let alone supply confidence and faith in longterm solutions in establishing veterans’ ventures.

Yet not all this blame should be placed on the shoulders of the

Small Business Administration. During the mid 1980s, VA provisions for small business loans were eliminated from the GI bill benefit. Public Law 96–237 required the Small Business Administration to provide for special consideration for veterans in all its programs.

Regretfully, however, veterans who have contacted the Veterans

of Foreign Wars and reported there are no such special considerations for them whatsoever at the SBA. This is because the Small

Business Administration has no direct lending program for veterans, and there are no federal development grants for veteran entrepreneurs, disabled or not.

The need for direct financial support in acquiring starting capital

is the number one request we receive from the veterans in respect

to small business questions and inquiries. This is the reason why

the Veterans Small Business Corporation is so vital to attacking

the heart of this problem to get not only answers for veterans on

small business questions, but also putting them in a position to

find sources for financial revenue.

Yet in their defense, the Office of Veterans Business Development within the SBA has been making positive strides in improving the way they do business. Their relationship with other agencies has been a catalyst for change as evidenced in their meetings

11

of cooperation with the Centers for Veterans Enterprise and the

Department of Labor to improve internal relations through better

communication and fact sharing.

Another positive change has been their attending sponsored

meetings with the VSOs such as the Task Force for Veteran Entrepreneurship and providing updates of policy status and developments. In addition, I would like to say their role as a resource has

greatly improved as evidenced through our dealings with their office. They have been effective and been very ‘‘hands-on’’ in directly

assisting veterans recommended by the VFW.

There are still many considerations that need to be seen and

problems that must be addressed? First, the Veterans Business Development Corporation has not had all of its positions filled. This

needs to be done immediately or as soon as possible because this

is hindering them from doing the job the best they can.

Secondly, it also risks opening up a door of doubt and criticism

by thinking they are not going to do anything. This factor alone

has caused doubt in the uniform communication and collaboration

among all the involved parties. It does not seem like anyone is

talking to each other, even though in fact at the VSO level we see

they are.

The Veterans Business Development Corporation is finally now

just getting underway after a long and arduous process. Another

discrepancy is the failure to have the Advisory Committee appointed and put in place. The VFW is very disappointed this issue

has not been treated with the sense of urgency that it deserves.

This lack of initiative and inaction on the part of the Small Business Administration is robbing the board of directors of valuable insight and counsel to help focus its energies towards raising much

needed capital to get the corporation moving forward.

Mr. Chairman, we need to maintain the proper perspective that

Public Law 106–50, the Advisory Committee and the Corporation

exist solely for one reason and one reason only; to help veterans,

especially disabled veterans, establish independent small businesses and become as self-sufficient as possible.

Veterans, especially disabled veterans, are a valuable resource

that has not been fully utilized to its maximum potential by the

private sector. Therefore, they should be allowed to capitalize on

their own skills and abilities to succeed.

Thank you. That concludes my testimony. If you have any questions, I would be more than happy to answer them.

[Mr. Eiland’s statement may be found in appendix.]

Chairman MANZULLO. Thank you very much. I appreciate that.

Our next witness is William Crandell, director of Government

Relations for the Association for Service Disabled Veterans.

Welcome, Mr. Crandell.

STATEMENT OF WILLIAM F. CRANDELL, DIRECTOR OF GOVERNMENT RELATIONS, ASSOCIATION FOR SERVICE DISABLED VETERANS

Mr. CRANDELL. Thank you. Good morning, Chairman Manzullo

and Ranking Member Velazquez and Members of the Committee.

The Association for Service Disabled Veterans commends you for

holding this important hearing today to ask what P.L. 106–50 is

12

accomplishing. ASDV’s goal is to create opportunities for service

disabled veterans through economic participation. P.L. 106–50 was

the product of a great deal of work done by this Committee and the

veterans community. Senior civil servants at SBA still ignore the

mandates of Congress to afford veterans special consideration.

Congress wrote into black letter law a requirement that federal

agencies pursue a goal of awarding three percent of contracts and

subcontract awards to companies owned and controlled by service

disabled veterans. Well, some will, and some will not. SBA has allowed agencies to file goals in writing—in writing—with as low as

zero percent. Without regulations, bureaucrats think of laws as

cute ideas.

The FAR Council drafted regulations which said in print that everybody could ignore the law and its content. We still have no final

FAR regulations to make the law operable after two years. Congress directed that reports to and from SBA would keep separate

data on businesses owned simply by veterans and those owned by

service disabled veterans.

Once 106–50 was enacted, ASDV and the Bank of America negotiated a memorandum of understanding with the administrator of

SBA to create a veterans outreach program in every Bank of America office through the small business development centers, the

SBDCs, that SBA supports. SBA did not follow through.

SBA had planned to fund some nine staff at the Office of Veterans Business Development and ended up with a shop of only six.

ASDV urges SBA to restore full funding to the Office of Veterans

Business Development. We will put more money into the coffers

than we will take out if you will give us a fair chance.

I have four more points. SBA should perform certification of businesses owned by veterans as seamlessly as possible at no cost to

the business. SBA must enforce the three percent contracting goal

for every federal agency. ASDV has found federal contracting officers willing and eager to support this goal, but they are told they

have no regulations, no authority to give contracts to qualified

service disabled veterans.

Qualify the surviving spouses and children of service disabled

veterans who take over family businesses for the three percent goal

in government contracting. It will cost the government nothing.

ASDV is concerned about the direction of the National Veterans

Business Development Corporation. The corporation should use its

congressional funding to create a larger capital fund for veterans

and especially service disabled veterans whose access to capital and

technical assistance has traditionally been limited.

Invest in making the SBDCs responsive to the needs of veteran

entrepreneurs. Every federal agency needs to be encouraged from

above to really look for veteran owned and service disabled veteran

owned businesses as suppliers. ASDV can help them. Nobody responsible for procurement should receive a bonus if the agency fails

to award its full three percent of contracts to veterans as required

by law.

Mr. Chairman and Madam Ranking Member, we have made

some real progress with the enactment and partial implementation

of P.L. 106–50, but nothing like what Congress intended. We want

SBA to serve veterans in good faith. Thank you.

13

[Mr. Crandell’s statement may be found in appendix.]

Chairman MANZULLO. Thank you very much.

Our next witness just got here. Rick, it is a good thing you were

the last person to testify, as opposed to the first.

Rick Weidman is director of Government Relations of the Vietnam Veterans of America. Good morning, and welcome.

STATEMENT OF RICHARD WEIDMAN, DIRECTOR,

GOVERNMENT RELATIONS, VIETNAM VETERANS OF AMERICA

Mr. WEIDMAN. Good morning, Mr. Chairman. There is no excuse,

and I offer none, sir. There were reasons involving an unbelievable

series of mishaps, including having no idea that the pay lot out

here has become a permit lot, which necessitated a long search for

parking, but I do beg your pardon, sir, and it will not happen

again.

Chairman MANZULLO. I was not giving you a hard time. I was

just teasing you, you understand. I am going to reset the clock for

the full five minutes.

Mr. WEIDMAN. Mr. Chairman, first of all, on behalf of George C.

Duggins, VVA’s national president, I wish to offer on behalf of all

of us at VVA congratulations on taking over the chairmanship of

this Committee. It is an important post, and I know that based on

certainly our experience with you and your leadership, extraordinary leadership on Gulf War veterans, that you will do right by

veteran entrepreneurs and particularly service disabled veteran entrepreneurs in the future.

Congresswoman Velazquez, Mr. Pascrell, thank you very much

for the opportunity to offer our views here today. Much of the history has been recapped by the distinguished colleagues to my right,

so I will not go through it again here in the oral statement except

to say the ironic thing of the not good history since 1954 of the

SBA and veterans and particularly during the 1960s, 1970s and

most of the time since is that the SBA was really born out of the

VA.

It was a very small New Deal agency that was put together with

the Veterans Business Loans and other programs for veterans at

the VA by President Eisenhower, and that became the Small Business Administration with some added resources. Veterans were

pushed from the center to the epicenter, if you will, of all services.

This has harmed not only veterans who were would be entrepreneurs and veterans who are entrepreneurs within our country.

It has harmed America by not taking advantage of the extraordinary skills that veterans bring to the marketplace.

The most recent history, as was covered in 1998 in response

partly to an oversight hearing of a Subcommittee of the full Committee conducted by Mr. Bartlett and in cooperation with the Subcommittee on Benefits of the House Veterans Affairs Committee,

then Administrator Alvarez named a task force, if you will, of people to look at what special consideration meant and make recommendations.

There was an extraordinary effort on the part of the veterans

community, SBA staff and other interested parties that resulted in

21 recommendations that covered, all facets of the SBA, which was

delivered just before Veterans Day, 1998.

14

The problem subsequent to that was that all of the promised action which was supposed to be taken by the end of December or

beginning of January did not take place, and while we did not have

contact directly with Ms. Alvarez we did with senior staff, including the current acting administrator, and no action on anything.

We asked that they convene and pull people back together to at

least discuss where we were, and that also fell on deaf ears.

Thanks to Senator Bond and Senator Kerry, we were given the

hearing room of the Senate, your counterparts on the Senate side,

the Small Business Committee, and a number of veterans organizations and other advocates came together.

Out of that came the Task Force for Veterans Entrepreneurship,

which includes some almost 30 veterans organizations, private

businesses, other interested parties like National Organization of

Competency Assurance, et cetera, who worked very closely with the

staff of the Committee on both sides of the aisle, both on this Committee. Primarily on this Committee, but also in cooperation with

the House Veterans Affairs Committee under the overall leadership

of the Honorable James Talent and Ms. Velazquez to develop 106– 50, which is an extraordinary piece of legislation.

The extraordinary vision put forth is just that: Extraordinary. It

leads us in the direction that we have been wanting to go, providing the adequate assistance, a hand up, if you will, to veteran

owned businesses and would be veteran entrepreneurs and those

who need self-employment for the future.

The problem is that the devil is in the details. Not a single part

of 106–50, with the exception of creation of the Office of Veterans

Business Development and the appointment of Mr. Elmore, has in

fact been accomplished. There are two sets of regulations that are

currently stuck at Office of Management and Budget. One is the

final procurement regulations that contains the ‘‘fix’’ that the Committee and Committees on Small Business so graciously provided

to us late last fall having to do with service disabled veterans procurement.

The other has to do with implementing the assistance to members of the Guard and Reserve who are small business owners or

self-employed who get activated, which is certainly important to

our overall defense under the total force concept with which our

military now operates. Both of those are stuck in a bureaucratic

maze, if you will. We are told that logjam will probably not be broken until sometime in the fall.

Regulations on all the rest of the aspects of P.L. 106–60, including activity by SCORE, including activity by the SBDCs, et cetera,

in fact has not reached the person on the street. The man or

woman who shows up at the Small Business Development Center

in Queens or shows up at the Small Business Development Center

in Illinois does not know if they are not told that there are special

services there because they are veterans. In fact, many veterans do

not know where to go.

The word is not getting out. The actualization of the vision put

forth by this Committee, by all of you, Mr. Manzullo, has not been

effectively realized in any manner, shape or form.

As I mentioned, on the positive side there were several things.

We did get funding for the National Veterans Business DevelopVerDate 11-MAY-2000 14:59 Sep 26, 2001 Jkt 075151 PO 00000 Frm 00018 Fmt 6633 Sfmt 6602 E:\HEARINGS\75151 pfrm09 PsN: 75151
15

ment Corporation. We have tremendous confidence in Mr. Glassman and his leadership, and I am sure that by the end of this year

that the National Veterans Business Development Corporation will

be developing nicely.

We cannot say that about any other aspects of the bill, which is

really quite extensive and which when, and I say when, implemented will change the whole nature of the way which SBA itself

and SBA funded entities do business in regards to veterans, particularly service disabled veterans.

There have been no regulations or administrator’s orders that

would implement all of the rest of the aspects of 106–50 in every

area of SBA. To our knowledge, there is no information gathering

going on in each and every program for the administrator’s annual

report back to you, Mr. Chairman.

Last, but not least, I would note on that, and then I will leave

it hopefully for questions, is that we need effective regulations and

other actions by the Administration. By the Administration I mean

not just the new Administrator when he gets on board and is confirmed by the Senate, but rather by the Administration that the

three percent minimum goal is just that. It is a minimum goal. It

is a floor. It is not a ceiling.

Make it clear to the folks, if I may, who took your three percent

in black letter law which was established as a minimum, and the

intent of the Congress was crystal clear, and chose to ignore it and

put their judgement ahead of all of the Members who on a bipartisan basis put this legislation into effect.

It is outrageous that they should be allowed to do so, Mr. Chairman, and we would urge you to bring it to the attention directly

of the President in order that he may start to take charge and start

to turn this around by giving clear orders to SBA that you will implement all aspects of 106–50 and not just to the SBA, but to the

heads of all other departments and agencies.

In other words, do not leave this time bomb which was not created by Mr. Barreto, in whom we do have confidence in from what

we know of him, as members of our task force have met with him.

Chairman MANZULLO. You are three minutes over time.

Mr. WEIDMAN. I apologize, Mr. Chairman, for going over

time,——

Chairman MANZULLO. That is all right.

Mr. WEIDMAN [continuing]. But I did want to bring that out.

Chairman MANZULLO. I understand that.

[Mr. Weidman’s statement may be found in appendix.]

Chairman MANZULLO. Let me first of all thank you all for coming. Let me tell you the way I look at this thing. I have problems

with Congress passing laws and then leaving it up to bureaucracies

to draft regulations. That is garbage. I have instructed my staff to

prepare an amendment to this bill and try to expedite it so that

the legislative language is self-executing. I am not going to wait for

the bureaucrats.

I did not come here to wait years to pass a law and wait for some

bureaucrats to issue regulations. That is not what this thing is

about. This is a simple bill. It is very simple. I have seen regulations issued that simply parrot the language in the bill.

16

The fact that the Civilian Agency Acquisition Council said that

they could ignore the law and its intent is because the law is based

upon fulfillment when the regulations are issued, so I am going to

ask that the six people here get together on your own and come up

with self-executing language.

In other words, in this bill where it says the regulators shall, you

draft for me your idea of what the language should be. Are you

with me? Do you understand what I am saying?

I am not going to wait for the SBA on this. I am not going to

wait for anybody. When a war happens, we do not put people on

hold to send them off to battle. Here is language in the testimony,

and I believe, Anthony, it is yours. No. Bill Crandell. It says absent

regulations, bureaucrats think of laws as cute ideas. Do you know

where all the money is going? It is to pay bureaucrats to issue regulations.

I would like you to work on that. If you could get us language

within 30 days, and I will sit down with Mrs. Velazquez and see

if we can come up with a bipartisan bill on this and try to expedite

this and get this language through.

The second thing—— Ms. VELAZQUEZ. Mr. Chairman, if I may?

Chairman MANZULLO. Yes?

Ms. VELAZQUEZ. Let me just say this to you. You know, the hearing and the purpose of this hearing today is to find out where we

are on this legislation and the execution of this legislation. Of

course, yes, welcome to Washington. There are a lot of bureaucrats

here.

Do you know what? When we have legislation that creates a new

program, it does not happen overnight, the implementation of such

a program, so I think that the hearing today will give us some light

as to where we are and what needs to be fixed.

Let me just remind you, and I welcome you to read a study that

my staff conducted last year about the failure of the federal government in terms of the procurement opportunities and the goals for

small businesses, minority owned businesses, women owned businesses, disadvantaged owned businesses. Five percent is the statutory goal.

Not even 1.5 percent was achieved, so this is not only about your

program. This is something that we need to correct about different

other programs. This is just not the failure of the SBA regarding

your program.

We need to do a lot of correction here that might require future

legislation, but in terms of the implementation of this, the purpose

today is to find out where we are. If we need to bring OMB or if

we need to bring FARC here and find out where we are and what

needs to be done, then we will do that for every single thing that

we have not accomplished.

This law was signed in 1999. The money is there that you made

reference to. You said that the previous Administration—it was not

the previous Administration—did not appropriate the funds for the

first fiscal year. It was not the previous Administration. It was the

people here in Congress, those who were in charge of the appropriation process, and they were not Democrats.

Thank you, Mr. Chairman.

17

Chairman MANZULLO. You can tell there is a lot of passion up

here.

Ms. VELAZQUEZ. Sir, this is a bipartisan Committee, and we work

in that fashion. This legislation was not passed only by Republicans. We worked collectively because we need to bring fairness

and equity to veterans, but do not come here and try to bash some

previous Administration. Just let us bring the facts and see where

we are.

Chairman MANZULLO. I do not think that was the issue. The

issue was that it has taken two years, and no one has lifted a hand

to draft a regulation. A lot of these people are career. They are in

under Republicans and Democrats. I do not care who they are.

I just think that there has to be a way to pass laws to make

these things work, as opposed to relying upon the regulators to

come up with the standards.

Ms. Velazquez, I want to tell you how much I appreciate your

leadership on this. Our full Committee is going to be spending

probably 50 percent of our time on procurement. We had a very

highly spirited hearing on Berets.

With the goals for fiscal year 2000 of 23 percent of small busi- ness procurement, that is $40 billion coming out of DOD, five percent for small disadvantaged business, five percent for women

owned business. Regardless of how you feel about whether these

are called set asides or whatever, what we have decided to do at

the full Committee level is to focus on the procurement of the federal government.

With the issue of the Berets, it is a disgrace what DLA has done,

and now most of those seven contracts have been terminated because of poor quality or because of foreign parts. I mean, this is

$40 billion worth of money that should be going in the hands of the

small business people.

We share your concern, but I also want you to do something else

besides the language. I want you to prepare for me a two-page

guideline that can be handed out to any veteran in this country on

how a veteran can obtain assistance to start or continue in his or

her own small business. We will prepare the document, and we will

submit it to the veterans association, and we will ask them to

adopt that language in getting it out to the VA centers.

We have an opportunity here to do something. We obviously have

a lot of energy, a lot of competence. Major General, I understand

your background is in procurement. We will rely upon you heavily,

sir, in this constant battle that we have against the government.

Mrs. Velazquez.

Ms. VELAZQUEZ. Mr. Ortner, I would like for you to clarify something that I read in your testimony. Are you advocating for disabled veterans to be included in the 8(a) program?

Mr. ORTNER. Yes, ma’am. That is more of a long-term goal. I actually had a portion concerning that in my oral testimony. I was

going to go into it, but did not have the opportunity.

Ms. VELAZQUEZ. I read it. Let me just share this with you. You

know, you came here last year, and you asked for a contracting

procurement goal and subcontracting goal. In some cases we have

provided you greater advantages than what participants in the 8(a)

program enjoy.

18

For example, 8(a) firms receive no special treatment as far as

lending, and now you come back to us and ask us to be included

in the 8(a) program. I have to tell you that that is not for me. That

is my position.

I am going to give you one number only so that you realize. You

know, the 8(a) program has been designed for minority businesses

to enter the federal marketplace and economically and socially disadvantaged businesses. We have already seen dollars to the 8(a)

program declining, $500 million from fiscal year 1999 to fiscal year

2000. Adding additional groups to the 8(a) program is only going

to mean fewer contracts for all those who are participating in the

8(a) program.

Sir, I do not think that that is a good idea. That is my position.

We could discuss it further, but every study that we have conducted throughout the federal contracting opportunities in the federal government is showing us that every year less and less contracts from the federal government are going to the 8(a) participants.

Mr. William Elmore, in your written testimony you stated that

the number of SBA 7(a) loans to veterans declined by almost 50

percent from fiscal year 1995 to fiscal year 2000. Last week we conducted a budget hearing, and Mr. Whitmore, who was representing

the Administration, was also using the same figures to show the

decline in 7(a) loans since 1995.

If you go back to 1992, you will see that the 7(a) loans to veterans increased substantially, over 130 percent, from fiscal year

1992 to fiscal year 1995. Much of that increase occurred in fiscal

year 1995 when the one-page application was implemented as part

of the loan doc application.

The decrease that you speak of in your testimony began in fiscal

year 1996 when the fees for the 7(a) loans increased, and now the

President is proposing to raise the 7(a) fees for fiscal year 2002.

You also stated that as a result of this and other declines in program activity levels, you were reviewing the program to ensure

that it is properly serving all small businesses, including veteran

owned businesses. Does this review include the present proposal to

raise fees on veterans?

Mr. ELMORE. The review that we have conducted thus far has focused on SBA services and resources, including loan products, that

date back in some ways back to 1973. Most of the data we have

been able to find so far dates back to 1990; what we have looked

at is veteran participation in the 7(a), in the 504, in what used to

be the direct and HAL loans, and also in the micro loan program.

The recommendations that we have developed that are presently

working through the SBA and then ultimately through OMB and

then to Congress tries to address what we have seen as a decline

in veteran loans generally across the agency.

I did not look at, nor did I know I should look at, the implementation of fees in 1996 that may have impacted loans, but we will

certainly look at that.

Ms. VELAZQUEZ. But do you now see a correlation between the

implementation of fees and the decrease in 7(a) loans?

Mr. ELMORE. I did not look for that, and I am not sure that I

would see that. I certainly have seen a reduction in loan activity

19

for veterans, and it has significantly accelerated over the last five

years. You are right. It was not just 1995.

Ms. VELAZQUEZ. Particularly in 1995, sir, when fees were imposed to the 7(a) loan program.

I hope that you go back, review this factor, and after that I welcome that you advocate on behalf of small businesses and veteran

small businesses and ask the Administration not to impose fees because every time that we impose fees on SBA, the 7(a) loan program, that will drive veterans away from that program.

Mr. ELMORE. I should mention that as we reviewed the loan

products we have understood now that about 60 percent of the

loans that go to veterans are under $150,000, so I do not believe

there were fees increased on that level of loan.

I have not year by year gone back to see if that number has increased or decreased in percentage, so we will do that as well.

Ms. VELAZQUEZ. Sir, 1996 was from the bottom up,—— Mr. ELMORE. Okay.

Ms. VELAZQUEZ [continuing]. So I will ask you to go back and

check those numbers.

Mr. ELMORE. We will do that.

Ms. VELAZQUEZ. Thank you.

Chairman MANZULLO. Thank you. Let me get Mrs. Kelly in before the bells go off and get the rest of the Members.

Mrs. KELLY. Thanks, Mr. Chairman.

Mr. Elmore, I would like to know what the SBA’s level of procurement is from veterans. Do you have that figure?

Mr. ELMORE. The SBA’s procurement itself?

Mrs. KELLY. Yes. The SBA procures things.

Mr. ELMORE. Yes, ma’am.

Mrs. KELLY. How much do they get from the veterans? How

much does your—— Mr. ELMORE. At this point——

Mrs. KELLY [continuing]. Office for Veterans Affairs procure from

veterans?

Mr. ELMORE. Since I got there, we have done no procurement out

of my office specifically. We are certainly preparing to do some procurement, and what does not go through our district offices is targeted to veteran owned small businesses, but we have not let any

contracts out yet.

Mrs. KELLY. In the past, if you look at the past records, have you

any information on that?

Mr. ELMORE. I do not have that information, but I will ask my

staff to dig it out.

Mrs. KELLY. Get that information for us, will you?

Mr. ELMORE. I will do that.

Mrs. KELLY. Is there a set aside for disabled veterans?

Mr. ELMORE. No, ma’am, there is not.

Mrs. KELLY. So it makes no difference? It is just a veteran or a

disabled veteran either one?

Mr. ELMORE. From my office’s perspective, we will look first to

a service disabled vet. Not finding one that could deliver the good

or service or product we need we will then look to a veteran owned

small business. If we do not find that, we will go out beyond that.

Mrs. KELLY. Is there any special effort made in that search?

20

Mr. ELMORE. Certainly there is a special effort by me and my

staff. We have identified 80,000 veteran owned small businesses,

and they will be the ones that we will notify when we have procurement opportunities specifically out of my office if they want to

bid on those or compete for those.

Mrs. KELLY. How do you notify them?

Mr. ELMORE. So far we have e-mail addresses for about 20,000

of those firms, and we have already been notifying them of other

procurement information and the activities of my office. If we need

to, we will go out in writing to them.

Mrs. KELLY. But so far you have not?

Mr. ELMORE. No, we have not, ma’am.

Mrs. KELLY. Will you do that?

Mr. ELMORE. Yes.

Mrs. KELLY. I think it is very important that the veterans get

the information early enough, that anyone from the agency gets the

information early enough that they can put together a bid for the

product that you are looking for and specifically with the veterans,

especially if you are dealing with disabled veterans who may have

reasons to have to have something else done.

For instance, if they have problems with hearing or problems

with sight, there may be a need for an earlier notification, and I

think it is very important that your agency focus on that.

Mr. ELMORE. We will do that, ma’am.

Mrs. KELLY. I do not know if you are aware of it, but you may

not know that I offered an amendment to the bill that was accepted

by voice vote in the markup that would require you to put together

information on the veteran participation in the federal government

procurement process; that you would collect that and disseminate

that to procurement officers.

I am concerned about educating procurement officers about your

intent at the Small Business Administration to do this with veterans. To my way of thinking, veterans have a higher priority in

the procurement process than almost anyone else in the entire

United States.

I would hope to hear from you that you are going to implement

a high education process, not only here in this country, but internationally because goods can be shipped on an international basis,

and our agencies and our representatives in the various nations are

also in the procurement process. Will you do that?

Mr. ELMORE. Yes, we will. We are planning a training conference

late this summer at the end of August, and we will include procurement, procurement officers, contract officers and such as part

of that conference.

Mrs. KELLY. Mr. Glassman, I just want to ask you. Has the Veterans Business Development Corporation raised any funds, tried to

raise any funds, in the interim? I read your testimony. You have

this master plan to meet the objective of raising money. Have you

done that? Have you done anything in the interim?

Mr. GLASSMAN. We are putting together proposals to go out in a

whole range of national funders. We would like to go out to with

grant proposals to probably 20 different institutions, so initially we

would probably go out in a context of seeking foundation funding

for people who are interested in entrepreneurship, people who have

21

a focus on disability. Beyond that, our plan is to eventually go to

some of the chief vendors, to VA, to DOD.

Mrs. KELLY. But basically what you are saying is your plan, you

intend to, you have not done?

Mr. GLASSMAN. We are in the seventieth day of our funding, so

we have—— Mrs. KELLY. I understand that.

Mr. GLASSMAN. We are commencing to hire the folks that will do

the fund raising.

Mrs. KELLY. I would hope you do that rapidly. There is a need

to get this ramped up and off the ramp. We have to get this thing

going. I hope that you will do that very quickly.

I yield back the balance of my time, Mr. Chairman.

Chairman MANZULLO. Okay. Mr. Pascrell, you are next.

Did you want to get a quick question in? That is between the two

of you.

Ms. VELAZQUEZ. Yes. Thank you, Mr. Pascrell.

Mr. Glassman, in your written testimony you stated that 106–50

was less specific on the direction the corporation shall take to implement the directive requiring the corporation to become self-sustaining within a four year period.

This direction gives the corporation the independence to achieve

self-sufficiency in a variety of ways and the opportunity to evolve

into an organization with a broad reach into the veterans community. Does the rest of the panel agree with this view of the independence provided to the corporation?

Mr. CRANDELL. If I may, that was one of the more important

parts of that construction as far as ASDV was concerned. It needed

to be—needs to be—a very independent agency.

Congress still and the Presidency still have the power of appointing new board members when that comes up. It is not beyond control obviously, but it becomes a very independent entity that will

be able to carry out its mission as the directors see fit.

Ms. VELAZQUEZ. Yes, sir?

Mr. WEIDMAN. It was specifically designed that way in working

with Mr. Talent and your folks. Ms. Desiree Linson, from your

staff, Congresswoman Velazquez, helped a good deal on that.

It brought a lot of questions because there has never been a federally created entity precisely like the National Veterans Business

Development Corporation. It is truly designed to be a public/private

partnership and to have the ability in fact to not just raise money

in the form of grants and donations and for services, but receive

funds back which will then be plowed right back into helping other

disabled veterans and other veterans in general.

It deliberately at least from our point of view within the veterans

community was nebulous, and I believe that that was also Mr. Talent’s and your intent insofar as we understood it and similarly

with Senator Bond and Senator Kerry.

Ms. VELAZQUEZ. Do all of you still support the self-sustaining

provision within the law?

Mr. WEIDMAN. We would urge, from Vietnam Veterans of America, that the match requirements be delayed a year because the

funding, initial funding, was delayed; therefore, to give them more

time.

22

I will say in all of the communications we have had with Mr.

Glassman and with his board, we have urged him not to think in

terms of $4 million match money, but think in terms of $40 million

and within just a very short period of time, like less than five

years, in terms of $400 million.

It is in fact possible. It is an idea whose time is right that will

bring creative activities that could not, frankly, be done by any federal entity to the problems that are needed to make sure that we

assist all sectors of the veterans community wherever they may be

from New York City to Illinois to southern Jersey.

Ms. VELAZQUEZ. Any other comments? Yes, sir?

Mr. GLASSMAN. If I could make a comment? I feel as though that

probably what you refer to as vagueness is probably one of the

more empowering pieces of the legislation.

Ms. VELAZQUEZ. Sure.

Mr. GLASSMAN. To me, it is going to allow us culturally, financially, presentationally, to most resemble the private sector, to

think out of the box, if you will.

The question a few moments ago from Congresswoman Kelly I

thought spoke to the opportunity. SBA’s total budget I was reading

is $30 billion. Three percent, $900 million, should go to service disabled veteran owned businesses.

It would be our goal to find and build the veterans electronic

marketplace, a platform on which you will find every conceivable

set of services and products that service disabled veteran business

run.

When we build such a platform, we economically, our corporation, will start to develop the self-sustaining revenues. To think of

business engines, and we could if I had endless time go after one

idea after another.

To think about a whole set of business engines is ultimately to

complement what I call just the straight fund raising. There is only

so far you are going to get on patriotism. You better have some

solid business ideas. This better be a venture in which people can

see the self-sustaining characteristics to be successful.

Ms. VELAZQUEZ. So, Mr. Glassman——

Yes, sir?

Mr. CRANDELL. If I might just comment on that electronic enterprise view? For service disabled veterans, you have in an awful lot

of cases people who work best in an environment of self-employment or an environment where they can sit at something electronic. There is a lot that folks can do in this direction.

Ms. VELAZQUEZ. One last question.

Chairman MANZULLO. Let me get on to Mr. Pascrell, and then we

can come back.

Ms. VELAZQUEZ. Mr. Chairman, just related to the same question.

Chairman MANZULLO. It is up to you. That is fine. It is your

time.

Ms. VELAZQUEZ. At the end of the fourth year, you will not come

back to us saying we need more money?

Mr. GLASSMAN. That is my fervent goal is to come back to you

and only be asking for your support for ways in which we can beVerDate 11-MAY-2000 14:59 Sep 26, 2001 Jkt 075151 PO 00000 Frm 00026 Fmt 6633 Sfmt 6602 E:\HEARINGS\75151 pfrm09 PsN: 75151
23

come more commercially viable, but not to ask for any additional

funding. We may ask you for lots of things, but not for money.

Ms. VELAZQUEZ. Stakeholders?

Thank you, Mr. Chairman.

Chairman MANZULLO. Those are great questions.

Ms. VELAZQUEZ. Thank you.

Chairman MANZULLO. Mr. Pascrell?

Ms. VELAZQUEZ. The mood in Washington is fiscal responsibility,

right?

Chairman MANZULLO. That is correct.

Mr. WEIDMAN. Mr. Chairman, if I might just add to that? We

may not come back and ask you for more money for the National

Veterans Business Development Corporation, but we may indeed

come back and ask you for more money for the Office of Veterans

Business Development.

$750,000 simply does not cut it in terms of what is needed to

help the entire agency and indeed the whole federal government

implement 106–50, so we will be coming to you for more funds and

support in that effort, but it will be for the main force activity that

would operate out of the administrator’s office and out of the associate administrator’s office, ma’am.

Mr. PASCRELL. Thank you, Mr. Chairman.

I want to associate myself with the words you just heard because

there was a change in funding in terms of the difference between

the office and corporate activities. We need to understand in 2001

what that difference is. $750,000 speaks for itself. It speaks for

itself.

I also want to associate myself, Mr. Chairman, and thank you for

having this hearing today, with Congresswoman Kelly concerning

veterans’ preferences and three percent. We talk about veterans’

preference in terms of personnel throughout many states of the

union. We talk about veterans’ preference in terms of procurement,

and that definition, the meaning of that, is changing every year in

terms of our expanding possibility.

My first question is to Mr. Elmore. Are you able to fulfill your

responsibility under P.L. 106–50 with the current staff allotment?

Mr. ELMORE. 106–50 is, from my view, a very comprehensive bill.

We are implementing. I think it really becomes a matter of the

time frame that it takes to accomplish everything the law intends.

I am enthused that the new Administration, who pays particular

attention to veterans in small business, is going to support the

kinds of resources we need to fully implement 106–50, but, bluntly,

it is taking some time, and it is going to take more time.

Mr. PASCRELL. So you can fulfill the responsibilities with the

present staff that you have?

Mr. ELMORE. I can fulfill them, but we are working weekends,

working lots of hours, and I am probably going to wear some people

out.

Mr. PASCRELL. I can only interpret your answer to be no, you

cannot.

Mr. CRANDELL. Mr. Pascrell, if I might speak for the veterans

community, no, they cannot.

Mr. PASCRELL. That is what I figured.

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Mr. CRANDELL. We all know the position that Bill Elmore is in

this morning.

Mr. PASCRELL. I am sorry?

Mr. CRANDELL. We all know the position that any administrator

is in this morning with regard to that question, but I think he has

given you a—— Mr. PASCRELL. What possible position other than telling us what

it is? What other alternatives are there?

Mr. CRANDELL. I think a number of us would hate to be federal

administrators who needed to tell you no to that.

Mr. PASCRELL. Really?

Mr. CRANDELL. I think it might be a rule of the game.

Mr. PASCRELL. Well, that is hopefully what we want to cut

through and get to the nucleus and the center of, and that is why

I asked the question.

I was not asking the question to put you on the hot seat. You

are already there. I asked you the question because I think it is

pertinent to all that we have discussed on this Committee through

various discussions on different issues as to budgets, to parts of the

SBA and your specific responsibilities, and I think it is an important question. I think that the responses speak for themselves.

Let me go on to my second question, Mr. Elmore.

Mr. ELMORE. Yes, sir.

Mr. PASCRELL. Many of the requirements of this comprehensive

law are being fulfilled. You have touched upon this, but how is the

SBA advertising these services to veterans?

You know, when we dealt with part of the new veterans law bill

that has passed through the House of Representatives sponsored by

Representative Smith from New Jersey, the chairman of the Veterans Committee, there is a part of that legislation which deals

with the veterans right to know, which we were able to get into

that, and I think vets have a right to know what is available, what

benefits there are that many times they do not take advantage of.

Fifty percent of the veterans do not know what their benefits are,

and I am being charitable with that number.

The question I am asking you is how are you deciding to get out

and advertise particularly in business matters what is available?

You started to talk to us about that. You made a list of examples

of outreach.

I think that the best point of contact with veterans are health

and hospital facilities where this information should be made available when a veteran does not come in to look for such information,

but we provide it to him, and this usually leads to a dissemination

of information. Have you tried that?

Mr. ELMORE. We have tried it in cooperation with one of our

partners in the MOU. We are working with the Department of Veterans Affairs, also with the Department of Labor, of course, with

SCORE and the ASBDC as well, to try to ensure that the information does get out there.

I will tell you that I am not completely satisfied that there is

enough yet. I think we do need to reach to the broader veterans

community, and I think we also need to reach to the next veterans,

i.e., the men and women who are still serving this nation, and try

to ensure that they also have access to the information.

25

Incrementally we are getting there, but, bluntly, we have not gotten completely there yet.

Mr. PASCRELL. We have a database of veterans. In my district

there are 40,000 veterans. We have a database. You have a database of who these veterans are throughout the United States of

America for the most part. It is not perfect. No database is perfect.

You know, I often wondered what it would take to send veterans,

individual veterans, rather than wait until they come in to be serviced and then tell them what else is available, which we do now.

Mr. ELMORE. For the most part.

Mr. PASCRELL. I often wondered what it would cost. Is that up

front cost really worth it? Is it not really worth it to disseminate

this information? I know the Veterans Administration has talked

about well, then we will have a run on all of our services. Exactly.

I think this is important, particularly in the area of health where

we are talking about closing down facilities because they are under

utilized because the people that can utilize them do not know how

to utilize them. It is almost bordering on criminal, Mr. Chairman.

I have one more area.

Chairman MANZULLO. What I would like to do is to let Mr.

Phelps have five minutes, and then we can take more time. I just

want to make sure everybody——

Mr. PASCRELL. If I could just finish out my last question?

Mr. ELMORE. Could I respond, if you do not mind, to Mr.

Pascrell’s points?

Chairman MANZULLO. Yes.

Mr. ELMORE. There are two things. First off, I have been privileged to be the SBA’s representative at the corporation’s board

meetings, and I think they will become the database, if you will,

for where the veterans are and whether they are findable. Bob addressed that earlier.

For the other point, I will be a little bold here. I would love the

opportunity to disseminate information about our services and programs through the newsletters of Members of Congress. I think

that might present one of the very best ways that we could reach

the breadth and the depth of the veterans community across this

great nation.

Mr. PASCRELL. Mr. Chairman, we have become the satellite offices for the INS. What would be a much more valuable situation

to America is if we become satellite offices for all of our veterans.

My final question is this; very quick and very simple. Would you

support the waiving of all fees to all veterans with regard to business applications and proposals? Can you support that?

Mr. ELMORE. I certainly cannot speak for the next Administrator.

This is one of the points that we have discussed in the office, but

I need to maintain obviously as much flexibility for my next boss.

That is one of the things that I will talk specifically with him

about.

Mr. PASCRELL. Mr. Chairman, will you please entertain the possibility of us getting a bipartisan legislation to waive all fees for

veterans with regard to the SBA?

Chairman MANZULLO. We will entertain it, Mr. Pascrell. The

problem is that once you waive it for one group, then you have all

26

the other groups lining up. You have to figure out where you are

going to go on it.

Mr. PASCRELL. Mr. Chairman.

Chairman MANZULLO. Remember that we are on the same

page——

Mr. PASCRELL. Right.

Chairman MANZULLO [continuing]. With regard to getting the

correct subsidy rate for the 7(a) Loan Program.

Mr. PASCRELL. Right.

Chairman MANZULLO. Once that model and the correct rate

comes in, that will lower it for everybody.

Mr. PASCRELL. I would say though——

Chairman MANZULLO. Appreciate that.

Mr. PASCRELL. Mr. Chairman, you would agree, and I agree and

I associate myself with your remarks, but I think that you would

agree with me when I say you would have every other group. The

fact is that the veterans are a different group. Let us not put them

in with all the others.

Chairman MANZULLO. Bill, I agree with that.

Mr. PASCRELL. You agree with that. I heard you say that.

Chairman MANZULLO. That is why we are having this hearing.

I want to go on to Mr. Phelps.

Mr. PHELPS. Thank you, Mr. Chairman, for your interest and aggressiveness in this area and panel members. Sorry I was a little

bit late. I am trying to catch up for fear of duplicating questions.

Clarify something for me, Mr. Chairman. I am from Illinois. We

have a tendency to get right at the root of the problem and make

things maybe over simplified. I heard him say this is a simple bill.

I heard Mr. Crandell say, I believe, that it is comprehensive. Those

are not the same to me.

If it is comprehensive or simple, Mr. Chairman, comparatively

speaking how is this implementation time table to other such legislation on track? Do the advocacy groups tell us?

Chairman MANZULLO. If you would yield, the Ten Commandments are comprehensive, but it is also simple. The bill’s intent is

simple, and they are comprehensive at the same.

Mr. PHELPS. I just hope that whoever is in command of making

sure that this legislation is implemented, whether it hinges on lack

of funding or funding that was there and someone has not moved

when it was there or in lieu of the cuts that may be affecting what

happens, whatever is in play with all this, you know, we need to

know.

I think you people are key in this whole structure to be able to

tell us what we can do through legislation because we have a tendency to want to pass legislation to improve things and prove to people that we care, whether they recognize it or not, but we may complicate the whole process while you are on the verge of implementation.

I do not want to do that. I saw that happen back in the state

legislature where I came from in Illinois. We just have a tendency

to do that even with the sincerest intentions.

Can anyone associate their remarks to where are we realistically

on such a kind of bill comparatively speaking?

27

Mr. WEIDMAN. If I may suggest, Mr. Phelps, as the Chairman

noted, Public Law 106–50 is both comprehensive, and yet it is

straightforward and simple. Much of the law is very close to being

self-executing, and we worked very closely with the staff of this

Committee to make sure that it was close to self-executing.

In fact, the Secretary of Transportation could pick up that section on procurement and implement it right now on the black letter

law. We will be glad to follow through and make sure and certainly

work with Committee staff on both sides of the aisle to make sure

everything is there.

Insofar as the provisions that affect every single program of the

SBA, they have not issued a directive. They have not issued an administrator’s order. They have not done any guidance or any training of their own staff; never mind the small business development

centers, et cetera, and SCORE and right on down the line.

Mr. PHELPS. And it is not because they do not have the resources

to do that?

Mr. WEIDMAN. It is primarily something of will, we would suggest, Mr. Phelps.

Not a single one of the 21 recommendations. A number of the

folks at this table worked very hard on the task force, and we are

grateful to Ms. Alvarez for the opportunity, but not one of those 21

recommendations was ever implemented.

No administrator’s order came, and it is currently not in effect

for implementing Public Law 93–237, Special Consideration. We

could go on and on.

Chairman MANZULLO. Could you yield? Could you yield on that?

Mr. PHELPS. Sure.

Chairman MANZULLO. Is that under your jurisdiction, Mr.

Elmore, to issue the administrative orders—— Mr. WEIDMAN. Administrative orders would have to come from

the administrator him or herself, sir.

Chairman MANZULLO. What is it, a letter?

Mr. WEIDMAN. It is essentially——

Mr. ELMORE. If I might? In 1983 or 1982, excuse me, the then

Administrator Sanders issued an Administrator’s order to implement special consideration for veterans, their dependents or survivors with a specific series of steps and things that would be done.

The regulations that flowed from that order were eliminated in

1995, and we have discussions now about going back and revisiting

those. The recommendations that I am preparing presently for the

next Administrator I will urge him to include in a new administrator’s order. Bluntly, I have not had an Administrator to go to.

Chairman MANZULLO. So that is what you are waiting on?

Mr. ELMORE. That is correct.

Mr. PHELPS. So where is the Office of Advocacy status? What do

they say? Do they have everybody in the same room, the staff, and

say look, this is what the goal is? Let us report back. The time

table is this. Is that happening?

Mr. ELMORE. The Office of Advocacy is engaged in conducting research about veterans’ participation with SBA programs and other

programs and the kinds of businesses, they own those kinds of

things and we are cooperating with them on that. Beyond that, I

cannot speak for the Office of Advocacy.

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Mr. PHELPS. But even that brings me to a concern just glancing

without having the time in questioning the accuracy of veteran

owned businesses. We say we have 300,000 service disabled veteran owned businesses, and yet the recent ProNet search only

shows that there are 2,532 such businesses listed.

Mr. ELMORE. If you go back, and I went back and did a review

of all the materials I could find for at least the last 11 years of SBA

programs. I went back further than that. I went literally back to

1953.

For example, the census data that is now available on other categories of small business ownership from 1997, I believe it is from

memory, did not include veterans information. The 1992 and the

1988 information did.

Everywhere you look there is a significant lack of timely information regarding veterans. This is why my office is in fact developing

specific recommendations and working with each office in the SBA

to at least start gathering the right kind of data.

The data is not there. I readily admit that. We readily admit

that. We are trying to change that now.

Mr. PHELPS. I have no other further questions. It is pretty

lengthy, I am sure.

Mr. Chairman, if it is true, following Mr. Pascrell’s comments,

that our offices could be used as satellites at least for awareness

and so forth, and I never use the franking privileges, the newsletters, in my office. I did in the State House. It can border on campaign abuse, I think.

You know, if it is true that we can serve that niche, if they can

just transfer the funds to our office to get that done I would be

willing to consider franking.

Chairman MANZULLO. I do not send out a newsletter either.

Let me conclude. We have asked for a couple of things. The first

thing is that if the five or you or six of you or whoever else you

need could get together and come up with draft legislation—I

mean, feel free to use our office; we can vet it through the Office

of Legislative Counsel—to make this entire bill self-executing. That

is the first thing.

How much time do you think you need on that? Thirty days?

Sixty days?

Mr. WEIDMAN. Thirty is plenty, sir.

Chairman MANZULLO. You can do it in 30 days? Okay.

Then the next thing is maybe a brochure exists with the VA. I

do not know. There is so much literature out there, and it is so confusing. A brochure that would say you are a vet, and you want to

go into business. Something simple like that.

Why don’t the six of you sit down and devise that? Come up with

the actual brochure itself, even though the information in there

may yet not be available because Mr. Glassman’s 70 day old organization needs a little bit more time to get going on it, but if you

could do that within the same period of time then we have some

guideposts.

Mr. Weidman?

Mr. WEIDMAN. Mr. Chairman, I would assume that you would

not object. I would be remiss in my role as current chairman of the

Task Force on Veterans Entrepreneurship, which includes all those

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groups, and we also work very closely with the American Legion,

even though—— Chairman MANZULLO. That would be fine.

Mr. WEIDMAN [CONTINUING]. They are not formally affiliated. We

would like to work through that group and make sure that we get

there with a united front behind you and Ms. Velazquez if we may,

sir.

Chairman MANZULLO. That is excellent. Let us come up with a

product ourselves.

A third thing is, Mr. Elmore, I think you can relate to this.

Whenever a business person gets something from the government

it is put over here, and then the political solicitations for money are

put over here, and then the bills are put over here. Normally, when

I practiced law and I would get something from the Department of

Agriculture. I did not read it.

Back home we have a huge exporting congressional district. We

bring in from time to time Trade Counsels General to have partnerships with foreign countries. We will send out 1,100 solicitations, and five people respond.

You know, we can identify every single veteran business. You

can send a mailing to every single one. The response rate would

probably be about the same. I am not saying it should not be done,

but e-mail is absolutely incredible. Twenty-five percent of the people you have identified, Bill, are on the e-mail, which is instant

messaging. One person types a message, and you push the button.

There it goes with hardly any cost to it.

It is not just so much trying to communicate with the veterans.

It is the best way to do it. Someone here testified about some new

technologies of communicating with those veterans. That really has

to be part of it. Whatever you can do, we are open to suggestions.

Again, we want to thank you for coming here. We appreciate

your testimony.

This Small Business Committee is adjourned. Thank you.

[Whereupon, at 11:34 a.m. the Committee was adjourned.]

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