After a decade of failure, the federal government still can’t hit the 3 percent SDVOB mandate. Although there has been steady improvement, it would still take until 2021 to reach the goal. With a new president in the White House, can this happen sooner?
This past August marked the 10th anniversary of the landmark Veterans Entrepreneurship and Small Business Development Act of 1999 (Public Law 106-50) that established a goal for all federal agencies to spend 3 percent of procurement dollars with service-disabled veteran-owned businesses (SDVOB). While the federal government as a whole has made progress and increased SDVOB spending each year (with the exception of 2002, see chart 1), the three percent benchmark is seemingly out of reach. In fact, the government as a whole has never even come close. The U.S. Small Business Administration (SBA) is responsible for the management and oversight of the small business procurement process across the federal government and negotiates with federal departments concerning their prime contracting goals and achievement with small businesses to ensure that small businesses have the best opportunity to provide goods and services to the federal government.
The Small Business Goaling Report documents the small-business procurement spending by each federal department. Each fiscal year, the SBA publishes Small Business Procurement Scorecards that provide an assessment of federal achievement in prime contracting to small businesses by the 24 Chief Financial Officers Act agencies. It also measures the progress departments are making to ensure small business opportunities remain an integral part of the acquisition of goods and services. The scorecard was designed to ensure federal agencies reach their small business and socio-economic goals, accurate and transparent contracting data is used and agency-specific progress is maintained.
Sorry Scorecard
The SBA recently released its scorecard for Fiscal Year 2008 and across 21 federal agencies with annual procurement budgets exceeding $500 million, the grand total spent with SDVOBs was a scant 1.48 percent. That’s not quite half of what is required by law. By contrast, the federal government spent more than 1.48 percent with eight individual businesses (see chart 2).
The most frustrating part for vetrepreneurs across the country (as if a decade of government failure isn’t frustrating enough in its own right) is the fact that there have been numerous other pieces of legislation passed to improve the effectiveness of the program.
The Veteran Benefits Act of 2003 (Public Law 108-183) improved upon PL 106-50 by adding section 308-36, which created the opportunity for contracting officers to award sole-source contracts to SDVOBs if certain criteria were met as part of the to the Procurement Program for Small Business Concerns Owned and Controlled by Service-Disabled Veterans.
In October 2004, President George W. Bush issued Executive Order 13360 to ensure federal agencies implement section 15(g) of the Small Business Act (15 U.S.C. 644(g)). In addition, EO 13360 mandated heads of all federal agencies to develop and implement a publicly available strategic plan that outlines how each agency will spend 3 percent of its procurement with SDVOBs and to report the agency’s performance to the U.S. Small Business Administration (SBA).
EO 13360 also required the SBA to “designate an appropriate entity” within the administration to coordinate with the Department of Veterans Affairs’ Center for Veterans Enterprise (CVE) to provide service-disabled veteran businesses information and assistance concerning participation in federal contracting and to advise and assist heads of agencies in their implementation of this order.
A $13 Billion Opportunity
Since 2001, government procurement spending has doubled (see chart 3). In fiscal year 2008, the federal government outsourced $527 billion. Of this total, $434 billion was available for contracting opportunities for small businesses. This creates $13.2 billion that should be spent with SDVOBs by law, but in 2008 only $6.45 billion went to these businesses.
During the 2008 presidential campaign, then Sen. Barack Obama addressed the issue and said ''I want to make sure that minority-owned businesses, small businesses, women-owned businesses, veteran-owned businesses are all being put, in fact, in positions where they can be competitive'' in terms of federal contracting.
Stimulating the Stimulus
With the recent passing of the American Recovery & Reinvestment Act of 2009, the opportunity for conducting business in the federal marketplace is now better than ever. On Feb. 17, 2009, President Obama signed the most sweeping government spending law in history designed to jumpstart the withering economy. According to the Senate Small Business and Entrepreneurship Committee, the bill increased funding for the SBA to $547 million – $47 million more than last year’s appropriation.
Representatives from five federal agencies testified March 12 before the House Small Business Subcommittee on Contracting and Technology concerning strategies to funnel stimulus package money to veteran-owned small businesses. Subcommittee Chairman Rep. Glenn Nye, (D) from Va. said the failures must stop.
utting government agencies on notice: We will not accept the tired excuse that the need to move hastily and the sheer volume of contracts resulted in an 'inadvertent oversight' of veteran-owned businesses," Nye said.
The White House issued a statement March 16 that emphasized the point that the “Obama administration firmly believes that economic recovery will be driven in large part by America’s small businesses…,” and outlined the measures the administration is taking in addition to the provisions in the recovery act.
So, has all the lip service translated into more SDVOB spending?
So far, So good
The news isn’t all bad. From FY 2007 to FY 2008, SDVOB spending increased by .47 percent across the entire federal government. This jump of nearly half of a percentage point is not only the largest single year increase ever; it also makes FY 2008 the best year ever for SDVOB spending.
In addition, the federal government has met and exceeded its stimulus package spending goals for SDVOBs. As of Oct. 2, 2009, 4 percent of the contract dollars awarded as part of the American Recovery & Reinvestment Act funding has been awarded to SDVOBs according to testimony before the Senate Small Business and Entrepreneurship Committee from Joseph Jordan, associate administrator for government contracting and business development at the SBA. Congruent with the federal law requiring 3 percent of all contract dollars to be spent with SDVOBs, the government is being closely monitored to ensure the vast funding issued out as part of the stimulus package is spent with SDVOBs.
It would be an easy excuse for federal agencies to use the recession as a reason to issue contracts quickly and forego the diligence of searching for and issuing contracts to SDVOBs. One percent above goal may not seem like a huge accomplishment, but it’s important to reiterate the federal government, on the whole, has never achieved the three percent goal in a decade of trying. To see a thorough breakdown of how the stimulus package money has been spent thus far visit www.navoba.com/stimulusmoney
Up and Coming Agencies
All told, four federal agencies did surpass the 3 percent goal individually: the Environmental Protection Agency (EPA), the Department of Veterans Affairs (VA), the Department of Labor (DOL), and the General Services Administration (GSA). FY 2008 is the first year that the GSA has achieved the goal and Federal Acquisition Service Assistant Commissioner William Webster, who leads the GSA’s 21 Gun Salute program, said he is honored.
“I am honored to lead GSA’s efforts in support of small businesses owned by service-disabled veterans,” Webster said. “It is a privilege to advance the mission and goals of this initiative. We help brave men and women who have put their own aspirations and safety second to our nation’s security and ideals. We believe these people deserve every opportunity to transition from being a warrior to a business owner.”
The GSA spent 3.93 percent of its procurement with SDVOBS and 6.34 percent with VOBs in FY 2008. The GSA provides a centralized delivery system of products and services to the federal government, leveraging its enormous buying power to get the best value for taxpayers. The agency is the largest purchaser of fleet vehicles for the federal government and it serves as a one-stop-shop for federal contracting officials seeking goods and services through its schedules.
Anthony Eiland, program administrator for the GSA’s veteran business programs, said GSA’s Office of Small and Disadvantaged Business Utilization (OSDBU) plans to increase opportunities for SDVOBs by hosting routine webinars to educate small businesses about the federal contracting process. To learn more about webinars and GSA programs visit www.GSA.gov or call Eiland at (202) 208-0257 or via email at anthony.eiland@gsa.gov.
Perennial Performers
Not surprisingly, the Department of Veterans Affairs (VA) is by far the best performing federal agency in terms of spending with veteran-owned businesses and those owned by service-disabled veterans. In FY 2008, the VA spent 11.76 percent of its procurement with SDVOBs and an additional 14.73 percent with VOBs respectively. This represents an increase of 65 percent in spending with SDVOBs from FY 2007. Part of the VA’s success is yet another piece of legislation, Public Law 109-461. This law requires the VA to set annual goals to award no less than 7 percent of all contracts service-disabled, veteran-owned businesses and 10 percent to all VOBs. In FY 2007, the VA attained its goals as it spent 10.37 percent of its budget with VOBs and 7.09 percent with SDVOBs.
“The VA works very hard to award contracts to SDVOSBs and VOSBs to the maximum practicable extent that we can,” said David Canada, senior procurement analyst of the VA’s OSDBU.“We are the leaders in the federal government for awarding contracts to SDVOB and VOB firms.”
According to a report released by the Government Accountability Office March 19, 2009, the “VA exceeded its prime contracting goals for SDVOSB and VOSBs in fiscal year 2007 and 2008, reflecting leadership commitment and broad-based agency efforts.” To learn more about PL 109-461 visit www.navoba.com/pl109-461.
The Environmental Protection Agency (EPA) was the only other agency besides the VA, GSA and DOL to attain the 3 percent benchmark. The EPA spent a total of 3.66 percent of its budget with SDVOBs, and 6.45 percent with VOBs. The General Services Administration (GSA) spent 2.34% of its procurement budget with SDVOBs and 5% with VOBs.
Room for Improvement
Although most agencies have been inching closer to the goal, many agencies have a long way to go. The Department of Health and Human (HHS) spent 0.70 percent of its budget with SDVOBs and 2.86 percent with VOBs. Nicholas Papas, spokesman for the agency said this will increase as the department is “committed to partnering with veteran-owned businesses and meeting the three percent goal.”
“We work closely with the Department of Veterans Affairs to ensure the VA can pass on information about contracting and procurement opportunities at HHS to veterans,” Papas said. “Additionally, HHS conducts an annual forum every November specifically designed for veterans and other business owners. At the forum, veterans can learn about the department, meet one-on-one with acquisition and program office personnel and meet with large prime contractors for potential subcontracting opportunities.”
The Department of Defense has been steadily increasing since 2003 the actual dollars it awards to VOBs, but in 2008 it only spent 1.05 percent with SDVOBs and 2.59 percent with VOBs. The Social Security Administration (SSA) spent 2 percent of its budget with SDVOBs and an additional 6.9 percent with VOBs and plans to increase these numbers.
“For [fiscal year] 2009, SSA contracting officers will reserve for SDVOSBs all of the acquisition actions that were awarded to SDVOSBs in 2008,” said Kia Green from the SSA National Press Office. “Additionally, SSA will send all of its FedBizOpps notices of solicitation to at least one SDVOSB. Finally, SSA will work with the SBA Office of Veterans Business Development to provide training on the SDVOSB program to SSA’s acquisition workforce.”
How Can Agencies Achieve the Goal?
Scott Denniston, director of programs for NaVOBA and former director of the OSDBU and the CVE at the VA, attributed the VA’s success to individual accountability.
“Accountability to me is the key ingredient,” Denniston said. “One of the reasons that we were successful at VA is that after [EO] 13360, meeting that 3 percent goal was part of the performance plan for anybody who touched the procurement process. So we got their attention. That’s what I mean by accountability because it gets down to the individual level.”
David Grove, spokesman for the National Aeronautics and Space Administration (NASA) said the agency hasn’t achieved the goal across the board, bt rewards success in the ares that do attain th benchmark.
“The NASA Office of Small Business Programs challenges the ten NASA Centers to achieve the 3 percent goal,” Grove said. “In FY2008, four of our centers achieved that goal and received awards for doing so. NASA will be updating its Veteran Strategic Plan that is posted to the web, extending our small business training program to not only contract specialists but program personnel, and implementing our new vendor data base to identify SDVOSB for market research to determine both set-asides and setting appropriate subcontracting goals.”
All agencies insisted that vetrepreneurs should learn as much as they can about what government agencies need in order to do business with the government.
“Do the market research so they understand who’s buying the products or services that they want to sell,” Denniston said. “You need a good marketing plan and you’ve got to be persistent.”
DID YOU KNOW? GSA's local Small Business Utilization offices are available to assist service-disabled veteran-owned small businesses throughout the contracting process.