by Hardy Stone
When I began VetLikeMe in 2010, I was hopeful and excited by the business opportunities that would be provided by the SBA through PL 106-50 (‘‘Veterans Entrepreneurship and Small Business Development Act of 1999″). [http://www.sba.gov/sites/default/files/files/pl106-50.pdf].This gesture of goodwill by the U.S. government for the service and sacrifice by disabled vets picked up more steam in 2003 with the passage of PL 108-183 – (“THE VETERANS BENEFIT ACT OF 2003″). [http://www.acq.osd.mil/osbp/docs/pl108-183.pdf]. These laws were “strengthened” by Executive Order 13360 [enacted 2005] — Providing Opportunities for Service-Disabled Veteran Businesses To Increase Their Federal Contracting and Subcontracting — [non-official title of EO).
My confidence in the VA’s and the Small Business Administration’s (SBA) programs totally faded with the reports of wide-spread fraud (November 2009) in SBA’s self-certification program. Ten companies with SDVOSB next to their name were randomly selected for examination to check their SDVOSB status–an unofficial inspection by the Government Accountability Office (GAO). TEN OUT OF TEN were frauds! TEN OF TEN!
But let’s back up a few steps. In 2006, the ‘‘Veterans Benefits, Health Care, and Information Technology Act of 2006,” the much-maligned “Veterans First” policy for procurements within the VA (109-461) was enacted. But because the GAO investigation had discovered fraud riddling the SBA program for SDVOSB, the Inspector General of the VA began digging, and boy did they find it! These discoveries by the VA gave birth to CVE, or Center for Veteran Enterprise (since renamed the Center for Verification and Evaluation).
PL 109-461 has been protested by SDVOSB at least 30 times for VA not setting aside VA procurement opportunities even though there were two or more SDVOSB capable of meeting the needs of the contract. GAO ruled against the VA every time. Finally, in November 2011, the VA issued a total non-compliance letter to GAO, indicating that the VA would not consider GAO’s recommendations EVER. No higher authority came to rescue SDVOSB. Well, I guess that’s par for the course. So not to waste valuable staff time and taxpayer dollars, GAO flat-out refused to deliberate PO 109-461 any longer.
The 8(a) program is another small business set-aside. The 8(a) Business Development Program helps small, disadvantaged businesses compete in the marketplace. Before SBA can approve an application, the disadvantaged individual(s) must show that he or she is socially disadvantaged. I don’t really know how one would scientifically prove that characteristic…can anybody help me out here? What kind of empirical study defines a person as “socially disadvantaged” unless it’s obvious that he/she is a member of a protected group.
I’m sure there are ways that a business can “prove” this. The SBA must have diagrams and formulas to compute this nebulous business quality. But how do you score it? What questions are asked? To begin with, where were you born? How are you “socially disadvantaged? From SBA’s web site we learn: “Economically disadvantaged businesses are those who have difficulty competing in the free enterprise system due to diminished capital and credit opportunities.” Sound like this could be an SDVOSB start-up? Quite likely that this is the case for many SDVOSB.
The HubZone set-aside preference. Again, from SBA’s web site: “The Historically Underutilized Business Zones (HUBZone) program helps small businesses in urban and rural communities gain preferential access to federal procurement opportunities. SBA’s HUBZone program is in line with the efforts of both the Administration and Congress to promote economic development and employment growth in distressed areas by providing access to more federal contracting opportunities.” This program is based on (among other things), the growth of the tax-base of geographical areas. These areas are typically in urban areas and change based on success of the businesses in the “zone.” Many HUBZone businesses had this preference pulled out from underneath them when some government entity reviewed economic areas and make modifications to the program prerequisites.
And the woman-owned business set-aside. From SBA’s web site: “To be eligible, a firm must be at least 51% owned and controlled by one or more women, and primarily managed by one or more women. The women must be U.S. citizens. The firm must be “small” in its primary industry in accordance with SBA’s size standards for that industry. In order for a WOSB to be deemed “economically disadvantaged,” its owners must demonstrate economic disadvantage in accordance with the requirements set forth in the final rule. There is no debate on the major qualification of this set-aside.
I hold no prejudice against any color or creed. I’m not a misogynist. I’m fully aware that in areas of social blight and run down areas in urban districts, and an increase in business is great for the community and makes America stronger.
My question: Does birthright equate to a set-aside small business advantage? Because one was born into a ‘disadvantaged’ segment of American society, does that trump men and women who were disabled because they took an oath to defend this country? Many think that an advantage in the unforgiving federal procurement arena should be earned.
And earning it is as simple as being injured in a line-of-duty incident.
The annual Scorecard is an assessment tool to (1) measure how well federal agencies reach their small business and socio-economic prime contracting and subcontracting goals, (2) provide accurate and transparent contracting data and (3) report agency-specific progress. The prime and subcontracting component goals include goals for small businesses, small businesses owned by women, small disadvantaged businesses, service-disabled veteran-owned small businesses, and small businesses located in Historically Underutilized Business Zones (HUBZones). A closer look at the 2012 SBA Annual Scorecard of business set-aside groups reveals more about this ‘birth versus commitment’ debate.
Note that for Woman Owned Small business (WOSB), the government-wide “goal” of federal procurement funds is five per cent of total agency expenditures. The goal for Small Disadvantaged Business is also 5%. The goal for SDVOSB is 3% of total expenditures.
Small Disadvantaged Business may seem like a HUBZone business, maybe not. WOSB in many cases, are SDVOSB, so the agency scorecard gets credit in both categories. A small number of business owners qualify as WOSB, HubZone and SDVOSB. The scorecard reflects all three categories. A sliver of small businesses qualify in all four categories.
These are the latest scores provided by SBA:
Goal 23.00% Reality 22.25% $89.9 B
Women Owned Small Business (WOSB)
Goal 5.00% Reality, 3.98% $16.2 Billion
Small Disadvantaged Business (SDB)
Goal: 5.00% Reality 7.67% $32.3 Billion
Goal 3.00% Reality 2.01% $8.1 B SBA’s goal for WOSB is 5% of agency procurements. SBA’s goal for Small Disadvantaged Business is also 5%.
Service Disabled Veteran Owned Small Business
Goal: 3.00% Reality 3.03% $12.3 Billion Last year, for the first time, the federal government met its goal of 3% total procurement dollars set-aside for SDVOSB. But, I repeat:
Disabled Veterans were NOT born disabled veterans.
We volunteered to serve America.
SDVOSBs deserve our respect and admiration, not stale platitudes and parades. Should we be given greater government business preference than those who ‘earn’ it by being born? I sure think so. Is our sacrifice different than the sacrifices made by other ‘protected’ government procurement groups? Think about it. Veterans took an oath to protect and defend this country. Some die, many are disabled for life. How about aligning 8a and SDVOSB in terms of the discretion given to contracting officers in making sole source awards? How about mandating a 5% minimum procurement dollars to SDVOSB? How about penalizing agencies that do not make the minimum instead of rewarding those agencies that do meet the minimum?
The U.S. Government had nothing to do with making someone a minority or female. They sure were involved in making soldiers disabled veterans.