[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
HEARING WITH RESPECT TO SBA PROGRAMS FOR VETERANS AND THE NATIONAL
VETERANS BUSINESS DEVELOPMENT CORPORATION
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HEARING
before the
COMMITTEE ON SMALL BUSINESS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC, MAY 23, 2001
__________
Serial No. 107-10
__________
Printed for the use of the Committee on Small Business
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75-151 WASHINGTON : 2001
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COMMITTEE ON SMALL BUSINESS
DONALD MANZULLO, Illinois, Chairman
LARRY COMBEST, Texas NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado JUANITA MILLENDER-McDONALD,
ROSCOE G. BARTLETT, Maryland California
FRANK A. LoBIONDO, New Jersey DANNY K. DAVIS, Illinois
SUE W. KELLY, New York WILLIAM PASCRELL, New Jersey
STEVEN J. CHABOT, Ohio DONNA M. CHRISTIAN-CHRISTENSEN,
PATRICK J. TOOMEY, Pennsylvania Virgin Islands
JIM DeMINT, South Carolina ROBERT A. BRADY, Pennsylvania
JOHN THUNE, South Dakota TOM UDALL, New Mexico
MIKE PENCE, Indiana STEPHANIE TUBBS JONES, Ohio
MIKE FERGUSON, New Jersey CHARLES A. GONZALEZ, Texas
DARRELL E. ISSA, California DAVID D. PHELPS, Illinois
SAM GRAVES, Missouri GRACE F. NAPOLITANO, California
EDWARD L. SCHROCK, Virginia BRIAN BAIRD, Washington
FELIX J. GRUCCI, Jr., New York MARK UDALL, Colorado
TODD W. AKIN, Missouri JAMES R. LANGEVIN, Rhode Island
SHELLEY MOORE CAPITO, West Virginia MIKE ROSS, Arkansas
BRAD CARSON, Oklahoma
ANIBAL ACEVEDO-VILA, Puerto Rico
Doug Thomas, Staff Director
Phil Eskeland, Deputy Staff Director
Michael Day, Minority Staff Director
C O N T E N T S
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Page
Hearing held on May 23, 2001..................................... 1
Witnesses
Elmore, William, Associate Administrator for Veterans Affairs,
U.S. Small Business Administration............................. 3
Glassman, Robert, Chairman, National Veterans Business
Development Corporation........................................ 5
Ortner, Blake, Associate Legislative Director, Paralyzed Veterans
of America..................................................... 7
Eiland, Anthony, Special Assistant for Veterans Employment,
Veterans of Foreign Wars of the U.S............................ 9
Crandell, William, Director of Government Relations, Association
for Service Disabled Veterans.................................. 11
Weidman, Rick, Director of Government Relations, Vietnam Veterans
of America..................................................... 13
Appendix
Opening statements:
Manzullo, Hon. Donald........................................ 30
Velazquez, Hon. Nydia........................................ 32
Prepared statements:
Elmore, William.............................................. 34
Glassman, Robert............................................. 43
Ortner, Blake................................................ 47
Eiland, Anthony.............................................. 56
Crandell, William............................................ 61
Weidman, Rick................................................ 66
Additional Information:
Letter from SBA in response to questions posed in hearing.... 73
VETERANS BUSINESS DEVELOPMENT HEARING
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WEDNESDAY, MAY 23, 2001
House of Representatives,
Committee on Small Business,
Washington, DC.
The committee met, pursuant to call, at 10:04 a.m. in room
2361, Rayburn House Office Building, Hon. Donald Manzullo
(chairman of the committee) presiding.
Chairman Manzullo. We will come to order. Good morning, and
welcome to this hearing of the Committee on Small Business. A
special welcome to those who have traveled a long distance to
come here.
The Small Business Administration is required by statute to
provide special consideration to veterans in the administration
of its programs. In the past, there have been complaints the
SBA and other agencies have been ignoring the needs of those
veterans with aspirations to start or grow a small business.
The subject of the hearing is the performance of the Small
Business Administration in providing financial and
entrepreneurial assistance to veterans. Specifically, this
hearing will look into the performance of the SBA in
implementing Public Law 106-50, the Veterans Entrepreneurship
and Small Business Development Act of 1999, which was signed
into law in August of that year.
This law provides that technical, financial and procurement
assistance be given to veterans. I am happy to say that special
emphasis is given in the law to providing assistance to small
businesses owned and controlled by service disabled veterans.
Basic to this hearing is remembering our veterans and the
sacrifices they made for this nation. Memorial Day is a day of
remembrance. I can assure you that we in Congress have not
forgotten you.
I look forward to a lively and informative discussion of
the issues presented. Again, welcome to the hearing. I yield to
the Ranking Member, Mrs. Velazquez, for her opening statement.
[Chairman Manzullo's statement may be found in appendix.]
Ms. Velazquez. Thank you. Good morning. Thank you, Mr.
Chairman. Good morning.
It is often said in the business world everyone is paid in
two coins, experience and cash. You should take the experience
first, and the cash will come later. For every business owner
in today's marketplace, no truer statement has ever been
spoken, but for our veteran small business owners experience is
something they have in abundance. What they need is the capital
and technical assistance to grow and expand their companies.
All of us in this room know what veterans have sacrificed
in the last 225 years to ensure that this country and our
people remain a free democratic society. For all that they have
done for us, it is now our duty to return that sacrifice to
those who want their piece of the American dream.
Unfortunately, in recent years we have seen a decline in
the numbers of veteran business owners and entrepreneurs in
spite of a growing economy. There has long been a growing
concern that veteran small business owners were, for whatever
reason, unable to access those components necessary to start
and grow a new business.
This Committee responded to those concerns during the 106th
Congress by drafting, passing and getting signed into law the
Veterans Entrepreneurship and Small Business Development Act.
This new law had several important goals, but one overriding
theme. Provide technical, financial and federal procurement
assistance to veteran-owned businesses.
While this legislation has achieved many of its goals,
there is certainly more that can and must be done for these
small business owners. For example, this Committee has been
very active in pursuing the interests of all small firms as
they try to do business with the federal government.
Rest assured, our work on this issue will continue until
the Members of this Committee are satisfied that small
businesses, whether they are owned by women, men, minorities or
veterans, are given every possible opportunity to compete for
federal prime contracts.
With that said, let me make one important point about
today's hearing. As we come together today to review the
progress of this legislation, we must do so in the context of
how we are best serving all of our nation's small businesses.
The fact is our nation over the last decade has experienced
the greatest period of sustained economic growth in our
history. We have an unemployment rate that stands at a little
over four percent. Personal income has quadrupled, and the
price of consumer goods continues to fall. Still, key economic
indicators such as increased layoffs and business closings in
technology show that we are clearly facing a financial
situation with more questions than answers.
With that in mind, we need to improve ways for small firms
to access capital. We should not be eliminating the tools to
help rebuild the foundation of our economy, but help
entrepreneurs live out their dream.
All of these issues and a whole host of others make up just
some of the obstacles that small business owners will face in
the coming months and years. More importantly, the communities
that these economic anchors call home are going to have to face
these issues as well unless we do something to help them.
In closing, Mr. Chairman, let me say again that the
5,000,000 veteran small business owners know what sacrifice is
all about. Frankly, within the business community I think that
that gives them unique qualifications for being a small
business owner. They understand what their company's success
can mean for their families and their community at least, just
as they understood what their military service means to this
country.
It is important to remember that while this hearing today
focuses on how we can help them succeed in today's economy, we
cannot forget that we also have a responsibility to ensure that
all small business owners are given the tools and the
opportunities to grow and prosper. After all, the veterans that
sit before us today have done a great deal to protect America's
future. It is now time to do our part.
Thank you, Mr. Chairman.
[Ms. Velazquez's statement may be found in appendix.]
Chairman Manzullo. Thank you for that excellent opening
statement.
We may have a lively day on the Floor today. I am not quite
sure what is going to happen. I would ask that you respect the
lights. When the yellow light comes on, that means you have one
minute. When the red light comes on, that means that you are
out of time.
I know five minutes is not a lot of time to tell your
story, but I would ask that you limit it to that. Then we will
have plenty of time for questions.
We will start with Bill Elmore. Bill is the associate
administrator for Veterans Affairs with the U.S. Small Business
Administration.
Mr. Elmore, welcome this morning.
STATEMENT OF WILLIAM ELMORE, ASSOCIATE ADMINISTRATOR, VETERANS
BUSINESS DEVELOPMENT, U.S. SMALL BUSINESS ADMINISTRATION
Mr. Elmore. Thank you. Mr. Chairman, Ranking Member, and
other Members of the Committee, I am William Elmore, the first
associate administrator for Veterans Business Development at
the SBA. Thank you for this opportunity to appear before you
today. I would like to request that my written testimony be
entered into the record.
Chairman Manzullo. All of the written testimony of the
witnesses and Members of Congress will be entered in the record
without objection.
Mr. Elmore. Thank you.
In 1973, Congress deleted Section 1813 of Title 38,
eliminating the small business loan guarantees for veterans
created in the GI bills of World War II and Korea.
Correspondingly, in January, 1974, Congress mandated that SBA
begin providing special consideration to veterans, their
dependents or survivors in all of our programs.
In 1983, SBA created the Office of Veterans Affairs. On
July 24, 2000, I was hired to run the new Office of Veterans
Business Development. Before I left my small business to come
to government, I was a veteran small business advocate
appearing before this and other Committees in that capacity.
Now as an Administration representative, I am learning that
implementing real and substantive change is a challenge that
requires time, resources, allies and cooperation.
I understand that Public Law 106-50 requires and veterans
deserve a thorough and complete implementation. In addition to
my written testimony, the following provides a synopsis of what
has been done so far.
SBA. has made significant improvements to our website. We
have created distance learning courses specifically for
veterans. We have compiled information on government
procurement and disseminated this to approximately 20,000
service disabled and other veteran owned small businesses.
The federal procurement data system has been modified to
collect procurement data on veterans and service disabled
veterans. We have mined information out of SBA databases and
compiled a list of approximately 80,000 service disabled and
veteran owned small businesses. We are providing them ongoing
information on federal procurement opportunities.
We have developed a quarterly newsletter that is sent to
veteran small business owners, SBA staff and veteran serving
organizations. SBA has reviewed, revised and we are planning to
expand the Veterans Business Outreach program. We are planning
a national training conference for SBA district Veterans
Affairs offices and will invite our resource partners to
participate.
We are organizing special outreach efforts through ten of
our SBA district offices. We are developing a national outreach
poster to be provided to 5,000 plus veteran serving locations.
We are assisting the Office of Advocacy with research that
examines veteran and service disabled veteran business
ownership, their needs, their engagement with SBA and other
services.
We are updating and revising our previously successful
Veteran Entrepreneur Training program. We are meeting with and
providing guidance to each program office of the SBA to assist
them in implementing data collection that will capture veteran,
service disabled veteran and veteran eligible information.
We worked with the Small Business Development Center
program on their program announcement to improve their services
to veterans and service disabled veterans. We organized a
meeting with the SBA Office of Capital Access and
representatives from the veteran serving community to explore
capital and technical assistance programs for veterans.
We asked more than 200 former SBA state and national
veteran advocate winners to assist us in ensuring special
consideration is delivered at the local level. We have reviewed
more than a decade of SBA services for veterans and are
developing recommendations for the next administrator based on
this review.
We have solicited program recommendations from the Veterans
Affairs officers in SBA district offices. We are creating a
database of small business media, veterans media, veterans
serving locations and small business associations to provide
them print and electronic tools regarding SBA services and
procurement opportunities for service disabled and other
veterans.
We assisted the start up on the National Veterans Business
Development Corporation, including hosting their first board
meetings. We have and are continuing to develop recommendations
for the next Administrator for strengthening his
Administrator's order, and we are exploring options to improve
ProNet for service disabled veteran and veteran entrepreneurs.
I note that since October, 2000, the number of service
disabled veterans registered in ProNet has risen by more than
28 percent, and the number of veterans registered in ProNet has
risen by almost 17 percent. This reverses years of decline.
In closing, we anticipate a renewed commitment from the new
Administration because of their stated interest in veterans and
small business success. We are aware that veterans and service
disabled veterans have not historically received the attention
they deserve. With the support of the new Administration,
Congress, our resource partners and the veteran entrepreneurs
themselves, we will change this.
Thank you.
[Mr. Elmore's statement may be found in appendix.]
Chairman Manzullo. Mr. Elmore?
Mr. Elmore. Yes, sir?
Chairman Manzullo. You read a list that was not in your
written testimony. If you could make available that list to us?
Mr. Elmore. I would be pleased to, sir.
Chairman Manzullo. Would that be okay?
Mr. Elmore. Absolutely.
Chairman Manzullo. Obviously you have updated your written
testimony. I appreciate your taking the extra effort on that.
Our next witness is Robert Glassman. He is the chairman of
the National Veterans Business Development Corporation.
Mr. Glassman, welcome.
STATEMENT OF ROBERT A. GLASSMAN, CHAIRMAN, BOARD OF DIRECTORS,
NATIONAL VETERANS BUSINESS DEVELOPMENT CORPORATION
Mr. Glassman. Thank you, and good morning, Chairman
Manzullo, Ranking Member Velazquez, and Members of the
Committee. I am very honored to be here to address you, but I
must admit that the memory that will last a lifetime will be
that my fellow board member sitting immediately behind me is
retired Army Major General Jim Klugh. It is very rare that an
ex lieutenant can be backed up by a Major General, and I will
always remember that.
Chairman Manzullo. Could you stand up, please? Welcome.
Major General Klugh. Thank you, sir.
Mr. Glassman. Before I describe the progress we have made,
I would like to thank Congress for creating the National
Veterans Business Development Corporation. Many members of the
veterans community have been working on this endeavor for over
a decade, and Members of your Committee have been involved with
this legislation for the last three years.
However, I must note our corporation, which is one of the
products of these efforts, is now only in the seventieth day of
our funding. While the law was fairly specific in its direction
to the corporation and board structure, clients to be served
and coordinating role with public and private resource
partners, it was less specific as to how we should implement
the directive for the corporation to become self-sustaining in
a four-year period.
That gives the independence to achieve self-sufficiency in
a variety of ways and the opportunity to evolve into an
organization with a broad reach into the veterans community.
The corporation intends to act in the same entrepreneurial
manner, spirit and ethic which we are tasked to provide to the
4,000,000 veteran owned businesses, 300,000 service disabled
veteran owned businesses and the 200,000 members of the
military transitioning to the civilian sector each year.
We intend to carry through this entrepreneurial ethic in
all our activities. For example, the corporation will provide
expanded entrepreneurial technical assistance to veterans,
including service disabled veterans. One path to that goal is
to provide veterans with a virtual technical assistance center
by creating a user friendly website that will provide
information, links to service providers and contracting
opportunities in the public and private sectors.
In addition, we will establish community based veteran
business assistance centers in partnership with key service
providers throughout the U.S. We will seek to export the
federal three percent service disabled veteran procurement goal
to the private sector in the form of a set of procurement
principles.
I would like to turn to some of the concrete steps we have
taken to build infrastructure. This law was signed on August
22, 1999. Our first board members nominated by Congress and
appointed by the President met in September, 2000. Since that
time, the board has been meeting on a quarterly basis.
Presently there are eight volunteer private sector
directors with one seat open. In 2002, there will be two more
vacancies and three more in 2004. To assist in furthering the
goals of this corporation, it is most important that the new
members be individuals who have built and managed successful
businesses, have raised capital, are familiar with the new
economy and in a technological sense have the ability to think
out of the box.
Furthermore, some of these members should have broad
backgrounds in state and federal government and procurement
expertise with these entities. I cannot overstate the
importance of finding the most qualified individuals to be
board members in order to ensure the continued success of the
corporation.
Our present board members represent private industry, state
and non-profit service providers. They are veterans of World
War II, Korea, Vietnam and peacetime service. Additionally,
there are three non-voting directors representing DOD, VA and
SBA. I particularly want to thank Mr. Elmore at my right here,
the associate administrator for Veterans Business Development
at SBA, for his contributions.
In March of 2001 when we received the appropriated funds,
we continued to develop the corporation's infrastructure. We
hired interim staff, established bank accounts, secured
temporary office space. We are also conducting a national
search for a permanent CEO. We have retained an accounting firm
specializing in providing financial services for non-profit
organizations. We are in the process of securing services for
printing database design and fund raising.
In the next few months, we anticipate we will provide
written materials for our customers and for fund raising
purposes, build the website and reach out to our federal
partners to coordinate our activities.
We have retained VetSolutions to develop our strategic
plan. VetSolutions is a national business development firm
providing training and consulting and research services to
veteran owned businesses. Founded by three disabled Vietnam
veterans with extensive backgrounds in business, program
development and veterans affairs, these gentlemen were involved
in the legislative and planning process underlying P.L. 106-50.
As part of the planning effort, they have interviewed board
members, staff and major stakeholders. When approved at our
next meeting, we expect that plan to be the corporation's road
map for future activities.
While my written submission speaks to the infrastructure
and framework we are building, it should be remembered that the
most important component is the strategic planning effort of
how best to employ an amount of funding that is approximately
ten minutes worth of the VA budget.
While this legislation can be viewed narrowly task by task
on behalf of the veterans we are serving, I prefer to look at
it through a wide angle lens, to think of it as an investment
program with the federal government as its lead investor. In
this context, it may arguably be said that this public/private
initiative may be the most important piece of social venture
capital since the GI bill.
On a personal note, I would like to extend my thanks.
Thirty years ago I was a beneficiary of that GI bill, and I
would not be privileged to be presenting to you were it not for
the wisdom of the Congresses that preceded you.
I wanted to say a personal thanks. When I returned from
Vietnam, the GI bill was an enormous help to pay my graduate
school tuition, and I wanted to extend my thanks for that.
[Mr. Glassman's statement may be found in appendix.]
Chairman Manzullo. I bet you never thought you would be
testifying before Congress 70 days after you got started.
Mr. Glassman. I hardly know how to respond to that.
Chairman Manzullo. You already have.
Our next witness is Blake Ortner. Blake is the associate
legislative director of the Paralyzed Veterans of America.
Welcome, Blake. We look forward to your testimony.
STATEMENT OF BLAKE ORTNER, ASSOCIATE LEGISLATIVE DIRECTOR,
PARALYZED VETERANS OF AMERICA
Mr. Ortner. Chairman Manzullo, Ranking Member Velazquez,
Members of the Committee, the Paralyzed Veterans of America
appreciates this opportunity to testify regarding the
performance of the Small Business Administration's assistance
for veterans.
The issue of small business ownership is important to PVA.
PVA's members are veterans disabled by catastrophic injury or
diseases. The many challenges still facing individuals with
disabilities as they seek employment have resulted in an
unemployment rate higher than that of any other category of
citizens in the United States.
The lack of benefits provided by traditional employers
often make it more difficult for the disabled to enter the work
force. Small business ownership and self-employment is a bridge
for many of these individuals.
Last year, when PVA testified, we believed the SBA had been
unreasonably slow in implementing P.L. 106-50. Admittedly, SBA
has moved forward. The National Veterans Business Development
Corporation awaits only one more appointment, and funding has
been secured. In addition, PVA believes the veterans have a
strong and supportive voice in Bill Elmore and the staff at the
Office of Veterans Business Development.
Unfortunately, few other improvements have been made. It is
the belief of PVA that the culture at SBA, if not anti-veteran,
is certainly no more than veteran neutral. SBA simply pays lip
service to supporting veterans.
S.B.A. has not pushed for the regulations needed to
implement P.L. 106-50. The missteps of the FAR Council are a
prime example. Section 502, paragraph 2, clearly states that
the government wide goal for participation by small business
concerns owned and controlled by service disabled veterans
shall be established at not less than three percent of the
total value of all prime contract and subcontract awards for
each fiscal year.
The FAR Council chose to ignore this clear statement and
instead wrote regulations which only included service connected
disabled veterans as a part of an overall goal. Where was SBA
monitoring of the regulation process that allowed a not less
than three percent to become a goal to only include service
disabled veterans?
When it was determined that a technical amendment was
necessary, SBA did not aggressively pursue this change and, as
far as PVA is aware, discussed the amendment with only one
Democratic Member. This again demonstrates SBA's traditional
indifference to veterans.
These delays in regulations can be disastrous for veterans'
businesses. An additional regulation is at OMB and waiting to
be published. I am told it should be published in the next few
weeks, nearly two years after passage of P.L. 106-50. These
regulations apply to Section 402, Assistance to Active Duty
Military Reservists, and concern the availability of loan
deferments and disaster assistance funds for small businesses
who have service members ordered to active duty.
These regulations need to be implemented quickly. Military
operations involving reservists have been ongoing, and the next
two months will see approximately 3,000 members of the National
Guard and Reserves from 18 states, including myself, mobilized
for duty with peacekeeping forces in the Balkans. The
availability of these disaster loans can make the difference
between a business surviving or failing during a soldier's
deployment. Mr. Chairman, I want the men and women that I
command concentrating on the mission and not the condition of
the checkbook back home.
There also seems to be some questions whether National
Guardsmen qualify for these mobilization benefits. A mobilized
National Guard unit is a federal entity and is treated as such.
To make a distinction between these two reserve forces is
unfair.
Mr. Chairman, what can SBA do to change its direction? PVA
would like to see, one, special loan product for disabled
veterans, programs such as micro loans and procurement
initiatives aimed directly at veterans, particularly disabled
veterans.
Two, the expansion of veterans' business outreach. PBA
fears that with the creation of the NVBDC, SBA now believes it
need not concern itself with encouraging veterans' businesses
because someone else can do it. Mr. Chairman, the corporation
in no way relieves SBA of its obligation to veterans to provide
congressionally mandated services.
Third, resources for significant outreach. In Washington, a
department or office's budget often details its importance. PVA
awaits the fiscal year 2002 budget of the Office of Veterans
Business Development. This funding level will be an indication
of any change at SBA.
The previous Administration had provided no fiscal year
2001 funding for the Veterans Office. However, some funding was
secured by this Administration to allow for some programs. PVA
views this as a question of priorities, and so often it seems
that SBA's priorities do not include veterans.
Finally, we ask the Committee to closely oversee the
activities of SBA's veterans' programs and require SBA to abide
by congressional mandate. Unless SBA is held accountable for
providing quality programs to veterans, it will continue the
indifference it has shown in the past.
Mr. Chairman, veterans deserve quality services whether in
health care, prosthetic devices or advice in training on small
business ownership. At the SBA, veterans should be the priority
and not just an afterthought.
I thank the Committee for this opportunity to present PVA's
views and would be happy to answer any questions.
[Mr. Ortner's statement may be found in appendix.]
Chairman Manzullo. Thank you very much. There is a Major
General back there going amen, amen.
Mr. Ortner. Thank you, sir.
Chairman Manzullo. We have to give them more than 70 days.
Mr. Ortner. Absolutely.
Chairman Manzullo. What I hope to do is to either have a
follow up hearing or assemble everybody in our office, our
joint offices, to make sure we monitor and give the support
that you need and make sure the job gets done.
Our next witness is Anthony--is it called Eiland or Eiland?
Mr. Eiland. Eiland.
Chairman Manzullo. Eiland, special assistant for Veterans
Employment of the Veterans of Foreign Wars of the U.S.
Mr. Eiland, welcome.
STATEMENT OF ANTHONY L. EILAND, SPECIAL ASSISTANT, NATIONAL
VETERANS EMPLOYMENT POLICY, VETERANS OF FOREIGN WARS OF THE
UNITED STATES
Mr. Eiland. Chairman Manzullo, Ranking Member Velazquez,
and Members of the Committee, thank you very much for inviting
the Veterans of Foreign Wars to have an opportunity to speak
today before the Committee and also to address how important we
think that the Small Business Administration's dealings with
the board is.
Mr. Chairman, for some veterans the normal routine of the
job environment is not a practical or feasible solution for
employment. For these veterans, most disabled, self-employment
is not just a dream, but also a necessity for ensuring the
peace of mind that comes from providing a secure atmosphere and
livelihood for themselves and their family members.
For these courageous individuals, Public Law 106-50 was
created to be a tool to enable them to succeed in returning to
the work force as taxpaying employers with the goal of creating
more small business to stimulate economic growth in our
communities. To make this a reality, Congress instituted one of
the most potentially effective initiatives ever, the Veterans
Entrepreneurship and Small Business Development Act of 1999
and, in turn, the Small Business Development Corporation.
The VFW sees the Veterans Entrepreneurship and Small
Business Development Act of 1999 as the first step of many in
repairing the trust between the government and the veterans'
community. We look forward with hope that not only will this
letter of the law be protected, but also the purpose of the law
will be enforced. In addition, it will also help to streamline
the process to ensure that the veterans community, that the
veteran and the disabled veteran will be seen as a valuable
resource and an asset to the economy as a small business owner.
Mr. Chairman, many veterans have harbored the belief that
the Small Business Administration has either been blind or
simply ignorant to their small business concerns, especially
those of disabled veterans. They feel they have had nowhere to
turn for support or guidance in establishing private ownership,
let alone assistance in maintaining a small business.
They were in turn forced to deal with a bureaucratic agency
that, in their opinion, did little to address and support their
wishes, problems or needs, let alone supply confidence and
faith in long-term solutions in establishing veterans'
ventures.
Yet not all this blame should be placed on the shoulders of
the Small Business Administration. During the mid 1980s, VA
provisions for small business loans were eliminated from the GI
bill benefit. Public Law 96-237 required the Small Business
Administration to provide for special consideration for
veterans in all its programs.
Regretfully, however, veterans who have contacted the
Veterans of Foreign Wars and reported there are no such special
considerations for them whatsoever at the SBA. This is because
the Small Business Administration has no direct lending program
for veterans, and there are no federal development grants for
veteran entrepreneurs, disabled or not.
The need for direct financial support in acquiring starting
capital is the number one request we receive from the veterans
in respect to small business questions and inquiries. This is
the reason why the Veterans Small Business Corporation is so
vital to attacking the heart of this problem to get not only
answers for veterans on small business questions, but also
putting them in a position to find sources for financial
revenue.
Yet in their defense, the Office of Veterans Business
Development within the SBA has been making positive strides in
improving the way they do business. Their relationship with
other agencies has been a catalyst for change as evidenced in
their meetings of cooperation with the Centers for Veterans
Enterprise and the Department of Labor to improve internal
relations through better communication and fact sharing.
Another positive change has been their attending sponsored
meetings with the VSOs such as the Task Force for Veteran
Entrepreneurship and providing updates of policy status and
developments. In addition, I would like to say their role as a
resource has greatly improved as evidenced through our dealings
with their office. They have been effective and been very
``hands-on'' in directly assisting veterans recommended by the
VFW.
There are still many considerations that need to be seen
and problems that must be addressed? First, the Veterans
Business Development Corporation has not had all of its
positions filled. This needs to be done immediately or as soon
as possible because this is hindering them from doing the job
the best they can.
Secondly, it also risks opening up a door of doubt and
criticism by thinking they are not going to do anything. This
factor alone has caused doubt in the uniform communication and
collaboration among all the involved parties. It does not seem
like anyone is talking to each other, even though in fact at
the VSO level we see they are.
The Veterans Business Development Corporation is finally
now just getting underway after a long and arduous process.
Another discrepancy is the failure to have the Advisory
Committee appointed and put in place. The VFW is very
disappointed this issue has not been treated with the sense of
urgency that it deserves.
This lack of initiative and inaction on the part of the
Small Business Administration is robbing the board of directors
of valuable insight and counsel to help focus its energies
towards raising much needed capital to get the corporation
moving forward.
Mr. Chairman, we need to maintain the proper perspective
that Public Law 106-50, the Advisory Committee and the
Corporation exist solely for one reason and one reason only; to
help veterans, especially disabled veterans, establish
independent small businesses and become as self-sufficient as
possible.
Veterans, especially disabled veterans, are a valuable
resource that has not been fully utilized to its maximum
potential by the private sector. Therefore, they should be
allowed to capitalize on their own skills and abilities to
succeed.
Thank you. That concludes my testimony. If you have any
questions, I would be more than happy to answer them.
[Mr. Eiland's statement may be found in appendix.]
Chairman Manzullo. Thank you very much. I appreciate that.
Our next witness is William Crandell, director of
Government Relations for the Association for Service Disabled
Veterans.
Welcome, Mr. Crandell.
STATEMENT OF WILLIAM F. CRANDELL, DIRECTOR OF GOVERNMENT
RELATIONS, ASSOCIATION FOR SERVICE DISABLED VETERANS
Mr. Crandell. Thank you. Good morning, Chairman Manzullo
and Ranking Member Velazquez and Members of the Committee.
The Association for Service Disabled Veterans commends you
for holding this important hearing today to ask what P.L. 106-
50 is accomplishing. ASDV's goal is to create opportunities for
service disabled veterans through economic participation. P.L.
106-50 was the product of a great deal of work done by this
Committee and the veterans community. Senior civil servants at
SBA still ignore the mandates of Congress to afford veterans
special consideration.
Congress wrote into black letter law a requirement that
federal agencies pursue a goal of awarding three percent of
contracts and subcontract awards to companies owned and
controlled by service disabled veterans. Well, some will, and
some will not. SBA has allowed agencies to file goals in
writing--in writing--with as low as zero percent. Without
regulations, bureaucrats think of laws as cute ideas.
The FAR Council drafted regulations which said in print
that everybody could ignore the law and its content. We still
have no final FAR regulations to make the law operable after
two years. Congress directed that reports to and from SBA would
keep separate data on businesses owned simply by veterans and
those owned by service disabled veterans.
Once 106-50 was enacted, ASDV and the Bank of America
negotiated a memorandum of understanding with the administrator
of SBA to create a veterans outreach program in every Bank of
America office through the small business development centers,
the SBDCs, that SBA supports. SBA did not follow through.
SBA had planned to fund some nine staff at the Office of
Veterans Business Development and ended up with a shop of only
six. ASDV urges SBA to restore full funding to the Office of
Veterans Business Development. We will put more money into the
coffers than we will take out if you will give us a fair
chance.
I have four more points. SBA should perform certification
of businesses owned by veterans as seamlessly as possible at no
cost to the business. SBA must enforce the three percent
contracting goal for every federal agency. ASDV has found
federal contracting officers willing and eager to support this
goal, but they are told they have no regulations, no authority
to give contracts to qualified service disabled veterans.
Qualify the surviving spouses and children of service
disabled veterans who take over family businesses for the three
percent goal in government contracting. It will cost the
government nothing.
ASDV is concerned about the direction of the National
Veterans Business Development Corporation. The corporation
should use its congressional funding to create a larger capital
fund for veterans and especially service disabled veterans
whose access to capital and technical assistance has
traditionally been limited.
Invest in making the SBDCs responsive to the needs of
veteran entrepreneurs. Every federal agency needs to be
encouraged from above to really look for veteran owned and
service disabled veteran owned businesses as suppliers. ASDV
can help them. Nobody responsible for procurement should
receive a bonus if the agency fails to award its full three
percent of contracts to veterans as required by law.
Mr. Chairman and Madam Ranking Member, we have made some
real progress with the enactment and partial implementation of
P.L. 106-50, but nothing like what Congress intended. We want
SBA to serve veterans in good faith. Thank you.
[Mr. Crandell's statement may be found in appendix.]
Chairman Manzullo. Thank you very much.
Our next witness just got here. Rick, it is a good thing
you were the last person to testify, as opposed to the first.
Rick Weidman is director of Government Relations of the
Vietnam Veterans of America. Good morning, and welcome.
STATEMENT OF RICHARD WEIDMAN, DIRECTOR, GOVERNMENT RELATIONS,
VIETNAM VETERANS OF AMERICA
Mr. Weidman. Good morning, Mr. Chairman. There is no
excuse, and I offer none, sir. There were reasons involving an
unbelievable series of mishaps, including having no idea that
the pay lot out here has become a permit lot, which
necessitated a long search for parking, but I do beg your
pardon, sir, and it will not happen again.
Chairman Manzullo. I was not giving you a hard time. I was
just teasing you, you understand. I am going to reset the clock
for the full five minutes.
Mr. Weidman. Mr. Chairman, first of all, on behalf of
George C. Duggins, VVA's national president, I wish to offer on
behalf of all of us at VVA congratulations on taking over the
chairmanship of this Committee. It is an important post, and I
know that based on certainly our experience with you and your
leadership, extraordinary leadership on Gulf War veterans, that
you will do right by veteran entrepreneurs and particularly
service disabled veteran entrepreneurs in the future.
Congresswoman Velazquez, Mr. Pascrell, thank you very much
for the opportunity to offer our views here today. Much of the
history has been recapped by the distinguished colleagues to my
right, so I will not go through it again here in the oral
statement except to say the ironic thing of the not good
history since 1954 of the SBA and veterans and particularly
during the 1960s, 1970s and most of the time since is that the
SBA was really born out of the VA.
It was a very small New Deal agency that was put together
with the Veterans Business Loans and other programs for
veterans at the VA by President Eisenhower, and that became the
Small Business Administration with some added resources.
Veterans were pushed from the center to the epicenter, if you
will, of all services. This has harmed not only veterans who
were would be entrepreneurs and veterans who are entrepreneurs
within our country. It has harmed America by not taking
advantage of the extraordinary skills that veterans bring to
the marketplace.
The most recent history, as was covered in 1998 in response
partly to an oversight hearing of a Subcommittee of the full
Committee conducted by Mr. Bartlett and in cooperation with the
Subcommittee on Benefits of the House Veterans Affairs
Committee, then Administrator Alvarez named a task force, if
you will, of people to look at what special consideration meant
and make recommendations.
There was an extraordinary effort on the part of the
veterans community, SBA staff and other interested parties that
resulted in 21 recommendations that covered, all facets of the
SBA, which was delivered just before Veterans Day, 1998.
The problem subsequent to that was that all of the promised
action which was supposed to be taken by the end of December or
beginning of January did not take place, and while we did not
have contact directly with Ms. Alvarez we did with senior
staff, including the current acting administrator, and no
action on anything. We asked that they convene and pull people
back together to at least discuss where we were, and that also
fell on deaf ears.
Thanks to Senator Bond and Senator Kerry, we were given the
hearing room of the Senate, your counterparts on the Senate
side, the Small Business Committee, and a number of veterans
organizations and other advocates came together.
Out of that came the Task Force for Veterans
Entrepreneurship, which includes some almost 30 veterans
organizations, private businesses, other interested parties
like National Organization of Competency Assurance, et cetera,
who worked very closely with the staff of the Committee onboth
sides of the aisle, both on this Committee. Primarily on this
Committee, but also in cooperation with the House Veterans Affairs
Committee under the overall leadership of the Honorable James Talent
and Ms. Velazquez to develop 106-50, which is an extraordinary piece of
legislation.
The extraordinary vision put forth is just that:
Extraordinary. It leads us in the direction that we have been
wanting to go, providing the adequate assistance, a hand up, if
you will, to veteran owned businesses and would be veteran
entrepreneurs and those who need self-employment for the
future.
The problem is that the devil is in the details. Not a
single part of 106-50, with the exception of creation of the
Office of Veterans Business Development and the appointment of
Mr. Elmore, has in fact been accomplished. There are two sets
of regulations that are currently stuck at Office of Management
and Budget. One is the final procurement regulations that
contains the ``fix'' that the Committee and Committees on Small
Business so graciously provided to us late last fall having to
do with service disabled veterans procurement.
The other has to do with implementing the assistance to
members of the Guard and Reserve who are small business owners
or self-employed who get activated, which is certainly
important to our overall defense under the total force concept
with which our military now operates. Both of those are stuck
in a bureaucratic maze, if you will. We are told that logjam
will probably not be broken until sometime in the fall.
Regulations on all the rest of the aspects of P.L. 106-60,
including activity by SCORE, including activity by the SBDCs,
et cetera, in fact has not reached the person on the street.
The man or woman who shows up at the Small Business Development
Center in Queens or shows up at the Small Business Development
Center in Illinois does not know if they are not told that
there are special services there because they are veterans. In
fact, many veterans do not know where to go.
The word is not getting out. The actualization of the
vision put forth by this Committee, by all of you, Mr.
Manzullo, has not been effectively realized in any manner,
shape or form.
As I mentioned, on the positive side there were several
things. We did get funding for the National Veterans Business
Development Corporation. We have tremendous confidence in Mr.
Glassman and his leadership, and I am sure that by the end of
this year that the National Veterans Business Development
Corporation will be developing nicely.
We cannot say that about any other aspects of the bill,
which is really quite extensive and which when, and I say when,
implemented will change the whole nature of the way which SBA
itself and SBA funded entities do business in regards to
veterans, particularly service disabled veterans.
There have been no regulations or administrator's orders
that would implement all of the rest of the aspects of 106-50
in every area of SBA. To our knowledge, there is no information
gathering going on in each and every program for the
administrator's annual report back to you, Mr. Chairman.
Last, but not least, I would note on that, and then I will
leave it hopefully for questions, is that we need effective
regulations and other actions by the Administration. By the
Administration I mean not just the new Administrator when he
gets on board and is confirmed by the Senate, but rather by the
Administration that the three percent minimum goal is just
that. It is a minimum goal. It is a floor. It is not a ceiling.
Make it clear to the folks, if I may, who took your three
percent in black letter law which was established as a minimum,
and the intent of the Congress was crystal clear, and chose to
ignore it and put their judgement ahead of all of the Members
who on a bipartisan basis put this legislation into effect.
It is outrageous that they should be allowed to do so, Mr.
Chairman, and we would urge you to bring it to the attention
directly of the President in order that he may start to take
charge and start to turn this around by giving clear orders to
SBA that you will implement all aspects of 106-50 and not just
to the SBA, but to the heads of all other departments and
agencies.
In other words, do not leave this time bomb which was not
created by Mr. Barreto, in whom we do have confidence in from
what we know of him, as members of our task force have met with
him.
Chairman Manzullo. You are three minutes over time.
Mr. Weidman. I apologize, Mr. Chairman, for going over
time,----
Chairman Manzullo. That is all right.
Mr. Weidman [continuing]. But I did want to bring that out.
Chairman Manzullo. I understand that.
[Mr. Weidman's statement may be found in appendix.]
Chairman Manzullo. Let me first of all thank you all for
coming. Let me tell you the way I look at this thing. I have
problems with Congress passing laws and then leaving it up to
bureaucracies to draft regulations. That is garbage. I have
instructed my staff to prepare an amendment to this bill and
try to expedite it so that the legislative language is self-
executing. I am not going to wait for the bureaucrats.
I did not come here to wait years to pass a law and wait
for some bureaucrats to issue regulations. That is not what
this thing is about. This is a simple bill. It is very simple.
I have seen regulations issued that simply parrot the language
in the bill.
The fact that the Civilian Agency Acquisition Council said
that they could ignore the law and its intent is because the
law is based upon fulfillment when the regulations are issued,
so I am going to ask that the six people here get together on
your own and come up with self-executing language.
In other words, in this bill where it says the regulators
shall, you draft for me your idea of what the language should
be. Are you with me? Do you understand what I am saying?
I am not going to wait for the SBA on this. I am not going
to wait for anybody. When a war happens, we do not put people
on hold to send them off to battle. Here is language in the
testimony, and I believe, Anthony, it is yours. No. Bill
Crandell. It says absent regulations, bureaucrats think of laws
as cute ideas. Do you know where all the money is going? It is
to pay bureaucrats to issue regulations.
I would like you to work on that. If you could get us
language within 30 days, and I will sit down with Mrs.
Velazquez and see if we can come up with a bipartisan bill on
this and try to expedite this and get this language through.
The second thing----
Ms. Velazquez. Mr. Chairman, if I may?
Chairman Manzullo. Yes?
Ms. Velazquez. Let me just say this to you. You know, the
hearing and the purpose of this hearing today is to find out
where we are on this legislation and the execution of this
legislation. Of course, yes, welcome to Washington. There are a
lot of bureaucrats here.
Do you know what? When we have legislation that creates a
new program, it does not happen overnight, the implementation
of such a program, so I think that the hearing today will give
us some light as to where we are and what needs to be fixed.
Let me just remind you, and I welcome you to read a study
that my staff conducted last year about the failure of the
federal government in terms of the procurement opportunities
and the goals for small businesses, minority owned businesses,
women owned businesses, disadvantaged owned businesses. Five
percent is the statutory goal.
Not even 1.5 percent was achieved, so this is not only
about your program. This is something that we need to correct
about different other programs. This is just not the failure of
the SBA regarding your program.
We need to do a lot of correction here that might require
future legislation, but in terms of the implementation of this,
the purpose today is to find out where we are. If we need to
bring OMB or if we need to bring FARC here and find out where
we are and what needs to be done, then we will do that for
every single thing that we have not accomplished.
This law was signed in 1999. The money is there that you
made reference to. You said that the previous Administration--
it was not the previous Administration--did not appropriate the
funds for the first fiscal year. It was not the previous
Administration. It was the people here in Congress, those who
were in charge of the appropriation process, and they were not
Democrats.
Thank you, Mr. Chairman.
Chairman Manzullo. You can tell there is a lot of passion
up here.
Ms. Velazquez. Sir, this is a bipartisan Committee, and we
work in that fashion. This legislation was not passed only by
Republicans. We worked collectively because we need to bring
fairness and equity to veterans, but do not come here and try
to bash some previous Administration. Just let us bring the
facts and see where we are.
Chairman Manzullo. I do not think that was the issue. The
issue was that it has taken two years, and no one has lifted a
hand to draft a regulation. A lot of these people are career.
They are in under Republicans and Democrats. I do not care who
they are.
I just think that there has to be a way to pass laws to
make these things work, as opposed to relying upon the
regulators to come up with the standards.
Ms. Velazquez, I want to tell you how much I appreciate
your leadership on this. Our full Committee is going to be
spending probably 50 percent of our time on procurement. We had
a very highly spirited hearing on Berets.
With the goals for fiscal year 2000 of 23 percent of small
business procurement, that is $40 billion coming out of DOD,
five percent for small disadvantaged business, five percent for
women owned business. Regardless of how you feel about whether
these are called set asides or whatever, what we have decided
to do at the full Committee level is to focus on the
procurement of the federal government.
With the issue of the Berets, it is a disgrace what DLA has
done, and now most of those seven contracts have been
terminated because of poor quality or because of foreign parts.
I mean, this is $40 billion worth of money that should be going
in the hands of the small business people.
We share your concern, but I also want you to do something
else besides the language. I want you to prepare for me a two-
page guideline that can be handed out to any veteran in this
country on how a veteran can obtain assistance to start or
continue in his or her own small business. We will prepare the
document, and we will submit it to the veterans association,
and we will ask them to adopt that language in getting it out
to the VA centers.
We have an opportunity here to do something. We obviously
have a lot of energy, a lot of competence. Major General, I
understand your background is in procurement. We will rely upon
you heavily, sir, in this constant battle that we have against
the government.
Mrs. Velazquez.
Ms. Velazquez. Mr. Ortner, I would like for you to clarify
something that I read in your testimony. Are you advocating for
disabled veterans to be included in the 8(a) program?
Mr. Ortner. Yes, ma'am. That is more of a long-term goal. I
actually had a portion concerning that in my oral testimony. I
was going to go into it, but did not have the opportunity.
Ms. Velazquez. I read it. Let me just share this with you.
You know, you came here last year, and you asked for a
contracting procurement goal and subcontracting goal. In some
cases we have provided you greater advantages than what
participants in the 8(a) program enjoy.
For example, 8(a) firms receive no special treatment as far
as lending, and now you come back to us and ask us to be
included in the 8(a) program. I have to tell you that that is
not for me. That is my position.
I am going to give you one number only so that you realize.
You know, the 8(a) program has been designed for minority
businesses to enter the federal marketplace and economically
and socially disadvantaged businesses. We have already seen
dollars to the 8(a) program declining, $500 million from fiscal
year 1999 to fiscal year 2000. Adding additional groups to the
8(a) program is only going to mean fewer contracts for all
those who are participating in the 8(a) program.
Sir, I do not think that that is a good idea. That is my
position. We could discuss it further, but every study that we
have conducted throughout the federal contracting opportunities
in the federal government is showing us that every year less
and less contracts from the federal government are going to the
8(a) participants.
Mr. William Elmore, in your written testimony you stated
that the number of SBA 7(a) loans to veterans declined by
almost 50 percent from fiscal year 1995 to fiscal year 2000.
Last week we conducted a budget hearing, and Mr. Whitmore, who
was representing the Administration, was also using the same
figures to show the decline in 7(a) loans since 1995.
If you go back to 1992, you will see that the 7(a) loans to
veterans increased substantially, over 130 percent, from fiscal
year 1992 to fiscal year 1995. Much of that increase occurred
in fiscal year 1995 when the one-page application was
implemented as part of the loan doc application.
The decrease that you speak of in your testimony began in
fiscal year 1996 when the fees for the 7(a) loans increased,
and now the President is proposing to raise the 7(a) fees for
fiscal year 2002.
You also stated that as a result of this and other declines
in program activity levels, you were reviewing the program to
ensure that it is properly serving all small businesses,
including veteran owned businesses. Does this review include
the present proposal to raise fees on veterans?
Mr. Elmore. The review that we have conducted thus far has
focused on SBA services and resources, including loan products,
that date back in some ways back to 1973. Most of the data we
have been able to find so far dates back to 1990; what we have
looked at is veteran participation in the 7(a), in the 504, in
what used to be the direct and HAL loans, and also in the micro
loan program.
The recommendations that we have developed that are
presently working through the SBA and then ultimately through
OMB and then to Congress tries to address what we have seen as
a decline in veteran loans generally across the agency.
I did not look at, nor did I know I should look at, the
implementation of fees in 1996 that may have impacted loans,
but we will certainly look at that.
Ms. Velazquez. But do you now see a correlation between the
implementation of fees and the decrease in 7(a) loans?
Mr. Elmore. I did not look for that, and I am not sure that
I would see that. I certainly have seen a reduction in loan
activity for veterans, and it has significantly accelerated
over the last five years. You are right. It was not just 1995.
Ms. Velazquez. Particularly in 1995, sir, when fees were
imposed to the 7(a) loan program.
I hope that you go back, review this factor, and after that
I welcome that you advocate on behalf of small businesses and
veteran small businesses and ask the Administration not to
impose fees because every time that we impose fees on SBA, the
7(a) loan program, that will drive veterans away from that
program.
Mr. Elmore. I should mention that as we reviewed the loan
products we have understood now that about 60 percent of the
loans that go to veterans are under $150,000, so I do not
believe there were fees increased on that level of loan.
I have not year by year gone back to see if that number has
increased or decreased in percentage, so we will do that as
well.
Ms. Velazquez. Sir, 1996 was from the bottom up,----
Mr. Elmore. Okay.
Ms. Velazquez [continuing]. So I will ask you to go back
and check those numbers.
Mr. Elmore. We will do that.
Ms. Velazquez. Thank you.
Chairman Manzullo. Thank you. Let me get Mrs. Kelly in
before the bells go off and get the rest of the Members.
Mrs. Kelly. Thanks, Mr. Chairman.
Mr. Elmore, I would like to know what the SBA's level of
procurement is from veterans. Do you have that figure?
Mr. Elmore. The SBA's procurement itself?
Mrs. Kelly. Yes. The SBA procures things.
Mr. Elmore. Yes, ma'am.
Mrs. Kelly. How much do they get from the veterans? How
much does your----
Mr. Elmore. At this point----
Mrs. Kelly [continuing]. Office for Veterans Affairs
procure from veterans?
Mr. Elmore. Since I got there, we have done no procurement
out of my office specifically. We are certainly preparing to do
some procurement, and what does not go through our district
offices is targeted to veteran owned small businesses, but we
have not let any contracts out yet.
Mrs. Kelly. In the past, if you look at the past records,
have you any information on that?
Mr. Elmore. I do not have that information, but I will ask
my staff to dig it out.
Mrs. Kelly. Get that information for us, will you?
Mr. Elmore. I will do that.
Mrs. Kelly. Is there a set aside for disabled veterans?
Mr. Elmore. No, ma'am, there is not.
Mrs. Kelly. So it makes no difference? It is just a veteran
or a disabled veteran either one?
Mr. Elmore. From my office's perspective, we will look
first to a service disabled vet. Not finding one that could
deliver the good or service or product we need we will then
look to a veteran owned small business. If we do not find that,
we will go out beyond that.
Mrs. Kelly. Is there any special effort made in that
search?
Mr. Elmore. Certainly there is a special effort by me and
my staff. We have identified 80,000 veteran owned small
businesses, and they will be the ones that we will notify when
we have procurement opportunities specifically out of my office
if they want to bid on those or compete for those.
Mrs. Kelly. How do you notify them?
Mr. Elmore. So far we have e-mail addresses for about
20,000 of those firms, and we have already been notifying them
of other procurement information and the activities of my
office. If we need to, we will go out in writing to them.
Mrs. Kelly. But so far you have not?
Mr. Elmore. No, we have not, ma'am.
Mrs. Kelly. Will you do that?
Mr. Elmore. Yes.
Mrs. Kelly. I think it is very important that the veterans
get the information early enough, that anyone from the agency
gets the information early enough that they can put together a
bid for the product that you are looking for and specifically
with the veterans, especially if you are dealing with disabled
veterans who may have reasons to have to have something else
done.
For instance, if they have problems with hearing or
problems with sight, there may be a need for an earlier
notification, and I think it is very important that your agency
focus on that.
Mr. Elmore. We will do that, ma'am.
Mrs. Kelly. I do not know if you are aware of it, but you
may not know that I offered an amendment to the bill that was
accepted by voice vote in the markup that would require you to
put together information on the veteran participation in the
federal government procurement process; that you would collect
that and disseminate that to procurement officers.
I am concerned about educating procurement officers about
your intent at the Small Business Administration to do this
with veterans. To my way of thinking, veterans have a higher
priority in the procurement process than almost anyone else in
the entire United States.
I would hope to hear from you that you are going to
implement a high education process, not only here in this
country, but internationally because goods can be shipped on an
international basis, and our agencies and our representatives
in the various nations are also in the procurement process.
Will you do that?
Mr. Elmore. Yes, we will. We are planning a training
conference late this summer at the end of August, and we will
include procurement, procurement officers, contract officers
and such as part of that conference.
Mrs. Kelly. Mr. Glassman, I just want to ask you. Has the
Veterans Business Development Corporation raised any funds,
tried to raise any funds, in the interim? I read your
testimony. You have this master plan to meet the objective of
raising money. Have you done that? Have you done anything in
the interim?
Mr. Glassman. We are putting together proposals to go out
in a whole range of national funders. We would like to go out
to with grant proposals to probably 20 different institutions,
so initially we would probably go out in a context of seeking
foundation funding for people who areinterested in
entrepreneurship, people who have a focus on disability. Beyond that,
our plan is to eventually go to some of the chief vendors, to VA, to
DOD.
Mrs. Kelly. But basically what you are saying is your plan,
you intend to, you have not done?
Mr. Glassman. We are in the seventieth day of our funding,
so we have----
Mrs. Kelly. I understand that.
Mr. Glassman. We are commencing to hire the folks that will
do the fund raising.
Mrs. Kelly. I would hope you do that rapidly. There is a
need to get this ramped up and off the ramp. We have to get
this thing going. I hope that you will do that very quickly.
I yield back the balance of my time, Mr. Chairman.
Chairman Manzullo. Okay. Mr. Pascrell, you are next.
Did you want to get a quick question in? That is between
the two of you.
Ms. Velazquez. Yes. Thank you, Mr. Pascrell.
Mr. Glassman, in your written testimony you stated that
106-50 was less specific on the direction the corporation shall
take to implement the directive requiring the corporation to
become self-sustaining within a four year period.
This direction gives the corporation the independence to
achieve self-sufficiency in a variety of ways and the
opportunity to evolve into an organization with a broad reach
into the veterans community. Does the rest of the panel agree
with this view of the independence provided to the corporation?
Mr. Crandell. If I may, that was one of the more important
parts of that construction as far as ASDV was concerned. It
needed to be--needs to be--a very independent agency.
Congress still and the Presidency still have the power of
appointing new board members when that comes up. It is not
beyond control obviously, but it becomes a very independent
entity that will be able to carry out its mission as the
directors see fit.
Ms. Velazquez. Yes, sir?
Mr. Weidman. It was specifically designed that way in
working with Mr. Talent and your folks. Ms. Desiree Linson,
from your staff, Congresswoman Velazquez, helped a good deal on
that.
It brought a lot of questions because there has never been
a federally created entity precisely like the National Veterans
Business Development Corporation. It is truly designed to be a
public/private partnership and to have the ability in fact to
not just raise money in the form of grants and donations and
for services, but receive funds back which will then be plowed
right back into helping other disabled veterans and other
veterans in general.
It deliberately at least from our point of view within the
veterans community was nebulous, and I believe that that was
also Mr. Talent's and your intent insofar as we understood it
and similarly with Senator Bond and Senator Kerry.
Ms. Velazquez. Do all of you still support the self-
sustaining provision within the law?
Mr. Weidman. We would urge, from Vietnam Veterans of
America, that the match requirements be delayed a year because
the funding, initial funding, was delayed; therefore, to give
them more time.
I will say in all of the communications we have had with
Mr. Glassman and with his board, we have urged him not to think
in terms of $4 million match money, but think in terms of $40
million and within just a very short period of time, like less
than five years, in terms of $400 million.
It is in fact possible. It is an idea whose time is right
that will bring creative activities that could not, frankly, be
done by any federal entity to the problems that are needed to
make sure that we assist all sectors of the veterans community
wherever they may be from New York City to Illinois to southern
Jersey.
Ms. Velazquez. Any other comments? Yes, sir?
Mr. Glassman. If I could make a comment? I feel as though
that probably what you refer to as vagueness is probably one of
the more empowering pieces of the legislation.
Ms. Velazquez. Sure.
Mr. Glassman. To me, it is going to allow us culturally,
financially, presentationally, to most resemble the private
sector, to think out of the box, if you will.
The question a few moments ago from Congresswoman Kelly I
thought spoke to the opportunity. SBA's total budget I was
reading is $30 billion. Three percent, $900 million, should go
to service disabled veteran owned businesses.
It would be our goal to find and build the veterans
electronic marketplace, a platform on which you will find every
conceivable set of services and products that service disabled
veteran business run.
When we build such a platform, we economically, our
corporation, will start to develop the self-sustaining
revenues. To think of business engines, and we could if I had
endless time go after one idea after another.
To think about a whole set of business engines is
ultimately to complement what I call just the straight fund
raising. There is only so far you are going to get on
patriotism. You better have some solid business ideas. This
better be a venture in which people can see the self-sustaining
characteristics to be successful.
Ms. Velazquez. So, Mr. Glassman----
Yes, sir?
Mr. Crandell. If I might just comment on that electronic
enterprise view? For service disabled veterans, you have in an
awful lot of cases people who work best in an environment of
self-employment or an environment where they can sit at
something electronic. There is a lot that folks can do in this
direction.
Ms. Velazquez. One last question.
Chairman Manzullo. Let me get on to Mr. Pascrell, and then
we can come back.
Ms. Velazquez. Mr. Chairman, just related to the same
question.
Chairman Manzullo. It is up to you. That is fine. It is
your time.
Ms. Velazquez. At the end of the fourth year, you will not
come back to us saying we need more money?
Mr. Glassman. That is my fervent goal is to come back to
you and only be asking for your support for ways in which we
can become more commercially viable, but not to ask for any
additional funding. We may ask you for lots of things, but not
for money.
Ms. Velazquez. Stakeholders?
Thank you, Mr. Chairman.
Chairman Manzullo. Those are great questions.
Ms. Velazquez. Thank you.
Chairman Manzullo. Mr. Pascrell?
Ms. Velazquez. The mood in Washington is fiscal
responsibility, right?
Chairman Manzullo. That is correct.
Mr. Weidman. Mr. Chairman, if I might just add to that? We
may not come back and ask you for more money for the National
Veterans Business Development Corporation, but we may indeed
come back and ask you for more money for the Office of Veterans
Business Development.
$750,000 simply does not cut it in terms of what is needed
to help the entire agency and indeed the whole federal
government implement 106-50, so we will be coming to you for
more funds and support in that effort, but it will be for the
main force activity that would operate out of the
administrator's office and out of the associate administrator's
office, ma'am.
Mr. Pascrell. Thank you, Mr. Chairman.
I want to associate myself with the words you just heard
because there was a change in funding in terms of the
difference between the office and corporate activities. We need
to understand in 2001 what that difference is. $750,000 speaks
for itself. It speaks for itself.
I also want to associate myself, Mr. Chairman, and thank
you for having this hearing today, with Congresswoman Kelly
concerning veterans' preferences and three percent. We talk
about veterans' preference in terms of personnel throughout
many states of the union. We talk about veterans' preference in
terms of procurement, and that definition, the meaning of that,
is changing every year in terms of our expanding possibility.
My first question is to Mr. Elmore. Are you able to fulfill
your responsibility under P.L. 106-50 with the current staff
allotment?
Mr. Elmore. 106-50 is, from my view, a very comprehensive
bill. We are implementing. I think it really becomes a matter
of the time frame that it takes to accomplish everything the
law intends.
I am enthused that the new Administration, who pays
particular attention to veterans in small business, is going to
support the kinds of resources we need to fully implement 106-
50, but, bluntly, it is taking some time, and it is going to
take more time.
Mr. Pascrell. So you can fulfill the responsibilities with
the present staff that you have?
Mr. Elmore. I can fulfill them, but we are working
weekends, working lots of hours, and I am probably going to
wear some people out.
Mr. Pascrell. I can only interpret your answer to be no,
you cannot.
Mr. Crandell. Mr. Pascrell, if I might speak for the
veterans community, no, they cannot.
Mr. Pascrell. That is what I figured.
Mr. Crandell. We all know the position that Bill Elmore is
in this morning.
Mr. Pascrell. I am sorry?
Mr. Crandell. We all know the position that any
administrator is in this morning with regard to that question,
but I think he has given you a----
Mr. Pascrell. What possible position other than telling us
what it is? What other alternatives are there?
Mr. Crandell. I think a number of us would hate to be
federal administrators who needed to tell you no to that.
Mr. Pascrell. Really?
Mr. Crandell. I think it might be a rule of the game.
Mr. Pascrell. Well, that is hopefully what we want to cut
through and get to the nucleus and the center of, and that is
why I asked the question.
I was not asking the question to put you on the hot seat.
You are already there. I asked you the question because I think
it is pertinent to all that we have discussed on this Committee
through various discussions on different issues as to budgets,
to parts of the SBA and your specific responsibilities, and I
think it is an important question. I think that the responses
speak for themselves.
Let me go on to my second question, Mr. Elmore.
Mr. Elmore. Yes, sir.
Mr. Pascrell. Many of the requirements of this
comprehensive law are being fulfilled. You have touched upon
this, but how is the SBA advertising these services to
veterans?
You know, when we dealt with part of the new veterans law
bill that has passed through the House of Representatives
sponsored by Representative Smith from New Jersey, the chairman
of the Veterans Committee, there is a part of that legislation
which deals with the veterans right to know, which we were able
to get into that, and I think vets have a right to know what is
available, what benefits there are that many times they do not
take advantage of. Fifty percent of the veterans do not know
what their benefits are, and I am being charitable with that
number.
The question I am asking you is how are you deciding to get
out and advertise particularly in business matters what is
available? You started to talk to us about that. You made a
list of examples of outreach.
I think that the best point of contact with veterans are
health and hospital facilities where this information should be
made available when a veteran does not come in to look for such
information, but we provide it to him, and this usually leads
to a dissemination of information. Have you tried that?
Mr. Elmore. We have tried it in cooperation with one of our
partners in the MOU. We are working with the Department of
Veterans Affairs, also with the Department of Labor, of course,
with SCORE and the ASBDC as well, to try to ensure that the
information does get out there.
I will tell you that I am not completely satisfied that
there is enough yet. I think we do need to reach to the broader
veterans community, and I think we also need to reach to the
next veterans, i.e., the men and women who are still serving
this nation, and try to ensure that they also have access to
the information.
Incrementally we are getting there, but, bluntly, we have
not gotten completely there yet.
Mr. Pascrell. We have a database of veterans. In my
district there are 40,000 veterans. We have a database. You
have a database of who these veterans are throughout the United
States of America for the most part. It is not perfect. No
database is perfect.
You know, I often wondered what it would take to send
veterans, individual veterans, rather than wait until they come
in to be serviced and then tell them what else is available,
which we do now.
Mr. Elmore. For the most part.
Mr. Pascrell. I often wondered what it would cost. Is that
up front cost really worth it? Is it not really worth it to
disseminate this information? I know the Veterans
Administration has talked about well, then we will have a run
on all of our services. Exactly.
I think this is important, particularly in the area of
health where we are talking about closing down facilities
because they are under utilized because the people that can
utilize them do not know how to utilize them. It is almost
bordering on criminal, Mr. Chairman.
I have one more area.
Chairman Manzullo. What I would like to do is to let Mr.
Phelps have five minutes, and then we can take more time. I
just want to make sure everybody----
Mr. Pascrell. If I could just finish out my last question?
Mr. Elmore. Could I respond, if you do not mind, to Mr.
Pascrell's points?
Chairman Manzullo. Yes.
Mr. Elmore. There are two things. First off, I have been
privileged to be the SBA's representative at the corporation's
board meetings, and I think they will become the database, if
you will, for where the veterans are and whether they are
findable. Bob addressed that earlier.
For the other point, I will be a little bold here. I would
love the opportunity to disseminate information about our
services and programs through the newsletters of Members of
Congress. I think that might present one of the very best ways
that we could reach the breadth and the depth of the veterans
community across this great nation.
Mr. Pascrell. Mr. Chairman, we have become the satellite
offices for the INS. What would be a much more valuable
situation to America is if we become satellite offices for all
of our veterans.
My final question is this; very quick and very simple.
Would you support the waiving of all fees to all veterans with
regard to business applications and proposals? Can you support
that?
Mr. Elmore. I certainly cannot speak for the next
Administrator. This is one of the points that we have discussed
in the office, but I need to maintain obviously as much
flexibility for my next boss. That is one of the things that I
will talk specifically with him about.
Mr. Pascrell. Mr. Chairman, will you please entertain the
possibility of us getting a bipartisan legislation to waive all
fees for veterans with regard to the SBA?
Chairman Manzullo. We will entertain it, Mr. Pascrell. The
problem is that once you waive it for one group, then you have
all the other groups lining up. You have to figure out where
you are going to go on it.
Mr. Pascrell. Mr. Chairman.
Chairman Manzullo. Remember that we are on the same page--
--
Mr. Pascrell. Right.
Chairman Manzullo [continuing]. With regard to getting the
correct subsidy rate for the 7(a) Loan Program.
Mr. Pascrell. Right.
Chairman Manzullo. Once that model and the correct rate
comes in, that will lower it for everybody.
Mr. Pascrell. I would say though----
Chairman Manzullo. Appreciate that.
Mr. Pascrell. Mr. Chairman, you would agree, and I agree
and I associate myself with your remarks, but I think that you
would agree with me when I say you would have every other
group. The fact is that the veterans are a different group. Let
us not put them in with all the others.
Chairman Manzullo. Bill, I agree with that.
Mr. Pascrell. You agree with that. I heard you say that.
Chairman Manzullo. That is why we are having this hearing.
I want to go on to Mr. Phelps.
Mr. Phelps. Thank you, Mr. Chairman, for your interest and
aggressiveness in this area and panel members. Sorry I was a
little bit late. I am trying to catch up for fear of
duplicating questions.
Clarify something for me, Mr. Chairman. I am from Illinois.
We have a tendency to get right at the root of the problem and
make things maybe over simplified. I heard him say this is a
simple bill. I heard Mr. Crandell say, I believe, that it is
comprehensive. Those are not the same to me.
If it is comprehensive or simple, Mr. Chairman,
comparatively speaking how is this implementation time table to
other such legislation on track? Do the advocacy groups tell
us?
Chairman Manzullo. If you would yield, the Ten Commandments
are comprehensive, but it is also simple. The bill's intent is
simple, and they are comprehensive at the same.
Mr. Phelps. I just hope that whoever is in command of
making sure that this legislation is implemented, whether it
hinges on lack of funding or funding that was there and someone
has not moved when it was there or in lieu of the cuts that may
be affecting what happens, whatever is in play with all this,
you know, we need to know.
I think you people are key in this whole structure to be
able to tell us what we can do through legislation because we
have a tendency to want to pass legislation to improve things
and prove to people that we care, whether they recognize it or
not, but we may complicate the whole process while you are on
the verge of implementation.
I do not want to do that. I saw that happen back in the
state legislature where I came from in Illinois. We just have a
tendency to do that even with the sincerest intentions.
Can anyone associate their remarks to where are we
realistically on such a kind of bill comparatively speaking?
Mr. Weidman. If I may suggest, Mr. Phelps, as the Chairman
noted, Public Law 106-50 is both comprehensive, and yet it is
straightforward and simple. Much of the law is very close to
being self-executing, and we worked very closely with the staff
of this Committee to make sure that it was close to self-
executing.
In fact, the Secretary of Transportation could pick up that
section on procurement and implement it right now on the black
letter law. We will be glad to follow through and make sure and
certainly work with Committee staff on both sides of the aisle
to make sure everything is there.
Insofar as the provisions that affect every single program
of the SBA, they have not issued a directive. They have not
issued an administrator's order. They have not done any
guidance or any training of their own staff; never mind the
small business development centers, et cetera, and SCORE and
right on down the line.
Mr. Phelps. And it is not because they do not have the
resources to do that?
Mr. Weidman. It is primarily something of will, we would
suggest, Mr. Phelps.
Not a single one of the 21 recommendations. A number of the
folks at this table worked very hard on the task force, and we
are grateful to Ms. Alvarez for the opportunity, but not one of
those 21 recommendations was ever implemented.
No administrator's order came, and it is currently not in
effect for implementing Public Law 93-237, Special
Consideration. We could go on and on.
Chairman Manzullo. Could you yield? Could you yield on
that?
Mr. Phelps. Sure.
Chairman Manzullo. Is that under your jurisdiction, Mr.
Elmore, to issue the administrative orders----
Mr. Weidman. Administrative orders would have to come from
the administrator him or herself, sir.
Chairman Manzullo. What is it, a letter?
Mr. Weidman. It is essentially----
Mr. Elmore. If I might? In 1983 or 1982, excuse me, the
then Administrator Sanders issued an Administrator's order to
implement special consideration for veterans, their dependents
or survivors with a specific series of steps and things that
would be done.
The regulations that flowed from that order were eliminated
in 1995, and we have discussions now about going back and
revisiting those. The recommendations that I am preparing
presently for the next Administrator I will urge him to include
in a new administrator's order. Bluntly, I have not had an
Administrator to go to.
Chairman Manzullo. So that is what you are waiting on?
Mr. Elmore. That is correct.
Mr. Phelps. So where is the Office of Advocacy status? What
do they say? Do they have everybody in the same room, the
staff, and say look, this is what the goal is? Let us report
back. The time table is this. Is that happening?
Mr. Elmore. The Office of Advocacy is engaged in conducting
research about veterans' participation with SBA programs and
other programs and the kinds of businesses, they own those
kinds of things and we are cooperating with them on that.
Beyond that, I cannot speak for the Office of Advocacy.
Mr. Phelps. But even that brings me to a concern just
glancing without having the time in questioning the accuracy of
veteran owned businesses. We say we have 300,000 service
disabled veteran owned businesses, and yet the recent ProNet
search only shows that there are 2,532 such businesses listed.
Mr. Elmore. If you go back, and I went back and did a
review of all the materials I could find for at least the last
11 years of SBA programs. I went back further than that. I went
literally back to 1953.
For example, the census data that is now available on other
categories of small business ownership from 1997, I believe it
is from memory, did not include veterans information. The 1992
and the 1988 information did.
Everywhere you look there is a significant lack of timely
information regarding veterans. This is why my office is in
fact developing specific recommendations and working with each
office in the SBA to at least start gathering the right kind of
data.
The data is not there. I readily admit that. We readily
admit that. We are trying to change that now.
Mr. Phelps. I have no other further questions. It is pretty
lengthy, I am sure.
Mr. Chairman, if it is true, following Mr. Pascrell's
comments, that our offices could be used as satellites at least
for awareness and so forth, and I never use the franking
privileges, the newsletters, in my office. I did in the State
House. It can border on campaign abuse, I think.
You know, if it is true that we can serve that niche, if
they can just transfer the funds to our office to get that done
I would be willing to consider franking.
Chairman Manzullo. I do not send out a newsletter either.
Let me conclude. We have asked for a couple of things. The
first thing is that if the five or you or six of you or whoever
else you need could get together and come up with draft
legislation--I mean, feel free to use our office; we can vet it
through the Office of Legislative Counsel--to make this entire
bill self-executing. That is the first thing.
How much time do you think you need on that? Thirty days?
Sixty days?
Mr. Weidman. Thirty is plenty, sir.
Chairman Manzullo. You can do it in 30 days? Okay.
Then the next thing is maybe a brochure exists with the VA.
I do not know. There is so much literature out there, and it is
so confusing. A brochure that would say you are a vet, and you
want to go into business. Something simple like that.
Why don't the six of you sit down and devise that? Come up
with the actual brochure itself, even though the information in
there may yet not be available because Mr. Glassman's 70 day
old organization needs a little bit more time to get going on
it, but if you could do that within the same period of time
then we have some guideposts.
Mr. Weidman?
Mr. Weidman. Mr. Chairman, I would assume that you would
not object. I would be remiss in my role as current chairman of
the Task Force on Veterans Entrepreneurship, which includes all
those groups, and we also work very closely with the American
Legion, even though----
Chairman Manzullo. That would be fine.
Mr. Weidman [continuing]. They are not formally affiliated.
We would like to work through that group and make sure that we
get there with a united front behind you and Ms. Velazquez if
we may, sir.
Chairman Manzullo. That is excellent. Let us come up with a
product ourselves.
A third thing is, Mr. Elmore, I think you can relate to
this. Whenever a business person gets something from the
government it is put over here, and then the political
solicitations for money are put over here, and then the bills
are put over here. Normally, when I practiced law and I would
get something from the Department of Agriculture. I did not
read it.
Back home we have a huge exporting congressional district.
We bring in from time to time Trade Counsels General to have
partnerships with foreign countries. We will send out 1,100
solicitations, and five people respond.
You know, we can identify every single veteran business.
You can send a mailing to every single one. The response rate
would probably be about the same. I am not saying it should not
be done, but e-mail is absolutely incredible. Twenty-five
percent of the people you have identified, Bill, are on the e-
mail, which is instant messaging. One person types a message,
and you push the button. There it goes with hardly any cost to
it.
It is not just so much trying to communicate with the
veterans. It is the best way to do it. Someone here testified
about some new technologies of communicating with those
veterans. That really has to be part of it. Whatever you can
do, we are open to suggestions.
Again, we want to thank you for coming here. We appreciate
your testimony.
This Small Business Committee is adjourned. Thank you.
[Whereupon, at 11:34 a.m. the Committee was adjourned.]
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