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22–204 PDF 2005

HOW ARE OUR VETERAN-OWNED SMALL BUSINESS

OWNERS BEING SERVED?

JOINT HEARING

BEFORE THE

SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT 

& GOVERNMENT PROGRAMS and the SUBCOMMITTEE ON ECONOMIC OPPORTUNITY

OF THE

COMMITTEE ON SMALL BUSINESS and 

the COMMITTEE ON VETERANS’ AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

WASHINGTON, DC, MAY 24, 2005

Serial No. 109–17

Serial No. 109–4, Committee on Veterans’ Affairs of the 

Subcommittee on Economic Opportunity

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

COMMITTEE ON SMALL BUSINESS 

DONALD A. MANZULLO, Illinois, Chairman 

ROSCOE BARTLETT, Maryland, Vice 

Chairman 

SUE KELLY, New York 

STEVE CHABOT, Ohio 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

JEB BRADLEY, New Hampshire 

STEVE KING, Iowa 

THADDEUS MCCOTTER, Michigan 

RIC KELLER, Florida 

TED POE, Texas 

MICHAEL SODREL, Indiana 

JEFF FORTENBERRY, Nebraska 

MICHAEL FITZPATRICK, Pennsylvania 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

NYDIA VELA ́ ZQUEZ, New York 

JUANITA MILLENDER-MCDONALD, 

California 

TOM UDALL, New Mexico 

DANIEL LIPINSKI, Illinois 

ENI FALEOMAVAEGA, American Samoa 

DONNA CHRISTENSEN, Virgin Islands 

DANNY DAVIS, Illinois 

ED CASE, Hawaii 

MADELEINE BORDALLO, Guam 

RAU ́ L GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

LINDA SA ́ NCHEZ, California 

JOHN BARROW, Georgia 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin

J. MATTHEW SZYMANSKI, Chief of Staff 

PHIL ESKELAND, Deputy Chief of Staff/Policy Director 

MICHAEL DAY, Minority Staff Director

SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT AND GOVERNMENT 

PROGRAMS 

MARILYN MUSGRAVE, Colorado Chairman 

ROSCOE BARTLETT, Maryland 

BILL SHUSTER, Pennsylvania 

MICHAEL FITZPATRICK, Pennsylvania 

LYNN WESTMORELAND, Georgia 

THADDEUS MCCOTTER, Michigan 

JEB BRADLEY, New Hampshire 

DANIEL LIPINSKI, Illinois 

TOM UDALL, New Mexico 

DANNY DAVIS, Illinois 

RAU ́ L GRIJALVA, Arizona 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin

JOE HARTZ, Professional Staff 

(II)

COMMITTEE ON VETERANS’ AFFAIRS 

STEVE BUYER, Indiana, Chairman 

MICHAEL BILIRAKIS, Florida 

TERRY EVERETT, Alabama 

CLIFF STEARNS, Florida 

DAN BURTON, Indiana 

JERRY MORAN, Kansas 

RICHARD H. BAKER, Louisiana 

HENRY E. BROWN, Jr., South Carolina 

JEFF MILLER, Florida 

JOHN BOOZMAN, Arkansas 

JEB BRADLEY, New Hampshire 

GINNY BROWN-WAITE, Florida 

MICHAEL R. TURNER, Ohio 

LANE EVANS, Illinois 

BOB FILNER, California 

LUIS V. GUTIERREZ, Illinois 

CORRINE BROWN, Florida 

VIC SNYDER, Arkansas 

MICHAEL H. MICHAUD, Maine 

STEPHANIE HERSETH, South Dakota 

TED STRICKLAND, Ohio 

DARLENE HOOLEY, Oregon 

SILVESTRE REYES, Texas 

SHELLY BERKLEY, Nevada 

TOM UDALL, New Mexico

JIM LARIVEIRE, Staff Director

SUBCOMMITTEE ON ECONOMIC OPPORTUNITY 

JOHN BOOZMAN, Arkansas Chairman 

RICHARD H. BAKER, Louisiana 

GINNY BROWN-WAITE, Florida, Vice 

Chairwoman 

STEPHANIE HERSETH, South Dakota 

DARLENE HOOLEY, Oregon 

LANE EVANS, llinois

MICHAEL BRINCK, Subcommittee Staff Director

(III) 

C O N T E N T S 

WITNESSES

Page 

Blackwell, Mr. Walter G., President and CEO, National Veterans Business 

Development Corporation .................................................................................... 4

Salus, Mr. Arthur, President, Duluth Travel, Inc. ............................................... 6

Lopez, Mr. John K., Chairman, Association for Service Disabled Veterans ....... 8

Ramos, Mr. Frank M., Director, OSDBU, Department of Defense ..................... 9

Denniston, Mr. Scott F., Director, OSDBU, Department of Veterans Affairs .... 10

Murphy, Mr. Paul, President, Eagle Eye Publishers ............................................ 12

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

America ................................................................................................................. 14

APPENDIX

Opening statements: 

Musgrave, Hon. Marilyn .................................................................................. 29

Boozman, Hon. John ........................................................................................ 31

Brown-Waite, Hon. Ginny ................................................................................ 32

Herseth, Hon. Stephanie .................................................................................. 34

Prepared statements: 

Blackwell, Mr. Walter G., President and CEO, National Veterans Business Development Corporation .................................................................... 35

Salus, Mr. Arthur, President, Duluth Travel, Inc. ........................................ 90

Lopez, Mr. John K., Chairman, Association for Service Disabled Veterans 97

Ramos, Mr. Frank M., Director, OSDBU, Department of Defense .............. 102

Denniston, Mr. Scott F., Director, OSDBU, Department of Veterans Affairs ................................................................................................................ 112

(IV) 

(1)

HOW ARE OUR VETERAN-OWNED SMALL 

BUSINESS OWNERS BEING SERVED? 

TUESDAY, MAY 24, 2005

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT AND

GOVERNMENT PROGRAMS AND SUBCOMMITTEE ON

ECONOMIC OPPORTUNITY

COMMITTEE ON SMALL BUSINESS AND COMMITTEE ON

VETERANS’ AFFAIRS

Washington, DC 

The Subcommittees met, pursuant to call, at 10:03 a.m. in Room 

311, Cannon House Office Building, Hon. Marilyn N. Musgrave, 

[chairwoman of the Subcommittee] presiding. 

Present: Representatives Musgrave, Boozman, Brown-Waite, 

Hooley, Herseth, Lipinski and Udall.

Chairwoman MUSGRAVE. I would like to call this meeting to 

order. Good morning and welcome to this joint hearing of the Committee on Small Business and Committee on Veterans’ Affairs. A 

special welcome to those who have come long distances to participate and to attend this hearing. 

Almost six years ago the President signed into law the Veterans 

Entrepreneurship and Small Business Development Act. This act 

created the National Veterans Business Development Corporation, 

familiarly known as the Veterans Corporation, to assist veterans, 

including service disabled veterans, with the formation and expansion of small business concerns by working with and organizing 

public and private resources. 

The Veterans Corporation is presently providing services to veterans that include entrepreneurial training, community-based initiatives, credit cards, insurance, and veterans’ outreach. 

September 30, 2005, marks the end of the federal funding, and 

after that date the corporation must become self-sustaining. At this 

hearing we hope to learn of the steps that the corporation is taking 

to ensure that it will continue to provide services to veterans when 

funding ends, and answer the question ‘‘Can the Veterans Corporation exist without federal funding?’’ 

Four years later the Veterans Benefit Act of 2003 established a 

procurement program for small business concerns owned and controlled by service disabled veterans. This procurement program 

permits federal agencies to sole-source contracts and restrict competition to service disabled veterans. 

2

One of the reasons that the program was established was because buyers for federal agencies expressed the view that they 

needed a set aside program to meet the three percent statutory 

contracting goal for service disabled veterans contained in the 

Small Business Act. To date, no major department or agency of the 

federal government has met the goal, and most departments and 

agencies are woefully short of meeting the goal. 

I ask you why that has occurred. I hope this hearing will energize federal agencies to meet their statutory obligation. 

A major purpose of this hearing is remembering our veterans 

and the sacrifices that they have made for this nation. Memorial 

Day is the day of remembrance. I can assure you that we in Congress will not forget you. 

Again, welcome to this hearing. I yield to my colleague, Chairman John Boozman for his opening statement. Did not mean to 

rush you, sir; glad you are here. Thank you. 

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

Mr. BOOZMAN. Thank you, Madam Chairman, and thank you for 

inviting us to participate in this joint hearing. 

Providing opportunities for small businesses owned by veterans 

is a very important topic. We all know that small business is the 

engine that drives the economy, and we want to make sure that 

small businesses owned by America’s veterans are not shut out of 

any market sector by unfair competition from special interest 

groups. 

The special assistance we can give the men and women who have 

worn the uniform has been earned as opposed to those given an advantage by acts of birth. There is no group in the nation that 

should have a place in line for any opportunity to succeed ahead 

of our veterans. I dare anyone who believes otherwise to go on the 

streets and alleys of Iraq with the troops, look them in the eye, and 

tell them they should take a back seat to someone who has never 

put themselves at risk for the nation. 

Madam Chairman, at a recent roundtable on veterans entrepreneurship, which Chairman Bradley was gracious enough to cosponsor with us, I noted that veteran business owners should not 

fall into the trap of depending on federal set asides for their success. 

While I fully support a mandate to federal agencies to set aside 

a small portion of their contracting opportunities for the veteranowned businesses, the private sector offers a broader and often less 

complex avenue to success, and I still believe that. 

Madam Chairman, thanks again for offering to bring us together 

today. I am eager to hear from our witnesses. 

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

Chairwoman MUSGRAVE. Thank you, Mr. Boozman. 

At this time I would like to recognize the ranking member, Mr. 

Lipinski, for an opening statement.

Mr. LIPINSKI. Thank you, Madam Chairman, and Mr. Chairman. 

Thank you for holding this hearing today on veterans and entrepreneurship. 

3

It is critical that we examine the unique issues that veterans 

face today in starting and running their own businesses. Veterans 

of all types and classification, whether having served actively in 

the U.S. Army, Coast Guard, Navy, or Air Force, are deserving of 

our continued support. They have sacrificed for our country, and 

have defended our freedom. 

It is important for us to show our appreciation for our veterans 

for the years they selflessly gave to serve their country, and for the 

hardships that they endured. Clearly, given the sacrifices these 

men and women have made and the service they have provided to 

our country, it only makes sense to provide our nation’s veterans 

with the tools to get their businesses off the ground. 

We are now beginning to welcome home a new era of veterans, 

the thousands of forces that have fought and continue to valiantly 

fight in Afghanistan and Iraq. These men and women are seeking 

employment opportunities upon their return to the States, and are 

increasingly turning towards self-employment in small business 

ownership. 

Their years of service in the military have equipped many veterans with a host of valuable skills in areas such as electrical wiring, computer programming, mechanics, and other areas. Many 

also hold security clearances. They have the knowledge and skills 

to provide useful services, but may need assistance in launching 

and developing their businesses. We must strive to provide veterans with the resources they need to succeed, including access to 

capital, business development, technical assistance, procurement 

opportunities and affordable health care. 

Initiatives such as these have been designed specifically to assist 

veteran—owned businesses in achieving stability on the road to 

success. 

Unfortunately, many of the essential programs that provide assistance to our entrepreneurs, including veterans, are facing severe 

budget deficiencies. These programs have not been given sufficient 

support in the federal budget. Ensuring that these programs are 

adequately funded and utilized to their fullest potential has been 

and must remain one of our top priorities. 

As our economy continues to lag in job creation, it becomes even 

more important to provide substantial assistance to veterans in all 

sectors of the small business community. After all, it is the small 

businesses that are capable of pulling us out of this period of economic uncertainty and getting us back on track by creating more 

jobs. 

Veterans are such an important component of the small business 

sector. While often overlooked, veterans are willing to do their part 

in contributing to our national economy, and we must continue to 

do our part as well. This includes ensuring that our veterans’ outreach goals are met by economic development programs, providing 

veterans with necessary capital to get their firms off the ground, 

and removing the regulatory obstacles veterans face in starting a 

business—all factors demonstrating to this community that we 

truly care. 

I look forward to the opportunity to hear from a variety of organizations and groups representing veteran-owned businesses. Your 

concerns are important to us. 

4

As we review the challenges that you bring before us, our ultimate goal should be to create a plan that will facilitate the success 

of our nation’s veteran entrepreneurs. Our veterans deserve no less 

than this. 

Thank you.

Chairwoman MUSGRAVE. Thank you, Mr. Lipinski. 

Welcome to our witnesses. We are happy that you are coming 

today to share with us. I would like to tell you that there is a light 

there on the table that helps you deal with the five-minute rule, 

and if you would please stay within the time constraints, it will 

help us with our schedule. 

The first witness that I would like to introduce is Walter 

Blackwell. He is the National Veterans Business Development Corporation president. Welcome, Mr. Blackwell. 

STATEMENT OF WALTER G. BLACKWELL, NATIONAL 

VETERANS BUSINESS DEVELOPMENT CORPORATION

Mr. BLACKWELL. Madam Chairwoman, Mr. Chairman, Ranking 

Members and Members of the Subcommittee, thank you for holding 

this hearing, and for the opportunity to discuss veteran entrepreneurship, economic development by and for veterans. 

I would like to submit my complete written statement for the 

record. 

In your invitation to testify you asked me to answer two specific 

questions. Is the Veterans Corporation providing those entrepreneurial services envisioned in the act and needed by veterans? And 

will the Veterans Corporation survive without federal funding? 

The short answers to these questions are yes and no. The facts 

are TVC is really beginning to provide the level of entrepreneurial 

services envisioned in the original legislation. On the other hand, 

our very existence is threatened without some continuing support 

from the federal government. 

We believe that the veterans’ needs in 2005 are far different from 

those imagined in 1999. World events and their impact on veterans 

now demand from all of us the creation of a new veteran community. To answer this call and be a catalyst for growth, TVC expanded our definition of veteran to include those soldiers, sailors, 

airmen and marines who are serving on active duty as well as national guard and reserve. 

The TVC’s expanded definition of veterans has not changed our 

mandate outlined in P.L. 106-50. In fact, TVC is working harder 

to expand access to entrepreneurial education and training, entrepreneurial mentoring and counseling, access to capital, and other 

business services. We accomplish this through two major program 

initiatives: the National Veteran Entrepreneurial Education Initiative and the National Veteran Community-Based Organization Initiative. 

The TVC regional hubs show in yellow stars and our communitybased organizational centers shown in green circles are the result 

of TVC’s new business model where a grant-based system is used 

that piggybacks on existing educational and communication organizational infrastructure. 

5

We deliver these program initiatives in two way. First, through 

existing facilities that gives TVC an economic economy of scale, and 

independent 501[c][3] organizations where we have partner relationships. 

The result of this new model are striking. While enrollments in 

new course starts are cyclical within quarterly intervals, this data 

demonstrates 129 percent increase in the enrollments for traditional courses above the FY-2005 goal. 

To date, we are reaching almost three times the number of veterans in the first months of this new educational plan compared to 

FY-2004’s annual performance. 

Building a veteran community means doing some things differently. I have been working with our board, staff, and providers 

to initiate the restructuring of our web presence into a twenty-first 

century format demanded of today’s successful entrepreneurs. 

A current learning project involves active-duty military taking 

courses from Iraq, being run by our Boston hub. The first two 

classes held just last week were an enormous success. In fact, we 

had an overflowing of 42 students. 

The Veterans Corporation is truly becoming a vehicle that literally leap frogs over the barriers presented to veterans upon their 

return home to the U.S. 

Added to this is the creation of a new learning pilot beginning 

in June. TVC will have the ability to reach significant numbers of 

underserved veterans in VA hospitals, returning guard and reserve 

units, as well as large rural and minority veteran populations. 

Courses will range from marketing to applying for a business loan. 

Sites across the U.S. span Walter Reed here at home, to San 

Diego on the west coast. 

The current challenges before TVC are budget shortfall for 2005, 

and future funding for FY-2006 and beyond. The reality TVC faces 

today without an immediate infusion of cash from Congress, high 

net-worth individuals, corporations and foundation, TVC will be 

forced to close its doors October 1, 2005. 

Our future funding builds on a platform of public and private 

partnership that enhance and expand needed programs and services. To date, TVC has submitted foundation grants totaling $30 

million, with another $20 million grant applications in process. We 

have initiated an outreach to high net-worth individuals and to 

public and private corporations with the interest of assisting veterans. 

And perhaps most importantly, TVC is in the process of reducing 

its back office costs and consolidating and reorganizing its staff. We 

are taking these steps because we believe when all is said and done 

TVC’s funding is $2 million a quarter, or at least $8 million a year 

as we expand our programs. 

In conclusion, I want to thank the Chairwoman, the Chairman, 

Ranking Members, and both subcommittees for your past interest 

and future support on these issues. We know we cannot do this 

alone. You have our promise to work in partnership with each of 

us as we work with you to deliver the critical knowledge, tools, resources our veterans, their families, your constituents so richly deserve. 

6

This community, the veteran community is poised to deliver on 

the investment Congress has made in them to be a strong economic 

driver in our nation’s financial future. 

Thank you, and I look forward to your questions. 

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

Chairwoman MUSGRAVE. Thank you, Mr. Blackwell, and thank 

you so much for being respectful of the time constraints. Good job. 

The next witness is Arthur David Salus, and he is the president 

of Duluth Travel, Incorporated. Welcome, Mr. Salus. 

STATEMENT OF ARTHUR SALUS, DULUTH TRAVEL, INC.

Mr. SALUS. Thank you. Good morning, Chairman Musgrave and 

Chairman Boozman and distinguished members. 

My name is Arthur Salus. I am founder and president of Duluth 

Travel located in Atlanta, Georgia.

Chairwoman MUSGRAVE. Sir, I think the audience is having trouble hearing. Let us pull the microphone a little closer. Maybe that 

will help. Let us know in the back if you cannot hear, and we will 

try to deal with it.

Mr. SALUS. Okay, can everybody hear me now? Okay, thank you.

Chairwoman MUSGRAVE. Thank you.

Mr. SALUS. Good morning, Chairman Musgrave and Chairman 

Boozman and distinguished members. 

My name is Arthur Salus, and I am founder and president of Duluth Travel located in Atlanta, Georgia. I am an adjunct professor 

at Gwinnett Technical College in Atlanta where I teach entrepreneurship and travel courses. I am frequently called upon by local 

and national media for my comments and travel expertise. 

I am grateful for the opportunity to appear before you regarding 

the Veterans Benefit Act of 2003, and the President’s Executive 

Order 13360, matters that concerns tens of thousands of small 

business owners and veterans across our great country. 

As a member of the American Society of Travel Agents and the 

Society of Government Travel Professionals, I am honored to 

present this statement with their support and encouragement. 

Today, Duluth Travel provides travel services for numerous businesses as well as the state and local government in Georgia. Duluth Travel is currently a federal management, travel management 

company, a subcontractor to a subcontractor for the Environmental 

Protection Agency and the U.S. Department of Agriculture. 

As a business owner, I began to focus on other possibilities to become a prime contract with the federal government. I did not think 

the status of a service disabled veteran would one day be of any 

importance, nor did I think it would lead me to the Department of 

Veteran Affairs for assistance three years ago in my quest to become a prime contractor. 

I quickly found out federal procurement opportunities for small 

business in travel were dismal at best. Add to the mix of service 

7

disabled veteran with a small business, the opportunities seemed 

nonexistent. 

I promptly became an active advocate for small business veterans. As an entrepreneur, I am a strong believer that tax-paying 

small businesses deserve a chance to provide goods and services to 

the federal government. The Department of Veteran Affairs and 

the House Committee on Small Business and Veterans’ Affairs 

were instrumental in getting to key issues accomplished. One was 

the passage of the Veterans Benefit Act of 2003, now Public Law 

108-83, which provides authority for federal agencies to create solesource contracts to qualified small business concerns owned and 

controlled by service disabled veterans. 

Current federal regulations called for federal agencies to contract 

23 percent of their prime contracting dollars to small businesses, 

a figure that goes unheeded and rarely sees the light of day. 

The Small Business Administration, Office of Advocacy, found 

that the federal contracts awarded to small businesses in 2002 

were overstated by $2 billion. That is because 44 of the top thousand business contractors were actually large businesses. 

The Department of Defense and the GSA accounted for 79 per- cent of their misdirected $2 billion. The National Association of 

Government Contractor’s website reported this in February 28, 

2005. 

To my knowledge, only a few federal agencies have met the solesource goal for service disabled veteran-owned businesses. And why 

is this happening? 

I can only relate to my own experience. It took me eight months 

to the day for Duluth Travel to be approved on the GSA schedule. 

In my opinion, GSA moves entirely too slow in the approval process. Small businesses can ill afford to spend valuable time in accomplishing the simple act of registering with the federal government. 

After Duluth Travel was registered with the federal government, 

I was directed to take advantage of marketing my own company’s 

services to the federal agencies, and that is exactly what I did. I 

e-mailed, sent letters, called each of the designated contracting officers at the various federal agencies provided by GSA. The e-mails, 

letters or calls introduced my company and noted that I was a service disabled veteran, and these are my results. 

Out of the 35 e-mails I sent, letters, to the contracting offices, I 

was stunned to receive only four replies. I received no call-backs, 

and I was only referred back to their websites. To date, I have had 

no contracting officer contact me at all regarding sole-source contracts or as an SDVOB set asides for travel procurement. 

Here is my observation. The procurement contracting offices 

seem to be unwilling to use small business firms for the fear that 

they will fail and thus award process go to the large companies. 

Procurement contractors avoid making changes to the new process 

despite the law. 

With a 95 percent performance rating from Dun & Bradstreet 

that GSA required, Duluth Travel surely had the credentials to receive these contracts. 

In closing, Congress must take the necessary steps towards 

strengthening the laws, making it mandatory that federal agencies 

8

shall award, not may award, government contracts to small business. We must make sure that small business set aside and solesourcing contracts are available and awarded appropriately. 

Small business can do the work while providing cost savings to 

the government. 

I also would like to thank you for this opportunity to testify. I 

look forward to answering any questions you may have. 

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

Chairwoman MUSGRAVE. Thank you, Mr. Salus, very much. 

Our next witness is John Lopez. And Mr. Lopez, I would mention, is the Chairman of the Association for Service Disabled Veterans. Welcome to the committee hearing today. 

STATEMENT OF JOHN K. LOPEZ, ASSOCIATION FOR SERVICE 

DISABLED VETERANS

Mr. LOPEZ. Thank you. Good morning, Chairman Musgrave, and 

Chairman Boozman, and distinguished members of the committees. 

Without objection, I will summarize my testimony, and submit 

full written testimony for the record.

Chairwoman MUSGRAVE. Without objection

Mr. LOPEZ. Okay. It has been five years since the initiative to assist disabled in-service military veterans to participate in self-employment entrepreneurship as a means of supplementing their rehabilitation. During that period of time that initiative, Public Law 

106-50, has been a source of extreme frustration and disappointment to the over 2 million adjudicated service disabled veterans attempting to access Public Law 106-50 benefits. 

And the present direction bode ill for the latest generation of 

America’s heroes, the Iraqi and Afghanistan service disabled veterans. 

In spite of the intent of the U.S. Congress and the executive direction of the President of the United States of America, a vested 

bureaucracy and special interest groups have made the going very 

difficult. They have inhibited the promise of assisted vocational rehabilitation for those who specifically and individually sacrificed to 

ensure the prosperity and security of our nation. 

It is imperative that the U.S. Congress and the U.S. Federal Administration take action to closely monitor and review the direction 

previously specified in Public Law 106-50, and Section 3 of 108-183, 

and the President’s Executive Order 13360. 

To ensure the implementation and progress of the initiative, we 

ask the U.S. Congress to emphasize by resolution and legislation 

that the service disabled veteran initiatives are not economic policies that will redirect the world economy, and they are not cultural 

compensation that will resolve the nation’s social controversies. 

Service disabled veteran entrepreneurship initiatives are a moral, 

ethical, and security imperative that must be absolutely implemented. Otherwise, the basic compact to defend the nation will 

soon lose its commitment, and we will perish in a babble of political 

recrimination. 

9

I would be pleased to answer your questions. 

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

Chairwoman MUSGRAVE. Thank you, Mr. Lopez. 

The next witness is Frank Ramos, and he is the Director of the 

Office of Small Business and Disadvantaged Business Utilization, 

and we would welcome you today, and look forward to your testimony. 

STATEMENT OF FRANK M. RAMOS, OFFICE OF SMALL BUSINESS AND DISADVANTAGED BUSINESS UTILIZATION, DEPARTMENT OF DEFENSE

Mr. RAMOS. Thank you. Chairman Musgrave and Chairman 

Boozman, and members of both committees, good morning to all. 

Thank you for inviting me to testify on behalf of the Department 

of Defense on our progress to achieve the service-disabled veteranowned small business goals. 

The subject of service-disabled veterans is a topic of high interest 

that I take very seriously. It is my time to serve our country in this 

capacity, and return the effort of the ultimate sacrifice endured by 

my members—members of my family and other veterans in the 

service of our country. 

It is of paramount importance to us to recognize the leadership 

and support of the President and the Congress. The President, 

through his executive order, demonstrated his leadership and commitment to service-disabled veterans. You, through the congressional leadership, enacted enabling legislation to facilitate policy 

that will help the service-disabled veteran-owned small businesses. 

I want to acknowledge the help of the veterans’ service organizations that support our working groups with invaluable insight to 

support and execute the Department of Defense strategic plan. 

I will begin with excerpts from our official testimony to describe 

our performance metrics and elements of the plan. 

The first step in our plan was to establish a benchmark of those 

firms for the Department of Defense industrial base supplier pool. 

In fiscal year 2003, we had 2,200 firms registered in the central 

contractor registry, which we refer to as CCR. We recognized then 

that 2,200 firms are insufficient in our supplier pool to meet the 

goal. 

Our first objective is to identify and register more of these firms, 

a critical first step toward meeting the goal. Our aggressive CCR 

registration outreach efforts derived from our first objective resulted in an increase to 7,000 firms registered as of May 2005, a 

218 percent improvement. 

We observe from the empirical data that there is a nexus in the 

increase in firms registered to a commensurate improvement of the 

Department of Defense contract awards from $149 million in fiscal 

year 2001 to an estimated $514 million in fiscal year 2004, a net 

growth of contract dollars of 247 percent over a three-year period. 

Our second objective is to publicize and train our acquisition personnel and the firm owners. Defense Acquisition University is our 

partner in this initiative to help train the acquisition and business 

communities. 

10

Our third objective is to include firms in the Department of Defense Mentor-Protege Program. We expect to have some mentorprotege agreements this fiscal year, and as of this morning in the 

Federal Register there is an interim rule which will facilitate that. 

Our fourth objective is to increase the subcontracting opportunities for target firms, working with prime contractors. Defense Contracting Management Agency is our lead component for this initiative. 

Our fifth objective will evaluate the effect that bonding has on 

the target businesses in the construction and environmental cleanup industries. The Corps of Engineers is our lead in this initiative. 

The last objective fosters teaming agreements and joint ventures 

to enable the firms to increase their capability and their capacity 

to receive larger and more complex contracts with larger dollar values. 

The department has developed an ambitious plan as a road map 

to meet the goal over time. The early performance indicators show 

that we are on the right path. We must first establish a robust supplier pool of industry-capable firms. I am convinced that the key to 

success is our synergistic relationship with the administration and 

with you, the Congress, our sister federal partners, other governmental organizations, and the business community. 

I will be pleased to take questions when it is appropriate. Thank 

you. 

[Mr. Ramos’ statement may be found in the appendix.]

Chairwoman MUSGRAVE. Thank you very much, Mr. Ramos. 

Our next witness is Scott Denniston. Mr. Denniston is the Director of the Office of Small Disadvantaged Business Utilization. Welcome to the committee. 

STATEMENT OF SCOTT F. DENNISTON, OFFICE OF SMALL DISADVANTAGED BUSINESS UTILIZATION, DEPARTMENT OF 

VETERANS AFFAIRS

Mr. DENNISTON. Thank you. Madam Chair, Chairman Boozman, 

Committee Members, I greatly appreciate the opportunity to testify 

at this joint committee hearing. Your oversight is exactly what the 

Federal Veterans Entrepreneurship Program needs at this critical 

juncture of its growth. 

In 1999, you directed federal agencies and the Veterans Corporation to organize public and private partnership, to promote formation and expansion of veteran-owned businesses. This mission has 

been fulfilled. DOD, SBA and VA have fully supported the Veterans Corporation. 

Turnover within the corporation has impeded our efforts somewhat. As a result, federal agencies, contractors and service providers have organized into areas of expertise. We continue to offer 

the corporation our full support. 

The President’s executive order requires agencies to create and 

publish comprehensive strategic plans. The majority have done 

this. These plans are easily located on our VetBiz.gov web portal 

as well as on SBA’s website. Now it is time to measure performance against those plans. 

11

I believe that formal score cards would be very useful. Since November, VA has hosted meetings of volunteers from federal agencies committed to increasing access for disabled veterans in the federal marketplace. The Honorable David Safavian, Administrator of 

the Office of Federal Procurement Policy, has been generous in his 

support of our group. He has actively encouraged the free exchange 

of visions and ideas. We have shared best practices. We are coordinating outreach conferences. We have identified impediments both 

real and perceived. 

The VA’s plan adopts the best practices and tackles some of the 

impediments. Our target plan has five improvement areas. 

Step one is employee awareness and training. This involves all 

employees. We kickoff our internal campaign on June 14 at our annual Champions of Veterans Enterprise Award Ceremony, and at 

this time, with the assistance of Mr. Crowder, I would like to 

present to the committee members and staff our first internal 

workings that we are going to use as part of our campaign. 

Our objective in all of this is to significantly increase our accomplishments with veterans and service disabled veteran-owned businesses. In fiscal year 2004, VA achieved 1.25 percent of total procurement dollars for disabled veterans. While this performance was 

higher than many federal agencies, it is still unacceptable. 

Step two is information sharing. Veterans registered on VetBiz 

vendor information page does now automatically receive FedBiz ops 

notices that match the company’s industry or product service codes. 

However, small businesses also need access to decision-makers well 

in advance of requirements that appear in electronic postings. 

Our plan requires local facilities to conduct annual vendor conferences. These sessions will include procurement technical personnel who will explain buying rules and announce opportunities. 

The VA now requires formal local procedures that ensure equitable access for small business owners to decision-makers. We are 

structuring a monthly video conferencing program to begin in October. This program will show-case buying rules and industry’s comment to several agencies. We will invite senior VA leadership to 

conduct periodic town hall meetings with owners. Deputy Secretary 

Mansfield did this as one of his first actions after accepting his position last year. The VA’s video conferencing centers will be available for owners to view these information session. 

Step three is sourcing support. Buyers need to easily locate vendors who will perform reliably. The VetBiz information page now 

offers video streaming. This is an option an owner may post a 

three-minute film clip to the database. Because of different computers throughout the government, we have learned that many employees do not visit websites because pages are often loaded slowly. 

By posing video clips to the VIP database, our visitors do not 

need to go anywhere else to get detailed information on veterans 

in business. 

Step four is partnering with prime contractors to create subcontracting opportunities for veterans and disabled veterans. We have 

dispatched letters to large federal contractors inviting them to 

identify a veteran business advocate to work with VA Center for 

VA Enterprise. Some prime contractors have responded with enVerDate 0ct 09 2002 19:25 Oct 14, 2005 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 G:\HEARINGS\22204.TXT MIKE
12

thusiasm. General Dynamics, SAIC, and Boeing are several large 

contractors who we have formal agreements with. 

We are working with the Defense Contract Management Agency 

to develop a model for contractors to improve outreach, mentorship, 

contract opportunities and direct employment of veterans. 

On June 14, we formally recognized federal prime contractors 

who are leading the way in utilizing service disabled veterans in 

business. As an example, Anteon is the only large business that we 

are aware of that made the three percent goal last year. 

Step five is modifying acquisition protocols to make it easier to 

do business with the federal government. 

I am excited about the potential for progress and the new framework established by the executive order. Never before have I witnessed such a confluence of legislation, creative rulemaking, openness of agency information, and passionate commitment by advocate. 

In closing, it is my privilege to work with leaders such as Secretary Principi, Deputy Secretary Mackay and now Secretary Nicholson and Deputy Secretary Mansfield and are going to make this 

program work. 

Thank you. 

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

Chairwoman MUSGRAVE. Thank you very much. 

Our next witness is Paul Murphy, President of Eagle Eye Publishers. Welcome. 

STATEMENT OF PAUL MURPHY, EAGLE EYE PUBLISHERS

Mr. MURPHY. Chairwoman Musgrave, Chairman Boozman, Ranking Members Lipinski and Herseth. Thank you for the opportunity 

to address your subcommittees this morning on the issue of service 

disabled veteran-owned business procurement. 

The status of SDVOBs in the federal marketplace remains weak. 

According to the latest procurement statistics from the U.S. General Services Administration, in fiscal 2004, federal agencies 

awarded 877 million to SDVOBs, just 2.8 percent of the reported 

$313 billion federal procurement total. 

Public Law 106-50 signed into law in 1999 by President Clinton 

stipulated that SDVOBs should receive three percent of all prime 

contract dollars annually. 

In fiscal 2004, this would have translated to $9.4 billion. In other 

words, federal agencies missed their SDVOB contracting goals by 

$8.5 billion, or over 90 percent. SDVOB spending amounts to less 

than one-tenth of the established SDVOB procurement goal. 

The positive news is that SDVOB prime contract spending is up 

68 percent, from $523 million in fiscal 2003. The total number of 

active declared SDVOBs grew 50 percent, from 906 to 1,355. In fiscal 2003, an average SDVOB received $577,965. In fiscal 2004, this 

figure rose 12 percent, to $647,000. 

However, we should not draw too many conclusions from these 

growth statistics yet. With overall numbers so small, small dollar 

increase in spending translate into large percentage gains. Real 

trends need a longer time to emerge. We also understand that 

13

there will be some additions and corrections to the FPDS data 

originally reported this past February which will alter dollar totals 

and percentages. 

In Eagle Eye’s 2004 study of SDVOBs for the U.S. Small Business Administration’s Office of Advocacy, we found a significant 

discrepancy between the number of active veteran-owned vendors 

listed in the DOD’s central contractor registry and the number of 

active VOB vendors reported in the GSA’s procurement database. 

We will attempt to recreate this measurement as we process the 

corrections and enhancements of the GSA data over the next several weeks. 

Looking at these SDVOB numbers from another perspective, 

each of the 1,355 officially recognized SDVOBs would have had to 

receive $6.95 million in total revenues for agencies to meet their 

fiscal year 2004 procurement goals. Alternately, it would have 

taken 14,540 SDVOBs receiving the current average procurement 

total to achieve the same goal. That is nearly eleven times the current number of SDVOBs, and I provide a series of charts and tables in my presentation, which I hope you will review. 

I was encouraged to note that my numbers, I actually came up 

with 7,000 VOBs in fiscal 2004, which seems to closely match and 

track the numbers that Mr. Ramos is also measuring. 

But we also found 1,355 SDVOBs that were not coded as VOBs, 

bringing our fiscal 2004 combined total of SDVOBs and VOBs to 

over 8,000. 

Service disabled veterans’ spending is highly concentrated by 

vendor. The top ten SDVOBs receive 27.1 percent of all SDVOB 

dollars. The top 25 received 56 percent of the total. An average 

SDVOB received $647,000 in fiscal 2004, approximately 10 percent 

less than the $709,560 received by an average small business. 

The SDVOB contract spending is not just concentrated by company, it is also highly concentrated by agency. Just five agencies 

accounted for over 80 percent of all SDVOB contract spending. Together, the Departments of Defense, Veterans Affairs, State, 

NASA, and General Services Administration spent 82.4 percent of 

that $877 million total. 

The high degree of spending concentration by vendors and agencies suggests that government buyers are not yet aware of the 

availability of qualified SDVOB vendors, and SDVOBs may not be 

taking full advantage of available avenues to market their goods 

and services to the government. 

In conclusion, steps to raise vendor awareness about the importance of certifying their firms as SDVOBs in the CCR need to intensify, particularly as we prepare for the eventual return of U.S. 

forces stationed throughout the Middle East. Easing the ability of 

government buyers to use SDVOBs, as with the new veterans 

GWAC are to the good but the agencies have significant ground to 

makeup to fill the government’s established three percent goal. 

We need clarification about the priority of any assigned to small 

firms in any given procurement, to avoid unnecessary competition 

between socio-economic groups while set aside goals remain so significantly unfulfilled, and lawmakers, small business and procurement officials must also realistically assess whether the industrial 

14

base has the capacity to fulfill the government’s current $9 billion 

goal for SDVOB procurement. 

The rapid rate of increase in the identification of SDVOBs over 

the most recent three years will level off and deficits inevitably will 

drive further cuts in agency spending. it may not be realistic to expect that an average SDVOB can grown nine times larger than the 

average small firm given the numbers we have today.

Chairwoman MUSGRAVE. Mr. Murphy, if you would please wrap 

up, your time has expired.

Mr. MURPHY. Thank you. If you have any questions, I will be 

happy to answer them.

Chairwoman MUSGRAVE. Thank you very much. 

Our final witness is Rick Weidman. Mr. Weidman is the Director 

of Government Relations for the Vietnam Veterans of America. 

Welcome to the committee. 

STATEMENT OF RICK WEIDMAN, VIETNAM VETERANS OF 

AMERICA

Mr. WEIDMAN. Thank you, Madam Chairwoman and Mr. Chairman, and all the distinguished members of the committee. I also 

serve, ma’am, as chairman of the Task Force for Veterans Entrepreneurship. 

The right to, and we would suggest, to an earned benefit of the 

three percent in all federal procurement derives from the Fourteenth Amendment to the Constitution which certifies veterans’ 

pensions and set aside. It was originally put in there following the 

Civil War, having to do with the famous 48 acres and a mule. 

There are no longer land grants that can be given to veterans, but 

a ceratin percentage of federal procurement, and yet it has not 

happened. 

In regards to Vietnam Veterans of America, and everyone who 

has looked at this who anticipates in the Task Force for Veterans 

Entrepreneurship, the best darn readjustment program we can 

ever provide to a returning man or woman from Operation Iraqi 

Freedom or Operation Enduring Freedom is meaningful work at a 

living wage. For many, that will mean taking a job working for 

someone else, but for many others, not only the best option but 

often the only option for profoundly disabled veterans is self-employment and/or mini-business or micro business. 

In regard to helping them get to that point, it is not just the procurement aspects of Public Law 106-50 or Public Law 108-183 that 

are important. There was originally, and Mr. Talon’s draft bill, 

H.R. 5668, a provision that would have been similar to the Jobs for 

Veterans Act that would have given veterans priority in every single program offered by the Small Business Administration and 

other programs funded through the Small Business Administration. 

We would suggest that the committees revisit that particular proposal. 

In regard to the problems outlined this morning having to do 

with getting on a GSA schedule and actually getting business once 

15

one is on there, changing the word ‘‘may’’ to ‘‘shall’’ in the law, and 

making sure that the original intent, which we believed, and in 

talking to the people who actually drafted to the members anyway, 

not the staff, the intent was, we know, to provide both sole-source 

and a disabled veteran competitive reserve in Public Law 108-183, 

and all of those things need to be clarified in the law in order to 

move forward. 

Two other things of note—three other things of note if we may. 

First is that the mentor-protege needs to be expanded beyond 

DOD, and require agencies to fund it. 

Secondly, everyone is looking for some leadership by example 

from the Small Business Administration, which has been sorely 

lacking. Quite simply put, currently, to our knowledge, there is not 

a single service disabled veteran contract with the Small Business 

Administration. They simply have no moral standing to go to the 

Department of Transportation or the Department of Defense or 

anyone else and say you have to do a better job because you are 

not doing a good enough job when they have none themselves, and 

that has been true the last three fiscal years. 

Similarly, in terms of leadership within the agency of concentrating on veterans, particularly service disabled veterans, while 

we are at war, while we are at war and have troops in the field, 

it is not too much to ask for both—for the Small Business Administration to concentrate on reaching out to those returning home to 

Walter Reed and to the other 24 military medical facilities around 

the country, and yet it is not happening. 

Recently, and in response, we believe, to the scheduling of this 

oversight there finally was an individual appointed to assist with 

federal procurement in the Office of Procurement Compliance within the Small Business Administration, but she has no staff. She is 

very fine, and a veteran herself, air force veteran, but without even 

any administrative help there is going to be a very limited amount 

that she will be able to do. 

We believe that would only happen because of this oversight 

hearing. One of our long-term members have suggested that perhaps every other month this committee, these two fine committees 

should schedule an oversight hearing in order to keep it on a roll, 

to have SBA to perform the duties that they are paid to do on a 

daily basis, and I know that that is not possible, Mr. Chairman and 

Madam Chairwoman, but something on that order in terms of continuous oversight is needed. 

Part of that continuous oversight, we would bring to your attention a bill that has been brought by Senator Snowe and co-sponsored by colleagues on the other side of the aisle in the Senate that 

would re-authorize and mandate the Small Business Administration to have the advisory committee on veterans’ business development rechartered and continued as a way of continuing that oversight and pressing within the SBA itself. 

I see my time is up, and I would be pleased to answer any questions that I may. In regard to the Veterans Corporation, if I may 

have one final note. 

It has been a very checkered history since August of 1999 in regard to the Veterans Corporation. It seemed like the fates and the 

forces raid against this corporation, this semi-public corporation, 

16

were something straight out of Odysseus, and yet somehow it has 

survived to this day. It is something that has caused great controversy within the veterans community, and within the task force 

as to whether or not it should be supported or non-supported. 

The only comment that I would make at this time on behalf of 

VVA and of the task force is that somehow, some way, if they can 

succeed, we wish them all the best, and would support them in 

that. There are too few hands and too few minds and too few resources trying to assist veteran business owners and disabled veteran business owners for any dissention within the community 

now, whether partisan or otherwise, and therefore anything that 

you can do to assist that corporation to succeed and assist the community to pull together would be most welcome. 

And then one last thing is we suggest, we have suggested in the 

past a convocation to deal with returning veterans. Perhaps a convocation, if you will, to deal with both the work aspects and selfemployment/min-business is for returning veterans in particular, 

but for other disabled veterans as well, but particularly for the 

young men and women who are in the field today is needed so that 

we are prepared to make sure that, frankly speaking, as a Vietnam 

vet, they do not get all scared up like we did when we came home. 

Thank you very much, Madam Chairwoman and Mr. Chairman.

Chairwoman MUSGRAVE. Thank you for your testimony. 

Ms. Hooley, do you have any questions at this time?

Ms. HOOLEY. I do. Thank you very much. First of all, I indicated 

that none of our witnesses were holding back or not being able to 

state exactly what they think, as I look at this map where you have 

got the research centers and educational centers, I will make 

maybe one small comment. 

They are not in—excuse me, and when you look at what happened on the west coast, if you live in Washington and you need 

to deal with anything on the west coast, you are traveling somewhere between 15 and 1800 miles, so it is a fair distance to any 

of these centers, and I hope that we could eventually change that. 

The question I have, Mr. Blackwell, in your testimony you focus 

on training opportunities for the Veterans Corporation provides to 

small businesses and the assistance you give them in getting off 

the ground. 

What kind of assistance does the Veterans Corporation provide 

with any training or assistance specifically on securing government 

contracts and navigating the procurement process? 

I mean, I am really worried that it is—I think it is, as we had 

one witness talk about, that it is very difficult to get through the 

procurement process, and how much training do we do with them?

Mr. BLACKWELL. The direct answer to your question is absolutely 

none. Our charter is entrepreneurial education and training, although I have been speaking with our representatives, or ex-officio 

members of our board at DOD, VA, and SBA on how we might assist them, particularly as we move into an electronic format with 

the availability of courses that relate to getting folks ready to parVerDate 0ct 09 2002 19:25 Oct 14, 2005 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 G:\HEARINGS\22204.TXT MIKE
17

ticipate in government procurement contracts. But we do not provide any direct training or education in that area.

Ms. HOOLEY. Let me ask a question of any of the witnesses. Do 

we do—I mean, we have got this law that says we have to have 

three percent procurement for small business, we say 23 percent, 

what kind of training do we do of our procurement officers so that 

they understand that they need to look at small businesses and 

small veteran businesses? Anyone want to answer that question?

Mr. RAMOS. Yes, ma’am. In the Department of Defense, we anticipated the enactment of the statute and the regulation, and also 

the President’s executive order. And we have already included a 

first-ever course at the Defense Acquisition University that incorporates the information relative to service disabled veterans and 

veterans across the board. That course is available to all of our contracting officer, program managers, and we are also planning, if we 

have not done this already, is making it virtual so that they can 

be accessed, and we have already had veterans with the Veterans 

Corporation. 

Because if you would look at our demographics where our veterans are spread, they are pretty much spread-out through the 

southwest, California, the south, the southeast, and they are clustered right around this area because of obvious reasons. So I think 

if we were to focus our attention, it would be where that population 

of veterans are in the CCR that are currently performing contracts 

which has a close relationship to where our industrial base is located throughout the country, and it is also, by the way, we have 

a good share located in Colorado and in Washington.

Ms. HOOLEY. Mr. Denniston, how long do you believe it will be 

before the VA has fully implemented their strategic plan, and have 

you see any benefits or results from the steps that the VA has already taken?

Mr. DENNISTON. The strategic plans are relatively new. I think 

we need some time to implement that. As I said before, I am optimistic. I believe that with the steps that we have taken with the 

strategic plan, that we will make the three percent goal within the 

next year. I fully believe that. 

Back to the question that Frank responded to, your question 

about training. The best resource, in my opinion, for training small 

businesses, particularly service disabled veterans, in doing business with the federal government is the Procurement Technical Assistance Centers that are funded by DOD, about 100 of them 

around the country, and we work very closely with them. 

We have had outreach conferences in 35 of the 50 states over the 

past three years to reach out to service disabled veterans, to get 

them excited about doing business with the federal government. 

Quite frankly, there is fear, if you will, of doing business with the 

federal government and being wrapped up in the bureaucracy.

Ms. HOOLEY. Right.

18

Mr. DENNISTON. And the red tape, and somehow we have to overcome that, and have veterans understand that working with the 

federal government, yes, we are a large organization, but if you 

take the right steps you can be successful, and we have found that 

the Procurement Technical Assistance Centers to be very beneficial 

in doing that.

Ms. HOOLEY. Thank you. Thank you all for testifying today. Yes, 

Mr. Weidman?

Mr. WEIDMAN. There are a number of testimonies here today, including the one having to do with the meager number of disabled 

veteran business owners, it is really the number of identified service disabled veteran business owners. Many do not self-identify, 

particularly to the federal government. 

Their experience is they do not know about this program, they 

do not know about the law, and basically they do not want anything to do with the government. They went into small business because they did not want to answer to folks, and they wanted as few 

bureaucratic things that they had to go through as possible. 

The clusters that Mr. Ramos talks about, I agree that that is 

probably where they are identified, but that does not mean that is 

where the veteran-owned and service disabled veteran-owned businesses are. They are all over the country, and the veterans demographic is broadly reflective of the demographics of the country at 

large, by age, and therefore those who are in business and most 

likely to be in business, they are spread throughout the 50 states 

and other three jurisdictions. 

If you have the contracts the veterans will come. Let me say that 

again. If you have the contracts and a realistic expectation without 

going to conference after conference, educational session after educational session, and spending that money and coming up still with 

no realistic expectation of getting a contract or a subcontract, 

which I can tell you many service disabled veterans are complaining hard to me and to others of us in the leadership of the 

task force that that is what has happened to them—

Chairwoman MUSGRAVE. Mr. Weidman.

Mr. WEIDMAN. —fewer and fewer people will identify.

Ms. HOOLEY. Thank you very much.

Chairwoman MUSGRAVE. Thank you. Mr. Lipinski, before we 

need to go, would you like to ask questions?

Mr. LIPINSKI. Thank you. The first question is for Mr. Blackwell. 

We—all of us here, not just myself—are concerned, and want to 

give help to veterans who are seeking to be entrepreneurial and 

start small businesses. But I am sure you would admit that the 

TVC has had problems getting going over the years. The five years 

are running out now. 

Do you see—in your testimony, you suggest that you are looking 

for funding for four years. Do you see funding for only four more 

19

years, or do you see it going on into the future, or do you think 

there will be a time when TVC will be able to survive on its own 

without getting the direct funding from the federal government?

Mr. BLACKWELL. I think your question is really the future of TVC 

as you look at a funding arm. I see it has a long-term partnership. 

I would like over time for the Congress to have less involvement 

in that. And if you look at the charts that I furnished you, one of 

the charts outlines on the left-hand side a number of foundations 

that w e are already receiving money for or have worked with. 

MOT is the current group that we look for in June. 

The corporations on the right are corporations I am currently approaching for major grants, for short-term funding before September of $1.5 million, and long-term funding for $2.25 million. 

If we are successful in our high net-worth individual contributions, the partnership for individuals, partnership for corporations 

and foundation, I think the burden that has been placed on the 

Congress will be lessened. But I do believe a long-term partnership 

with the Congress is an essential one for providing services to veterans long term.

Mr. LIPINSKI. Do you think that—I know that you have not been 

there very long, but do you believe you have a plan that is different 

from previous plans in terms of getting this—being able to get this 

outside funding, which seems to be—has been the plan all along, 

but has not really succeeded up to this point?

Mr. BLACKWELL. Yes, you are right. I have only been there almost 12 weeks, so I guess I am the new-be in the room. I do believe 

we have a strong plan. I believe the plan that Chairman Lewis put 

forth in December is a good plan. The strategy of getting out now 

and meeting with individuals and corporations is an active process 

that I am very committed to, and frankly, hope to have very positive results in the next 60 to 90 days.

Mr. LIPINSKI. Thank you. A quick question for Mr. Ramos. This 

could go on for a long time, I hope you can answer quickly. In 

terms of—what does, in general, force small businesses—what does 

the Department of Defense do to ensure that large contractors actually achieve their small business goals? And do you really see 

this being done efficiently, being done well? If you can answer it 

in two minutes or less.

Mr. RAMOS. Sure. Let me just get to the point of your question. 

A year ago—a little over two years ago when I first—no, when I 

came here, we had problems with that issue. We put on probation 

one of the major prime contractors of this country for not meeting 

their subcontracting goals with small business. 

We now have at least six prime contractors that have stepped 

forward with Defense Contracting Management Agency to work on 

an initiative where we will identify service disabled firms that are 

already in our active contracting database, and we are going to 

share for the first time ever a cross-listing of all those firms for all 

the prime contractors to consider in part of their subcontracting 

20

plan because if you have industries that you are successful in Department of Defense, the big topic is joint inter-operation ability, 

and these are the lessons learned out of Afghanistan and Iraq. 

So we are pushing our veterans who have that experience so they 

can cross-cut into the other subcontractors—contracting opportunities with these primes.

Chairwoman MUSGRAVE. Thank you. We will break now to go 

vote, and we thank you for your patience. We will come back and 

continue our questions after we are finished voting. Thank you. 

[Recess.]

Chairwoman MUSGRAVE. I have been a school teacher, and once 

you let the kids go, it is hard to get them back. At any rate, I am 

happy that we have been joined by my colleague from Florida, Ms. 

Brown-Waite, and Ms. Brown-Waite, do you have questions at this 

time?

Ms. BROWN-WAITE. Yes, I do. Thank you very much, first of all, 

for holding this hearing. I think it is a very, very important issue. 

I have a question for Mr. Lopez.

Chairwoman MUSGRAVE. He is not here.

Ms. BROWN-WAITE. Okay. Well, I know he is not voting.

Mr. WEIDMAN. Madam Chairwoman, I am sorry. Mr. Lopez had 

to step out to the men’s room. He will be right back.

Ms. BROWN-WAITE. That is fine. I have a question for both VA 

and Department of Defense, perhaps Mr. Denniston and Mr. 

Ramos. 

What mechanism is actually in place for monitoring national and 

local procurement actions to determine progress toward some of the 

set aside goals that Congress has mandated?

Mr. DENNISTON. The first mechanism, which unfortunately is 

after the fact, is the Federal Procurement Data System where all 

contracts over $25,000 are input. I think the issue is one of market 

research and one of acquisition planning, and what we are trying 

to do is put in place mechanisms beforehand. 

So as an example, one of the things that are Deputy Secretary, 

Mr. Mansfield did very recently was we sent a memo directing all 

acquisition offices to identify all of their procurements between now 

and the end of the fiscal year, and identify those that were good 

candidates based on the capabilities of the service disabled vet 

community in the area to identify using the mechanisms, the service disabled vets set aside, and we are still in the process of gathering those. But that is probably the best mechanism. 

The other one, obviously, is awareness of the program from the 

standpoint of management responsibility and commitment.

Ms. BROWN-WAITE. Just as a follow up, what percentage of veterans who could qualify for this do you believe actually know about 

21

the program? Is it well known in the veterans community, or is it 

one of those things that you continuously try to educate on?

Mr. DENNISTON. I think it is both. I think we continuously try. 

I think we have all had difficulty identifying service disabled vet 

businesses or service disabled vets that want to start businesses. 

One of the things that we do every year, as you know, if you are 

on the rolls of VA as a service disabled vet you get a letter in January telling you what your disability compensation is going to be, because that goes up with the inflation factor, for the last four years 

in those letters we have had a paragraph that says if you are a 

service disabled vet business or if you are a service disabled vet 

thinking about starting a business, contact us in the Center for 

Veterans Enterprise, and that is probably the best mechanism that 

we have to get the word out to the entire community of service disabled vets. 

Now, what happens is we get inundated with calls of people that 

want to have an issue, a veterans benefit issue, and want to get 

their disability compensation raised, and that is obviously not our 

area, but it is the best way we found to identify these 2.5 million 

service disabled vets.

Ms. BROWN-WAITE. Must be because they could not get through 

to my line first. 

[Laughter.]

Ms. BROWN-WAITE. Just being facetious. 

One of the other questions is the use of subcontractors by prime 

contractors. Tell me how you all, first of all, encourage it, and track 

it.

Mr. DENNISTON. Each agency in the way that we encourage it is 

going to be a little bit different. Obviously, we have got the requirements of Public Law 95-507 which requires a subcontracting plan. 

The most effective mechanism, we believe, is having performance 

of past plans and goals, and a forward-looking plan as part of the 

evaluation criteria, because if large businesses know that their use 

of small businesses is going to impact on their ability for an award, 

they are much more serious about it. 

What we have found in all of the subcontracting area is that the 

prime contractors do it, it is important to their customer. So we in 

the VA had a concerted effort to make sure that our prime contractors know that this is important to us, and it is the reason, in my 

opinion, that companies like Johnson & Johnson, like SAIC, are 

coming to us and asking for our help in identifying service disabled 

vets that they can use as subcontractors.

Ms. BROWN-WAITE. Madam Chair, just a follow-up question.

Chairwoman MUSGRAVE. Yes, go ahead.

Ms. BROWN-WAITE. If you were to quantify that, what percentage 

of subcontractors would you say actually are disabled veteranVerDate 0ct 09 2002 19:25 Oct 14, 2005 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 G:\HEARINGS\22204.TXT MIKE
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owned subcontractors? Could you give me like just a rough estimate even?

Mr. DENNISTON. As far as dollars or as number of companies?

Ms. BROWN-WAITE. Number of companies.

Mr. DENNISTON. Number of companies, I could not. Now, as dollars go, we are finding that our prime contractors pretty much mirror what we have done in the VA, which is about one percent of 

the total dollars. And it is interesting because what we find is it 

depends on the industry that we are talking about. 

As an example, the information technology area where we know 

that we have got a lot of service disabled vets that can do that type 

of work, we get good participation. Contrast that with the pharmaceutical industry as an example where we know that pharmaceuticals is not even a small business arena because of the FDA requirements and the R&D costs and the timing involved. So we 

know as an example that that is an industry where we are going 

to have a real difficult time meeting our three percent goal.

Ms. BROWN-WAITE. Thank you. I see my time is up. 

[The Honorable Brown-Waite’s statement may be found in the 

appendix.]

Chairwoman MUSGRAVE. Thank you. Ms. Herseth, do you have 

questions?

Ms. HERSETH. Thank you, Madam Chair, and I would like to submit my opening statement for the record and just move to some 

questions for our witnesses today. 

[The Honorable Herseth’s statement may be found in the appendix.]

Ms. HERSETH. Mr. Blackwell, I understand you are new to your 

position and I appreciate your testimony today, and I could not 

agree more that the needs that we face today for veterans and 

service-connected disabled veterans are far different today than 

they were in 1999, and I know that we have had one-year extension in terms of the federal component of the funding for the Veterans Corporation. 

And just to follow up on Mr. Lipinski’s line of questioning, in anticipating after that one-year extension where the private money 

was going to come from other funds, in the event that we are not 

able to make some legislative changes pursuant to your request or 

your sense that an additional four years or some sort of permanent 

partnership with the federal government funding for services that 

you provide, in that event, whether through federal or private 

purses, would you recommend that certain of the Veterans Corporation activities be incorporated into the SBA, or the VA Center 

for Veterans Enterprise?

Mr. BLACKWELL. I guess I would go to Mark Twain, the event of 

my death has been—I think there are two answers. 

23

The first piece is I really see a long-term partnership with the 

Congress as really an important, if you will, stamp of approval for 

this program, that Congress and private industry are involved. 

In my meetings with private industry so far, the private corporations, one of the first questions they ask me is why is funding stopping for this important program, and why are we now being asked 

to pick up this mantle. 

I think having Congress as a partner really says that Congress 

is very concerned about what is happening to veterans; that Congress is interested in these programs. So it makes the, if you will, 

funding sale to corporates and to high net-worth individuals a lot 

easier. 

If this were just allowed to be a survival on our own with high 

net-worth individuals, corporations and foundations, the question is 

going to keep coming up, does not Congress care. 

So even if it is a small amount of money, I think the imprimatur 

of Congress being an active partner and participant in the programs that we are providing is a very key piece.

Ms. HERSETH. Well, I appreciate that, and I tend to agree. I am 

not one who believes that just because certain programs are offering certain services that may be similar, that we should all of a 

sudden consolidate all of those programs because you are oftentimes serving different constituencies and different needs in ways 

that are effective that not all programs can do. 

But along that line, is there some collaboration, some communication, you know, when I receive through the materials that we 

received today—

Mr. BLACKWELL. Right.

Ms. HERSETH. —and I received, you know, this handout, I have 

to imagine that given the constituency that you are serving, that 

there hopefully is some communication going on that would at least 

make the resources that are limited go even further if that communication exists.

Mr. BLACKWELL. I think if you look at what we have been trying 

to do over the last 12 plus weeks, we are really looking at where 

there are synergies, where there are matches of service. Working 

with both Scott and Frank’s organization, we are combining a lot 

of the materials that can be combined into our entrepreneurial education training. 

As regarding moving what we do into other arenas if we are not 

able to survive in our funding, I think the issue is that we focused 

on very veteranized modules to our education pieces, that sense of 

community that I talked about building is very, very important to 

the veterans who go through programs. 

If you look at traditional courses offered by SBA, about 10 to 12 

percent of the people taking those courses are veterans who did not 

identify themselves as veterans on the onset of that course. Having 

them go through a program with someone else going through SBA 

is valuable. Having them go through a program with other veterans is more valuable. The key to success in what we are doing 

24

now is veterans helping veterans, veterans mentoring who have additional skills in business, who have the ability to long-term reflect 

on what it was like to start a business, the obstacles they overcame, the venues they pursued, and the avenues for success are all 

very key to helping veterans succeed in business.

Ms. HERSETH. Thank you, Mr. Blackwell. I appreciate your insights and your testimony. 

Madam Chairwoman, could I follow up with a different question 

for a different member of the panel?

Chairwoman MUSGRAVE. Yes. As a matter of fact, I am going to 

offer another round, and I will just continue with you, please.

Mr. LOPEZ. Oh, great.

Chairwoman MUSGRAVE. For the two ladies that bothered to 

show up, we are going to give them a little more opportunity. Go 

ahead.

Ms. HERSETH. Thank you. 

Mr. Salus, am I pronouncing that correctly?

Mr. SALUS. Yes, ma’am.

Ms. HERSETH. Okay. Could you explain the e-travel contract 

issues you are facing as a small business trying to compete for federal travel contracts?

Mr. SALUS. Yes, ma’am. The federal government spends $20 billion in travel. There are three prime contractors in e-travel, and 

that is IDS, Northrup Grumman, and Carlson-Wagonlite. 

Of the three prime contractors, only one understands the travel 

business because they are in the travel business. My frustration is 

that Northrup Grumman knows how to send up missiles, IDS 

knows IT work, but they do not understand the travel business. 

It is my frustration that these prime contractors are not looking 

at small businesses. I, myself, am a sub for a subcontractor. As a 

sub for a subcontractor, I have no—I do not get any credit with 

GSA. So taking eight months for me to be on the GSA schedule, 

I have no worth under GSA scheduling. 

So the bundling effect, what we call bundling, is that these three 

prime contractors, they still work with the top large agencies for 

the travel. So the subcontractors, me being a sub for a sub, we 

have no credit. Yet we are still doing the work.

Ms. HERSETH. Thank you for providing an answer that I anticipated, I guess, but I wanted to make it for the record, and that is, 

and especially your experience, knowing the travel business and 

identifying what happens when you have these three prime contractors, and the services they are providing are outside of their 

sort of primary business. Then what happens when you do not 

have certain prime contractors that are either as familiar with the 

law, is willing to do what they could do in this case under the proVerDate 0ct 09 2002 19:25 Oct 14, 2005 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 G:\HEARINGS\22204.TXT MIKE
25

grams that we have established. So I appreciate you being here 

today.

Mr. SALUS. Thank you.

Ms. HERSETH. And your responses. Thank you.

Mr. SALUS. Thank you.

Chairwoman MUSGRAVE. Thank you, Ms. Herseth. 

Ms. Brown-Waite.

Ms. BROWN-WAITE. Thank you, Madam Chairman. 

This question, I think, is for Mr. Lopez. Mr. Lopez, in your testimony you state that the original Veterans Corporation Board of Directors did not appear to be adequately experienced to execute the 

corporation’s mission. 

In your opinion, has this changed, and could you describe the 

necessary attributes, skills, and abilities of future corporation leaders?

Mr. LOPEZ. Thank you. No, I do not believe the original—the veterans organizations proposed three of the leading executives in the 

country to be members of the board of the original Veterans Corporation. They were all rejected by the present administration has 

not being adequate, which kind of stunned us because we could not 

think of anybody more adequate. 

One of the characteristics you are looking for if you are going to 

go to the private sector for money is you are going to look for people who have it, and people who can generate it. If you have a 

board of individuals who subscribe to the principles, but do not 

have the experience and do not know how and where to find 

money, which is what the Veterans Corporation did, you have a 

bunch of people who are working very, very hard, and getting nowhere. 

Looking at the present board, I do not believe that the statute 

of the board is still sufficient to enable them to generate the necessary support from the private sector. It has to be a very, very 

high-level support in order to generate the type of money they need 

to make this program a success.

Ms. BROWN-WAITE. Just a follow-up question. Other than being 

rejected by the administration, were there reasons given and were 

the people who eventually were appointed, were they alternates? 

Tell me how we got into this situation, and let me just preface that 

with I know having served on boards, it is sometimes a very difficult situation to raise money regardless how great the cause is. 

And so I want to make sure that it is not just a situation of being 

unhappy with who was appointed. 

So if you could give me some specifics in this area, it really 

would help me.

Mr. LOPEZ. Surely.

26

Ms. BROWN-WAITE. Thank you.

Mr. LOPEZ. The board was finally realized, the major part of the 

board, during the end of the Clinton Administration, and the President, President Clinton at that time took the position and made the 

statement that he felt that any advice he would get from the Congress in the legislation was ‘‘precatory’’, one of those words you 

never heard before and you had to run to the dictionary and find 

out what does that mean. 

What it meant was I can accept it or I can reject it. I can listen 

or I do not listen, so I will do what I want to do. 

Consequently, a lot of the individuals who were appointed to the 

board, in my opinion, were individuals who had perhaps been well 

meaning, but lacked those attributes that I referred to, and that is, 

they did not have access to the nation’s philanthropy, or even to 

the nation’s veteran leadership. So I felt those two things were 

missing. It would be almost impossible to carry the message forth. 

I am not a seer, but that is what I feel happened. 

The message was not communicated, and it is a very, very difficult responsibility for this gentleman to try and pick up four years 

of flurry, and inability to connect. And now to try to restore it 

again, I do not know. I say in my remarks that I submitted that 

with some intense—let us say commission-type effort on the part 

of the Congress, perhaps, perhaps they can restate the message 

again, and with the fact that we have now a part of a tragic part 

of our history, and that is the war in Iraq and Afghanistan, this 

might be sufficient now to change the circumstances and perhaps 

make them able to reach that philanthropic community.

Chairwoman MUSGRAVE. Thank you, Ms. Brown-Waite. I especially appreciate you coming when Mr. Boozman could not return 

for the latter part of the hearing. 

I just want to challenge the witnesses to tell me what you think 

is the most single important initiative for assisting the service veterans veteran-owned small businesses in federal contracting if I 

could just toss that out. Maybe you need to look at each other. 

What would you say it is?

Mr. LOPEZ. I think we looked at each other many times before. 

[Laughter.]

Mr. LOPEZ. If I may.

Chairwoman MUSGRAVE. Yes.

Mr. LOPEZ. I believe we are in the battle for the—as I say in my 

written comments—for the hearts and minds of the contracting officers. They have developed a mindset that responds to what they 

believe the Congress has authorized them to do, and they are very 

risk-adverse, and they feel comfortable with that particular 

mindset. 

And getting them to change is very, very difficult, especially if 

it puts them into a population which, if you take a look, they have 

never served before. This is service disabled individuals who use a 

27

very word ‘‘disabled’’. You have an implication there that these people are not competent. This frightens the contracting official. 

The procurement executive in the agencies, and as the President 

did in his executive order, must be very, very firm and say I want 

this done, I want it done now, and the Congress must repeat that. 

We want this done. We are serious about it. We want it done now. 

Our guys are dying at the rate of 1,100 a day. Before long the 

window of opportunity is going to close on its own, and you will 

have a program that may reach the successes that these gentlemen 

refer to in terms of form and substance, but there will not be any 

takers.

Mr. RAMOS. If I may from the Department of Defense. I differ a 

little bit with Mr. Lopez. I think the contracting officers in the Department of Defense are attempting to do the so-called right thing. 

We are different in many respects from the civilian agencies because we have a different mission, and that is to make acquisitions 

for the warfighter. So that contracting officer has to consider all of 

the offers or considerations that may be before them, including veterans and service-disabled veterans. 

Ultimately in their market analysis in making a consideration, 

they will consider the best opportunity for the warfighter in terms 

of that acquisition decision. 

Now, the other thing that we have in the Department of Defense 

that again is different from the civilian agencies is that we try to 

look and find the firms that fit into the industries. 

I think if you look at what Mr. Lopez is saying we are losing 

1,000 a day, I understand, of veterans, we kind of think those are 

the World War II veterans. We think we are looking at—in terms 

of our supplier base, the Vietnam-era veterans, and from that period on. 

What is really interesting, and Congressman Lipinski who just 

left touched on something that I think we should—we are beginning to focus on, and that is the transformation of the Department 

of Defense in terms of its requirements from lessons learned in Afghanistan and Iraq. 

The veterans that we see coming from Iraq and Afghanistan will 

have a different knowledge base, particularly in the technology 

area that we are seeking. And things have changed since 9/11, and 

it does not affect the veterans so much, but I think it is a commodity that they can sell. They have an ability to sell their security 

clearances. I believe this is what Congressman Lipinski said. That 

is a valuable commodity that we are trying to build upon with respect to their experience base. 

We are having a conference on June 20, which is the first one 

for the Secretary of Defense, along with the other military components, where we are sold out, we have 500 registrants and they are 

already sold out. And we are bringing individuals from the Veterans Administration, Secretary Perry from GSA, the ethics officer 

from inside of the Department of Defense, and a number of keynote 

speakers. We are having Everett Alvarez, one of our longest captive 

prisoners of war, to talk to them because he is a successful businessman, and we want him to talk with candor about what it is 

to be a successful businessman in the Department of Defense. 

28

So again, that is just a quick perspective of what we are trying 

to do.

Chairwoman MUSGRAVE. Well, I thank you. I have a son who is 

serving in the military right now, and in a matter of weeks we will 

add a son-in-law to the family that recently got home from Afghanistan. So as we approach Memorial Day, I just want to express my 

love and appreciation to veterans. We have a couple of World War 

II veterans in the family as well. 

You know, we lose about a thousand a day. Those in my family 

are heroes to all of us, and Korean War veterans too, the forgotten 

war, if you will. So these veterans’ issues are very near and dear 

to my heart, and I thank you gentlemen for your excellent testimony today, and I thank my colleagues for their participation, and 

this meeting is adjourned. 

[Whereupon, at 11:46 a.m., the subcommittees were adjourned.]

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