"I am easily satisfied with the very best."
Winston Churchill’s famous quote may seem a little pompous, but it drives home the notion that settling for anything less than the best is simply unacceptable. The veteran-owned business movement has enjoyed some major victories and some disappointing defeats over the last decade – but this fight is far from over. In fact, it’s just getting started. Until vetrepreneurs are given the very best of every opportunity our country can offer, the National Veteran-Owned Business Association will never be satisfied.
This year marks the tenth anniversary of the federal law, Public Law 106-50 or the Veterans Entrepreneurship and Small Business Development Act, which mandates that 3 percent of all federal procurement dollars are spent with service-disabled, veteran-owned businesses. This piece of landmark legislation was the defining moment that officially created SDVOBs as a diverse business class on par with minority- and women-owned small businesses and is generally accepted as the official start of the veteran-owned business movement.
This year also marks five years since NaVOBA expanded the veteran business movement away from purely focused on federal procurement to corporate America. In 2004, Rich McCormack and Chris Hale founded Veteran’s Business Journal. The focus of the magazine was to capitalize on the success of the federal legislation and create more opportunities for VOBs in the private sector. The success of the magazine led to the creation of NaVOBA and ushered in the transformation to Vetrepreneur.
"NaVOBA has identified and executed on the vetrepreneur-to-business (V2B) opportunity," said NaVOBA President Chris Hale, "At 50 corporate members, we’re not where we want to be, but we are making progress."
However, the origins veteran-business movement fight goes back a lot further than that. John Lopez was pivotal in creating the California Disabled Veteran Business Enterprise (DVBE) Participation Program. This law, passed in 1989, laid the foundation for PL 106-50, but the movement goes back even further than that.
The History of the VOB Movement
From 1967 until 1973, Lopez was running the Small Business Development Center in Santa Clara County. "That’s where Silicon Valley was born," Lopez said. "We saw them when they were tiny with one or two employees."
The California Governor at that time, Ronald Reagan, decided to run for president and Lopez went to work for his campaign but was re-hospitalized as a result of his injuries sustained during the Korean War. Lopez then decided to start his own printing business in 1979 after he got out of the hospital. In 1986, Lopez had been talking with other veterans at the VA hospital and nearly all of them were running their own businesses, so they decided to form a support group and the Association for Service Disabled Veterans (ASDV) was born.
"We realized as a group that we were all running into the same problems when it came to assistance programs," Lopez said. "We had no standing. We said, ‘there’s something wrong here.’ Everywhere we went we were told that ‘if you were a minority or a woman, we could help you, but as a veteran, you’ve got no standing,’ which, incidentally, is still a problem now."
Legislation is the Key
In 1987, Lopez sold his business for $1 to one of the other ASDV members so he could devote his attention to advocating for veteran-owned businesses. He then developed the legislation for the California DVBE program and started knocking on doors in the California Legislature.
"It wasn’t like today," Lopez said. "I got no positive response. None."
Lopez then decided to try his luck with the federal government since it was directly responsible for creating veterans. Lopez met the same frustrations in Washington, D.C. and was repeatedly told veterans had no standing. He said that since there was no law requiring government personnel to provide assistance, they simply wouldn’t.
"Nobody has to help you because it doesn’t say anywhere in the law that they have to," Lopez said. "They said ‘it’s not in the law. We don’t make laws, we just obey them. And if you’re not in the law, we’re not going to do anything.’ So, I put my tail back between my legs and went back home to California."
In 1988, Lopez met Ralph Dills who was the chairman of the General Services Committee in the California Senate at the time and an Army veteran. Lopez wrote the legislation that outlined the California DVBE program, but Dills agreed to be the official author and submit it to the state congress. Lopez testified and the legislation was passed. He said he was asked to travel to different states around the country to help get similar legislation passed, but he had a better idea.
"I decided to use what I learned from working with Reagan, the trickle down effect. If we could get federal legislation passed, it would trickle down to all the states."
Back to Washington
In 1992, Lopez met with Pennsylvania Congressman Joseph McDade, who was the ranking Republican on the House Small Business Committee. McDade agreed to sponsor the legislation in the House.
"He was a hell of a guy," Lopez said. "I mean, he cared about us. And he said ‘look, I’ll carry this thing for you. I know they’re slamming doors in your face, but I’ll help you. So we wrote this bill that was seven feet thick and he said ‘you stand back. Let me push this thing through."
Unfortunately, an opening became available on the House Appropriations Committee, and since McDade couldn’t be the ranking member on both committees, he left the Small Business Committee behind – simultaneously abandoning Lopez and the VOB legislation.
"That taught me a lot about Congress," Lopez said.
Then, Lopez met Jim Talent, a Republican from Missouri, who served as the chairman of the House Small Business from 1997 to 2001. Talent agreed to help with the bill and at this time, the Task Force for Veterans' Entrepreneurship (formerly Task Force, now known as VET-Force) was organized to advocate for the passage of PL 106-50. VET-Force Chairman Rick Weidman, another plank owner of the veteran business movement, worked closely with Lopez and Talent as well as other veteran service organizations on the task force and in 1998, the task force presented Aida Alvarez, administrator of the US. Small Business Administration (SBA) at the time, a series of 21 recommendations.
"She accepted 19 out of the 21 just before Veterans Day in 1998 in a big press event and pledged publicly that she would implement all of those by the end of 1998," Weidman said. "Well, nothing happened. It was getting close to the New Year and we couldn’t get them to call a meeting. We got upset and called our own meeting."
The SBA tried to tell the task force that it couldn’t hold a meeting unless the SBA called the meeting.
"Our reaction was ‘excuse me. We can call a meeting any damn time we want. We don’t work for you. This is America and that’s what we fought for," Weidman said.
"They told us to take a hike and we said ‘no’," Lopez said. "That’s when we learned that you can push back in Washington if you know enough and you have confidence and credibility. If you want to go on record as being anti-veteran, go ahead."
Lopez said that in 1999, the Republicans took over the congress and Talent became chairman of the small business committee.
"So he had power and he could push it through. If he hadn’t been there, we never would have got it because the previous leadership couldn’t care less about us," Lopez said.
Hale said the VOB movement’s biggest failure has been getting the federal government to obey the mandates established by the law and spend 3 percent of procurement dollars with SDVOBs.
"Numerous government and quasi-government agencies have been charged with making this happen," Hale said. "Nearly all, including SBA, the Veterans Corporation, and agency OSDBUs, have failed for ten straight years. More to blame are our politicians, who passed this law in 1999, and gained veteran voter favor as a result, have since lacked the political will to enforce it. It’s incredibly disappointing that these politicians have seemingly used veterans for political gain, then left them holding onto an empty promise that goes unfulfilled year after year after year."
In 1998, Anthony J. Principi was the deputy secretary at the VA (the department’s second highest position) and also served as the chairman for the Congressional Commission on Service Members and Veterans Transition Assistance. Principi asked Scott Denniston, NaVOBA’s Director of Programs who was working for the VA at the time, to serve on the Transition Commission providing recommendations about increasing support and enhancing business opportunities for veterans.
"That was, in my opinion, the foundation of this entire movement," Denniston said. "After the Transition Commission, we started working with Congress to write the laws that have gotten the veterans programs where they are today."
"Clearly, the creation of the veteran business movement has been its biggest accomplishment thus far," Hale said. "To that, all 25 million veterans, and over 3 million of us who own businesses, owe a tremendous debt of gratitude to John Lopez, Rick Weidman and other pioneers who ushered in this movement on a national level in 1999 with the passage of PL 106-50. Since then, our biggest accomplishment has been the inclusion of all veterans, regardless of disability status, at the corporate and state levels."
Many of the recommendations contained in the final report to Congress from the Transition Commission were incorporated into Public Law 106-50, the Veteran Entrepreneurship and Small Business Development Act of 1999 and Public Law 108-183, the Veterans Benefits Act of 2003.
For example, PL 106-50 led to the creation of the Center for Veterans Enterprise (CVE) in 2000, an organization committed to providing support for and creating opportunities for veterans interested in entrepreneurship.
In addition, PL 106-50 created the Office of Veterans Business Development at the SBA William Elmore was hired by the SBA in 2000 and presently serves as the associate administrator for Veterans Business Development. Elmore said the SBA administers 68 district offices with a veterans business development officer assigned to each. When the program began, the SBA provided assistance to 70,000 veteran-owned businesses. This number increased each year since the program began and in 2009, the SBA provided counseling and assistance to more than 270,000 veteran-owned businesses.
"There’s really been a quadrupling of the number of veterans seeking assistance," Elmore said. "Each year we do a customer satisfaction survey and for the first time in FY 2009, the 25-34 year-old age group was the largest demographic. This is the first evidence that this generation of returning veterans have the same interests and the same acumen as veterans from WWII and other generations."
In 2004, President George W. Bush issued Executive Order 13360 which ordered all federal agencies to implement strategic plans on how each agency planned to achieve its 3 percent mandate for SDVOBs and report its progress to the SBA.
Public Law 109-461, or the Veterans Benefits, Health Care, and Information Technology Act of 2006, is the most recent milestone from a federal legislation standpoint. This legislation gave priority to veteran-owned businesses in contracting with the VA and also gave the VA the authority to set its own goals. Presently, the VA’s spending goal is no less than 10 percent of procurement dollars for all veteran-owned businesses, regardless of disability status, in addition to a 7 percent goal for SDVOBs.
"We’ve got to get this across the whole federal government," Denniston said. "I really think for this thing to succeed, we need to have state and federal programs for all veterans, not just service-disabled."
Weidman agrees and said this is a major initiative for VET-Force.
"That is our goal to do that across the board," Weidman said, "To have veteran goals as well as SDVOB goals in every single agency."
By far, the biggest challenge facing the veteran business community is simultaneously its biggest opportunity. Ten years after PL 106-50 has been passed, fewer than 2 percent of all veteran-owned businesses have registered on the federal Central Contractor Registry database. And those VOBs that don’t do business with the federal government have not identified their veteran status either. There’s a great deal of wisdom in the old adage "there is strength in numbers." If the 3 million veteran-owned businesses in this country united under a common flag for a common purpose, there would be no limit to the potential political power and influence in corporate America.
"Let’s put the opportunities available to the vetrepreneur in some sort of perspective versus resources," Hale said. "When you count CVE, the veteran arms of SBA, PTAC and OSDBU, plus the Task Force, Elite, etc, I would argue that, as a VOB community, we’re easily allocating in excess of 90 percent of our total resources toward securing the federal opportunity. While the federal opportunity is the most important one, in that it serves as the movement’s foundation, we cannot afford to have water in our basement. We should not be allocating 90 percent of our resources to the greatest opportunity."
Creating consumer demand and influencing the American consumer public to buy from veteran-owned businesses is by far, the most lucrative opportunity for veteran-owned businesses. Consumer transactions account for two-thirds of the national gross domestic product. If 3 percent of consumer purchases went to VOBs, the opportunity exceeds $280 billion.
"We must each take personal accountability to spread the word that there is value and opportunity in declaring your business as veteran-owned," Hale said. "Taking a ‘Buy Veteran’ message to the general American populace permits small, Main Street-oriented veteran-owned businesses to derive value from the veteran business movement. NaVOBA is focused 110% on this in 2010."
Denniston said that identification is the key for the future success of the veteran business movement.
"It’s got to start with the veterans themselves," Denniston said. "They’ve got to identify and become aware of the movement and start pitching the movement at the local level."
Jones said preference programs are "merely a means to open the door to those who have generously served to protect each and every one of us."
Many Faces of the Movement
The main criticism of the VOB movement is that veterans are fragmented. While this may be true to some degree, it’s not entirely uncommon the early stages of large, national movements involving millions of people. But, it’s important to note that there will always be different groups that serve different purposes within the movement. Some advocate for legislation, some offer training and financial assistance, yet others work to increase demand and opportunities in the private sector.
"As time passes, the best ideas come to the surface, the best entities prevail, and participants find their respective strengths and roles," Hale said. "NaVOBA does this for a living. This is our full-time job and I think that shows. We devote our full professional attention to creating opportunity for veteran-owned businesses."