by Wayne Simpson
The Department of Veterans Affairs (VA) is the Federal leader in contracting with Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) and Veteran-Owned Small Businesses (VOSBs). After all, it should be. Not only is VA the Chief Advocate for America’s Veterans, channeling its prime contracting and subcontracting dollars into the very community it is charged with serving is a logical extension of VA’s mission.
VA also has unique procurement authorities placing SDVOSBs and VOSBs as the highest priority contracting sources at VA—VA has the tools to maximize its SDVOSB and VOSB accomplishments, reinforced by a unanimous 2016 U.S. Supreme Court Decision.
Despite these authorities, does VA really have the advocacy and leadership SDVOSBs and VOSBs need, once enjoyed and counted on? Is VA really the advocate for SDVOSBs and VOSBs it holds itself out to be? You be the Judge.
VA Could Spend Over a Billion Dollars less annually with SDVOSBs and VOSBs and still meet its goals
Do you realize, using VA’s FY 2015 spend with SDVOSBs and VOSBs, VA could spend over One Billion Dollars less with these SDVOBs and VOSBs and still meet its unrealistically low goals? To be sure, look at VA’s Fiscal Year 2015 accomplishments.
VA reported expenditures with all businesses totaling $20,163,328,048. Of the total Fiscal Year 2015 reported spend, VA posted impressive accomplishments with SDVOSBs and VOSBs, totaling $3,474,012,720 (17.22% of total expenditures), and $3,840,270,761 (19.04% of total expenditures). But are they so impressive? Especially when you consider VA’s unrealistically low goals and the fact VA’s accomplishments have shown decreases in recent years. Fiscal Year 2015 accomplishments were down from 18.70% and 20.94% for SDVOSBs and VOSBs, respectively in Fiscal Year 2014.
What is troublesome here is VA could have spent over a billion dollars less with SDVOSBs and VOSBs and still made its SDVOSB and VOSB goals. Applying VA’s unrealistically low SDVOSB and VOSB goals of 10% and 12% respectively, in effect since FY 2010 and kept at that level by VA leadership, to its Fiscal Year 2015 spend, VA could have only spent $2,016,332,804 and $2,419,599,365, with SDVOSBs and VOSBs, respectively, and still met its goals. Yes, that is correct, VA could have spent $1.457 Billion less with SDVOSBs, and $1.420 Billion less with VOSBs and still have met its goals. Can you imagine running your business this way?
Each percentage point can make the difference in millions of dollars to the SDVOSB and VOSB communities.
And keep in mind, VA gets to legitimately count accomplishments in multiple categories. All SDVOSBs are counted as VOSBs and small businesses. VOSBs can be counted as VOSBs and as small businesses. The dollar amounts for SDVOSBs and VOSBs are not added together, most of the VOSB accomplishments come from counting SDVOSBs in the VOSB category, as SDVOSB is a subset of the VOSB category.
VA’s SDVOSB and VOSB Goals
Although spending at VA is up, the one thing that isn’t up at VA is its SDVOSB and VOSB procurement goals. Despite VA significantly exceeding these goals each year the goals have been flat-lined for the last seven fiscal years. There is no indication the goals are going to be increased anytime in the future. It appears VA’s Principal Small Business Executive and Advocate for SDVOSBs and VOSBs is doing little in the way of advocating an increase in these goals or any efforts attempted in this regard have failed. What is worse for SDVOSBs and VOSBs, no advocacy or ineffectual advocacy?
Sections 502 and 503, the Veteran entrepreneurial provisions of Public Law 109-461, the Veterans Benefits, Healthcare, and Information Technology Act of 2006, were effective June 20, 2007, and are codified at § 8127 and § 8128 of 38 United States Code (U.S.C). This important law provided VA with unprecedented contracting authorities and was implemented as the “Veterans First Contracting Program.” But in all actuality, it really wasn’t “Veterans First” as SDVOSBs and VOSBs would eventually learn.
An important requirement of § 8127 38 U.S.C. states, in part, “In order to increase contracting opportunities” for SDVOSBs and VOSBs, the Secretary of Veterans Affairs shall determine and establish a goal for each fiscal year for participation by these firms in VA’s prime contracts and subcontracts. The only restriction § 8127 38 U.S.C. places on the Secretary is VA’s goal shall not be less than the Government-wide goal. Public Law 106-50, the Veterans Entrepreneurship and Small Business Development Act of 1999 established a 3% goal Government-wide, where it remains today. Federal agencies other than VA do not have set-aside or sole source award authority for SDVOSBs, and follow FAR Pat 19.14, The Service-Disabled Veteran Contracting Program, which implemented set-aside authority under Public Law 108-183, the Veterans Benefits Act of 2003.
So, there it is, right there in the United States Code, in black and white. The law clearly states the goals set by the Secretary are set for the purpose to increase contracting opportunities with SDVOSBs and VOSBs. The problem is VA’s goals are so far below VA’s annual achievements in the SDVOSB and VOSB categories they are for all intents and purposes meaningless. More troubling is the goals have been flat-lined since Fiscal Year 2010, under two VA Secretaries now. The one common denominator is the flat-lined goals coincide with a change in VA’s small business executive leadership. Also, coincidentally, VA hit its high-water mark with its SDVOSB and VOSB accomplishments in Fiscal Year 2010 with 23.36% and 20.52% respectively, for SDVOSBs and VOSBs. The rest, as they say, is history sadly.
In Fiscal Year 2008, the goals were increased for SDVOSBs and VOSBs from 3% and 7% respectively, to 7% and 10% respectively, to reflect the enactment of Public Law 109-461. No surprise, the dedicated and capable procurement professionals at VA exceeded those goals and the goals were increased again in Fiscal Year 2010 from 7% and 10% for SDVOSBs and VOSBs, respectively, to where they remain today, at 10% and 12% for SDVOSBs and VOSBs, respectively. Where has the advocacy and the leadership gone?
Merriam-Webster Dictionary defines “Goal” as “The end toward which effort is directed.” Is it actually the VA Secretary’s intent to decrease contracting opportunities with SDVOSBs and VOSBs? But that is exactly what the VA Secretary’s goals could do.
While it may not be the VA’s Secretary’s intent of spending less money with SDVOSBs and VOSBs, the unrealistically low goals flat-lined for the last seven years have an unintended consequence and detrimental effect on SDVOSBs and VOSBs while simultaneously boosting performance ratings for those responsible for achieving the goals. This is just amazing.
One example is VA can continue to lose ground in its SDVOSB and VOSB accomplishments as it has, but because of the unrealistically low goals, they continue to far exceed the goals each year. This is certainly good enough for all the self-adulation at VA and probably sufficient for some to even get their performance tickets punched for salary increases and cash awards tied to their performance ratings.
Another example, and even more disconcerting is the SDVOSBs I hear from where a VA facility tells them VA is exceeding its goal, as if to say there is no interest or pressure at looking to increase contracting opportunities with the SDVOSB. The Veterans First Contracting Program is to be used even if VA meets its goals—there is no ceiling on goals. This, too, was reinforced in the U.S. Supreme Court (SCOTUS) Decision.
VA’s Implementation of the Veterans First Contracting Program
The Veterans First Contracting Program was interpreted and implemented merely as another open-market set-aside program, a lower-priority than the Required Sources of Supply contained in Federal Acquisition Regulation (FAR) Part 8, and supplemented in Veterans Affairs Acquisition Regulations (VAAR) Part 808.
VA spends billions of dollars annually through the Federal Supply Schedule (FSS) Program, covered in FAR Subpart 8.4, and it was determined early on by VA officials the Veterans First Contracting Program was not applicable to these procurements, FAR Part 8 would always trump the Veterans First Contracting Program.
It took a unanimous June 26, 2016, SCOTUS Decision in Kingdomware Technologies vs. United States to finally get VA’s implementation of its Veterans First Contracting Program correct. SCOTUS disagreed with VA’s interpretation and implementation and ruled, among other things, FSS procurements are in fact contracts and subject to the Veterans First Contracting Program. The SCOTUS Decision came after many Government Accountability Office (GAO) Protests were sustained and ultimately overturned with a VA victory in a lower Federal Court.
Despite VA’s implementation of Kingdomware, there is still something which should be very troubling to SDVOSBs and VOSBs – VA’s SDVOSB and VOSB goals have not increased for seven years despite VA’s significant accomplishments against them.
The chart below graphs VA’s SDVOSB/VOSB accomplishments for Fiscal Years 2005-2016. It should be noted the U.S. Small Business Administration (SBA) has not officially released the Federal Government’s Fiscal Year 2016 Goaling Report as of April 21, 2017. The data shown in this chart comes from the Federal Procurement Data System—Next Generation (FPDS-NG), also as of April 21, 2017. Therefore, VA’s accomplishments shown for Fiscal Year 2016 are tentative and could increase or decrease with the release of SBA’s Fiscal Year 2016 goaling report. They say a picture is worth a thousand words:
Wayne Simpson is the Principal, FedBizAssist, L.L.C., a small business he formed shortly after retiring with nearly 38 years of federal service at the U.S. Department of VeteransAffairs (VA) and its predecessor organization, the Veterans Administration. At the time of his retirement, Wayne served as the Executive Assistant to VA’s Deputy Assistant Secretary for Acquisition and Logistics. In this position Wayne was the primary staff advisor to the Deputy Assistant Secretary, who serves concurrently as VA’s Senior Procurement Executive and Debarring Official.