News From the
Committee on Small Business
Subcommittee on Contracting and Technology
Glenn Nye, Chairman

For Immediate Release                                                       CONTACT:  Alex Haurek; Duncan Neasham
July 15, 2010                                                                                           (202) 226-3636

Nye to Agencies: Stop Shortchanging Vets
We Must Honor Our Obligation to Our Veterans

WASHINGTON, D.C. —A Small Business Congressional Committee today explored ways to ensure that veteran-owned small businesses are able to win their fair share of federal contracts.  In 2003, Congress established the Service Disabled Veteran Owned Small Business (SDVOSB) initiative, which awards sole-source contracts to businesses owned by veterans injured in the line of duty. Rep. Glenn C. Nye (D-VA), who chairs the Small Business Committee’s Contracting and Technology Subcommittee, said that federal agencies should be proactive in using veteran-owned firms to meet government procurement needs.

“As our brave men and women return home from the wars in Iraq and Afghanistan, many of them will take the skills they acquired in the military, launch their own ventures and go into business for themselves,” Nye said.  “Veterans often already understand the procurement process and have skills that are in demand by the federal government.  When they are awarded contracts, it is a win-win for veterans and for taxpayers.”

During today’s hearing, it became clear that federal agencies have not met goals set in law requiring that they reserve three percent of their contracts for veteran-owned businesses.  Lawmakers also discussed the high degree of fraud that has been found in the SDVOSB initiative.  Last fall, a report ordered and overseen by the Small Business Committee, performed by the Government Accountability Office (GAO), found ten ineligible firms that should not have qualified for the program still collected hundreds of millions of dollars in SDVOSB contracts that should have gone to veterans. The audit suggested not only that fraud was widespread, but that there are not significant safeguards in place to root out and deter these abuses.

“If we are serious about honoring our commitment to our veterans, then the program designed to support veteran entrepreneurs must be more than an empty promise,” Nye said.  “We need federal agencies to step up to the plate and explain exactly how they intend to broaden their outreach to the veteran community, create more opportunities for veteran-owned businesses and ensure these programs work as intended.”

Nye has authored legislation to improve the SDVOSB initiative and encourage greater use of veteran-owned businesses for federal projects.  The bill, “the Service Disabled Veteran-Owned Small Business Procurement Reform Act,” would require the Small Business Administration to dedicate more resources to reaching out to legitimate veteran-owned businesses in order to encourage their participation.

It would also institute fines and criminal penalties for companies that game the system to cheat veterans out of contracts.

For video of today’s hearing, click here.

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