(August-September 2013) – HR 2882, “Improving Opportunities for Service-Disabled Veteran-Owned Small Businesses Act of 2013.”
On July 31, Representative Mike Coffman (R-CO) introduced HR 2882 in the House Small Business Committee. Although the bill overtly addresses what some consider the Veterans Administration’s ‘failing’ verification system, the measure has ignited passion within the SDVOSB community. The bill fully shifts the SDVOSB/VOSB verification process from VA to the Small Business Administration. The SBA has suc-cessfully verified other set-aside groups (HUBZone, 8A, WOSB), for many years, but some in the SDVOSB community fear the transition will result in confusion in procurement offices of other federal agencies and eliminate provisions that some say function well in the veteran business community.
VetLikeMe Interviewed Mr. Coffman on August 6 from Washington:
On behalf of all Service Disabled Veteran Small Businesses (SDVOSB), thank you, Congressman for introducing H.R. 2882. The past three years have been especially eventful for our community with regard to federal government legislation, GAO decisions and federal court determinations. Most of this activity for SDVOSB has not been positive, and we sincerely appreciate the renewed visibility this bill brings to issues important to us and the business opportunities for SDVOSB that may result.
VetLikeMe (VLM): What legislation or government performance reports brought this matter to your attention?
This is an issue I’ve been working on for several years – we owe it to those who served to make sure that only legitimate service-disabled veteran-owned small businesses (SDVOSBs) or veteran-owned small businesses (VOSBs) are benefiting from the programs created to honor their service. In my role as a mem-ber of both the House Small Business Committee (HSBC) and the House Veterans’ Affairs Committee (HVAC), I’ve heard from a lot of veterans about problems with the verification program. However, I’d say the key report for me was the January 2013 GAO report on the Department of Veterans Affairs (VA) verifi-cation process – GAO was unable to ascertain whether the verification process actually reduced fraud. If we are spending $33 million a year on a program, and have 120 people working on it, it should deliver measur-able results for our veterans.
I take the issue of fraud seriously – during the last Congress, as Chairman of the HSBC’s Subcom-mittee on Investigations, Oversight and Regulation, I introduced legisla-tion that makes it easier to suspend and debar individuals and companies incorrectly misrepresenting their status as service-disabled veteran-owned small businesses or veteran-owned small businesses. That provision is now the law, but it still wasn’t helping SDVOSBs and VOSBs trying to navigate the VA verification process. VA itself told us that over 98% of the firms they reject are rejected not because the individual isn’t a veteran or service-disabled veteran, but because of the business structure.
The Small Business Administration’s (SBA’s) Office of Hearings and Appeals was able to identify numerous cases they would decide differently than VA.
At every briefing, VA improvements simply added more process and bureaucracy while veterans continued to complain that the decisions out of VA simply didn’t make sense. So, in my role as the Chairman of the HVAC’s Subcommittee on Oversight and Investigations, I held a joint hearing in March with the Small Business Committee on the verification problems at VA. I heard from VA, SBA, GAO, and many veterans. During that hearing, and as a result of the follow up questions, it became clear that legislation was necessary to fix the verification process.
VLM: What input did Vietnam Veterans of America and VET-Force have in crafting the bill?
VET-Force testified at the March joint HSBC/HVAC hearing on behalf of the over 100 veterans’ or-ganizations they represent, including the Vietnam Veterans of America. Their testimony, the testimony of The American Legion, and the information I’ve received from the numerous veterans helped shape my un-derstanding of the problem. I was pleased to have them publicly support the Improving Opportunities for Service-Disabled Veteran-Owned Small Businesses Act of 2013.
VLM: Why do you think SBA can do a better job of certifying SDVOSB than the VA?
VA and SBA each have their areas of expertise, and the Improving Opportunities for Service-Disabled Veteran-Owned Small Businesses Act of 2013 will have each agency do what it does best. VA is best suited at determining whether an individual is a service-disabled veteran or a veteran, so under the new legislation, it remains in charge of that process.
However, 98% of the firms rejected by VA aren’t rejected because the individual isn’t a veteran or service-disabled veteran.
Instead, those firms are rejected because of how the business is structured, which requires an understanding of SBA’s regulations on ownership and control. SBA has over sixty years of expertise and decades of case law interpreting these issues. While VA’s currently states that it follows SBA’s guidance on size, ownership and control, the March 2013 hearing demonstrated that there is a great deal of disparity and a lack of transparency when VA applies these rules. Therefore, this legislation puts issues regarding size, ownership, and control back with the agency best able to interpret them – the SBA.
VLM: Will VSOs/SDVOSBs have operational input in the verification process if this bill passes and be-comes law?
Any new process would be subject to notice and comment rulemaking, and would require negotiations between SBA, VA, and the Office of Management and Budget. While the legislation does not establish day-to-day operational protocols, I expect that veterans and service-disabled veterans help shape these processes.
VLM: As written, H.R. 2882, applies only to VA contracts. Will this bill be implemented throughout the government in the future?
Before we can move all service-disabled veterans to one system, we need to build that system. H.R. 2882 should provide a framework that can be expanded in the future to cover all verifications. However, it has one significant advantage over the current split process. Currently, a firm can be rejected by VA and then turn around and self-certify for a contract at any other agency. Under the proposed legislation, this would no longer be possible.
VLM: What will happen to SDVOSBs/VOSBs caught in the transition from VA to SBA? Will they be able to bid on VA contracts?
In drafting H.R. 2882, my cosponsors and I were careful to create transition time, and give SBA, VA and OMB the ability to negotiate how that transition would occur so that it will not displace current SDVOSB and VOSB firms.
VLM: Verification is only one component of the “Vets First” law; does Congress have any plans to ad-dress the rest of the law (109-461) that requires VA to consider SDVOSBs BEFORE other businesses?
I want to be clear – this legislation doesn’t change the Vets First preference at VA, instead it works to make sure that all qualified firms are able to benefit from the Vets First preference, but that rent-a-vets and other fraudulent firms are not able to take opportunities they haven’t earned.
Thank you, Congressman, for spending time with VetLikeMe.
Text of 2882: http://tinyurl.com/n3q88t7
VetLikeMe remains bipartisan in every aspect of political discourse with one exception: We will advocate relentlessly for the rights of disabled veteran business. We take no political position or stance on issues within the SDVOSB community.
The following is in support of H.R. 2882 — Pro
By Marc Goldschmitt
The bill fixes several key problems and eliminates double standards in statute and regulation:
1. It aligns SBA and VA statutory definitions of a veteran;
2. It updates the Small Business Regulations to provide for continuation of the business in the event of the death of the SDV from service connected disabilities or if the vet is 100% disabled;
3. It provides for an appeals process with experienced administrative law judges and decades of case law;
4. Assures that an SDVOSB or VOSB at VA is an SDVOSB or VOSB at SBA and vice versa.
I think that we could all agree that these are significant and long overdue changes.
The other part of the bill, which is the only place I’ve heard any pushback, has to do with where the verifica-tion process is managed and executed. This is the implementation and interpretation aspects of verification. In the past these were severely broken and caused irreparable harm to a number of businesses.
From a veteran perspective, the implementation today is significantly better:
1. Timeframes from submission to decision are significantly reduced;
2. Much more information is publicly available about the documentation that CVE requests and what they may be looking for;
3. Verification Assistance Partners and Counselors have been trained and are able to assist applicants in preparing and submitting documentation as well as interpreting requests for additional information;
4. CVE has implemented a pre-determination step.
The remaining issue of interpretation is one that can be highly emotional. By this I mean what CVE refers to as “Business Models.” These are the areas where there seems to be strong consensus that change is re-quired, but less agreement on what things need to be changed and how. It also impacts the type and volume of documentation that a veteran must submit. To me, the debate should focus on how important are these changes to the veteran community and how soon must they be implemented. Admittedly, these “business
model issues” do not immediately affect most of the smaller businesses and startups. But, they do impact those businesses that are growth oriented and seeking an infusion of capital and expertise to support and sus-tain that growth. So, the first question is “How important is change to building and sustaining a VOSB and SDVOSB industrial base? “
Many make the point that SBA is rudderless and may change home ports. But the leaders, workers and proc-ess for doing ownership and control (a subset of HUBZone, 8a and status protests) are in place and would most likely continue if SBA moved to Commerce. Since the infrastructure, policies and procedures are in place at SBA to support document collection and review, the second question would be “How disruptive in the short term and long term would a move to SBA be?”
Others make the point that “the Executive tells VA leadership to do it this way and or that way or else…it should get better or heads should roll at VA.” Or that “VA arrogance and refusal to comply with Congres-sional and GAO recommendations/direction. This is the crux of the situation and this is what requires atten-tion.” So, the third question is “How likely is it that VA will implement necessary changes?”
Should the verification program move to SBA, an overriding historical concern, and a critical fourth question is “Where will the SDVOSB program fall in SBA’s priorities?”
Rather than bash HR 2882, which fixes problems that have plagued the verification program from its incep-tion, let’s accept the critical parts that we agree need to be done and focus on the impact of the remaining im-plementation and interpretation challenges in the con-text of how we can recommend the path that best supports the community.
Counter View: H.R. 2882 Con
By Wayne Gatewood
A number SDVOSBs are against this Bill. We are NOT just another small business category…we are Veterans.
SBA does not have any leadership at present with Karen Mills on the way out and Marie Johns already gone, and there are considerations of having its mission (SBA) fall under Commerce Department…what chaos! There is also the issue of disability sensitivities regarding our individual cases that should not be shared with SBA in any way. Finally, SBA has had its problems as well, and we will be starting from scratch!
Let us remember something very pertinent to this matter …..SDVOSB/VOSB verification was not and is not a uni-versal small business requirement…it pertains ONLY for SDVOSB and VOSB set-asides at VA under the failing Vets First Program and PL 108-183. No doubt we have been hurt by the CVE verification failures (me person-ally for over a year), but I am hanging my hat on CVE and VA. If the Executive Branch gets involved and sup-ports the Congress and its take on CVE, and IF the Executive Branch tells VA leadership to do it this way and or that way or else…it should get better or heads should roll at VA.
All too often the Congress has told VA it must do this and it must do that…VA’s leadership has been arrogant and combative and it is their refusals to comply that must be addressed. I am amazed at this Government; we have agencies that refuse to follow the Laws so we let them get away with it….no way to run the Government. Look at the 13 or so Aldevra Protests relative to Vets First at VA that were upheld by GAO; after all of these successful Pro-tests by SDVOSB Aldevra, VA still refused to comply and has stood solidly on their interpretation of PL 108-183 in the face of Congressional and GAO recommendations and concerns to interpret them otherwise. The VA Verifica-tion Program is strictly a VA requirement…get it fixed and make those responsible for the failures to be held accountable…that simple. Fact is, some progress is being made…we just need to get them where they need to be.
I am concerned that if we get this thing over to SBA, it will not be long until the other (non Vet small business groups) start demanding that there be verification for SDVOSBs for all agencies; there are those that are pres-ently complaining that we self certify and they cannot. Fact is, many SDVOSBs do not want to be verified by VA because they are not looking for work at VA and they don’t want the hassle. If we would have to go to uni-versal SDVOSB verification…think of the impact on non-verified SDVOSBs, and the expense to the Government.
Certainly this part of my argument is hypothetical but I believe it will happen….just because we have taken our attention off the real issue…VA arrogance and refusal to comply with Congressional and GAO recommendations/direction. This is the crux of the situation and this is what requires attention. With more than 24 years in business and a verified SDVOSB, I was never consulted by anyone and asked my opinion regarding HR 2882, and neither were any of the SDVOSBs that I have spoken to. I am wondering how many SDVOSBs spoke with Congressional staffers so their views could be known before this Bill was drafted?
No doubt emotions regarding CVE at VA are raw but we need to think this through very carefully.
Under PL 106-50 a group of Vets were to form a Council at SBA and have all kinds of powers, power to call in agency heads, power to alert the White House to failures by those agencies not making their 3%, etc. etc., etc. Fact is, this Council (if that is what it is referred to) has NEVER been able to exercise the flexibility and the authority vested in it under the Law. The SBA never allowed the Council to fully function and thus we were not able to inform the White House of Agency failures. As I have said, we are Veterans and we need to clean up the lingering issues at VA CVE and leave the Program there where it be-longs since it is in fact a VA matter for set-asides at VA only. Going to SBA I fear, will result over time, in universal verification for SDVOSBs under amended legislation. Fact is, many agencies outside of VA, if not all, want to see that a Vet is verified and are often hesitant to deal with those that are not VA veri-fied…when in fact self verification is the Law for them.
Fraud rampant in veterans preference contracts, 5-Part Series, The Washington Examiner
August 5, 2013 part 1
Warren Parker parlayed a he-roic war record into millions of dollars in federal contracts, cashing in on a preference program that limits or eliminates competition for small businesses owned by service-disabled veterans.
Parker’s resume included three Silver Stars, three Purple Hearts and a slew of other decorations for heroism. He even kept a diary of his “sniper kills” in Vietnam.
It was all a scam.
Parker never went to Vietnam or saw combat. During his five years in the Missouri National Guard, he never left the state.
August 6, 2013 part II ‘Trust me’ is federal policy on
Policing preference fraud
Lying won’t get you banned from a federal program that gives preferential treatment in government contracting to companies owned by veterans with service-connected disabilities.
If one agency catches you misrepresenting your qualifications, you can simply move on to the next one, which is unlikely to check your history.
Chances are you will continue to qualify for lucrative contracts with little or no competition as the owner of a Service-Disabled, Veteran-Owned Small Business. http://tinyurl.com/ma7vsas
VA slow to clean up broken veterans August 7, 2013 part III
preference contracting mess
Preventing fraud in the preference program aimed at helping small busi-nesses owned by disabled veterans is finally a priority at the Department of Veterans Affairs.
It took several rewrites of the law and years of prodding by federal investi-gators. But VA is now verifying the qualifications of those claiming to be operators of Service-Disabled, Veteran-Owned Small Businesses.
Series by Mark Flatten,
Reporter, The Washington Examiner
Veterans preference fraud widespread but government prosecutes few cases
August 8, 2013 part IV
Billions of federal dollars were flowing to small businesses owned by service-disabled veterans, and a pair of construc-tion contractors in St. Louis wanted a piece of it.
But Michael Woodling and Joseph Madlinger were not dis-abled veterans, so they couldn’t qualify for the bidding preferences being offered by the federal government un-der the Service-Disabled, Veteran-Owned Small Business program.
To get around the restriction, they hatched a “rent-a-vet” scheme, according to federal court records. They con-vinced an acquaintance, who was a disabled veteran, James Browdy, to put his name on new shell corporation, which would bid on the contracts. The work, and most of the profits, would be passed on to Woodling’s firm, Gateway Contractors. http://tinyurl.com/moqrd2m
Few in Congress seem to care about veterans preference fraud
August 9, 2013 Part V
Rep. Tammy Duckworth acknowledged a Virginia businessman probably did nothing illegal when he used a minor foot injury from 27 years before to qual-ify for a program to aid disabled military veterans with a preference in federal contracts. But what he did was disgraceful, said the Illinois Democrat who in 2004 lost both legs in combat while serving as a helicopter pilot with the Army National Guard in Iraq.
“Shame on you,” Duckworth said during a House Oversight and Government Reform committee hearing in June. “You may not have broken any laws. We’re not sure yet. You certainly broke the trust of this great nation. You broke the trust of veterans.”
Duckworth’s wrath was aimed at on Braulio Castillo, whose twisted ankle at a military prep school in 1984 al-lowed him to qualify as the owner of a Service-Disabled, Veteran-Owned Small Business.
VetLikeMe Vol . 4 No. 6
Veteran Small Businesses Conference
August 6-8 St. Louis, Missouri
We invited the VA to share with the SDVOSB community what they thought of the conference in St. Louis, but after multiple communications, not a word was written by Tom Leney & Company. Seems kind of odd that this would be the case since the VA has been rattled by so many outside forces lately. Surely they’d jump at a chance to put on a good face for VetLikeMe. Many positive insights were given about the conference (“best one ever,” great event,” very useful”), but there were equally as many negative voices and some ambivalent. We carried periodic reports on vetlikeme.org
The 2013 conference was covered by VetLikeMe with periodic posts and updates on vetlikeme.org Media contributor Roger Reed developed several multi-media reports available here:
Day 1 Slide Show:
Day 2 Slide Show:
26-28 August Navy Gold Coast, San Diego, CA
VLM has featured unvarnished national news and editorial opinion concerning the SDVOSB community since Nov. 2009. From the beginning we’ve operated in the red, but this publica-tion will always be free.
We hope VLM keeps the SDVOSB community informed so that decision makers will provide increased federal contracting opportunities for those of us injured while serving our country.
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By Sarah Schauerte VetLikeMe Columnist
Drastic House Bill Asks VA to Hand Over SDVOSB Verification to SBA
On August 1, House Small Business Committee Member Rep. Mike Coffman (R-CO) introduced the “Improving Opportunity for Service Disabled Veteran-Owned Small Business Act of 2013” (HR 2882). The main thrust of the bill is a show-stopper: it requires the Department of Veterans Affairs (VA) to relinquish con-trol over the verification of SDVOSBs to the Small Business Administration (SBA).
As veterans know, the SBA and the VA operate separate procurement programs for SDVOSBs. These two pro-grams are different in several key respects, including the following that would be impacted by the bill:
Verification/Certification Procedures – Under the SBA’s program, veteran business owners self-certify their eligibility to participate in SDVOSB set-asides issued by all procuring agencies other than the VA. Under the VA’s Veterans First Contracting Program, the Center for Veterans Enterprise (CVE) verifies appli-cants as eligible SDVOSBs or veteran-owned small businesses (VOSBs) in its VetBiz Vendor Informa-tion Pages (VIP). This includes submission by veteran businesses of key business documents to show veteran ownership and control. Pursuant to the terms of Rep. Coffman’s bill, the SBA would verify appli-cants as eligible for the Veterans First Program. That’s right. In seeking verification and re-verification, veteran business owners would no longer have to deal with the VA.
Appellate Procedures – Eligibility issues and protests relating to the SBA’s SDVOSB Program are heard by the SBA’s Office of Hearings and Appeals (OHA), while eligibility issues and protests relating to the Veterans First Program are heard by the VA. Under Rep. Coffman’s new bill, denied verifications or SDVOSB bid protests (based on eligibility) would be also heard by SBA OHA.
Since the inception of the VA’s VetBiz VIP Verification Program, it has encountered harsh criticism due to its extremely high applicant rejection rate (currently 30%, which represents a vast improvement), long wait times, and technical glitches.
Despite this, both the VA and the SBA have expressed the intention that the VA’s verification program ulti-mately be applied government-wide. Further, the VA recently sought comments for proposed rulemaking to amend 38 CFR Part 74 and to improve the VetBiz process generally. With these developments, along with the time and money invested in VetBiz, it would seem that the chance of this bill becoming law is small
It makes more sense that the CVE’s VetBiz process be improved to the point that the SBA could one day take the reins and apply it government-wide.
So why introduce the bill? To suggest that the SBA should take over verification from the VA is to state that the verification process is lacking. Representative Coffman’s bill is getting a lot of buzz, and buzz is something that can bring about change. There’s nothing like pressure to inspire productivity.
Representative Coffman’s bill can be accessed at:
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Hardy Stone is the editor/publisher of VetLikeMe, the nation’s only publication devoted to service disabled veteran owned business.