Seven years of war in Iraq and nine years of conflict in Afghanistan have taken its toll on the men and women who have served there, with the number of disabled veterans jumping by 25 percent, or 2.9 million people nationwide, since 2001.
Of those, 181,000 are veterans of the two wars in in Iraq and the current conflict in Afghanistan, while nearly one million are veterans of the Vietnam War. Once they left the service, many of these disabled veterans wanted nothing more than to get on with their lives, and the government, in many ways, has stepped up to help them. But there are still roadblocks and bureaucratic shortcomings that haven’t given our vets the support they need to thrive post-service.
For instance, Congress enacted The Veterans Benefits Act of 2003 which established a program, administered primarily by the Small Business Administration, that awards set aside and sole-source government contracts to small businesses controlled by one or more service-disabled veterans.
For all of its noble efforts, the program, and many like it has fallen short of its promises, and in some case have become victim to scandal. Late last year, the Government Accountability Office released a scathing report that found the program vulnerable to widespread fraud and abuse.
Millions of dollars in taxpayer money that should have gone to honest disabled veteran-entrepreneurs were instead pocketed by imposters, who broke the rules and gamed the system to get contracts, according to House Small Business Committee Chairwoman Nydia M. Velazquez, D-NY.
“When you consider the sacrifices our service-disabled veteran entrepreneurs have made, the findings of this report are nothing short of appalling,” she said when the report was released last November.
The 10 firms indentified in the GAO investigation had received roughly $100 million in contracts earmarked for disabled veterans through fraud or abuse of the program (or sometimes both). In most cases, disabled veterans were used as fronts for large and even multi-national companies, yet in one instance, the firm’s owner was not even a service-disabled veteran.
Widespread fraud in the program was only half the problem. The GAO investigation also found that the SBA and other agencies involved in the procurement process had few or zero safeguards in place to prevent fraud and abuse. In one of the bitter legacies of the Bush administration, the SBA’s fraud prevention efforts had been decimated by budget and staffing cuts.
In a separate hearing last month before a subcommittee of the House Veterans Affairs Committee, Scott Denniston testified on behalf of the National Veteran-Owned Business Association (NaVOBA), which represents more than 2,000 small business owners across the country, who are veterans.
Denniston, who is NaVOBA’s director of programs, noted that the 2003 law set aside 3 percent of all federal contract awards for disabled-veteran small businesses, but the statute never provided guidance or mechanisms to achieve the goal. To address that shortcoming, the Veterans Administration, on its own, established the Center for Veteran’s Enterprise to bring together veteran-owned small businesses, federal agencies, and prime contracting communities.
But the VA has never embraced the program from an “institutional” standpoint and hasn’t provided the resources to expand the program despite demand for its services growing from the influx of Iraq and Afghanistan veterans, Denniston said.
In another festering problem, the VA was tasked with setting up a computer program to certify disabled-veteran-owned firms as well as veteran-owned firms. The process is supposed to curb the fraud and abuse uncovered by the GAO report.
But getting verified “is burdensome, overbearing and so untimely as to cause serious financial strain on [the firms it’s supposed to serve],” Denniston testified. “Some of our members share stories and frustrations of the process taking over six months to complete, with the veteran applicant never being told where his/her application is in the process,” he explained.
The drastic recession has made the program’s problems even more acute. In the most recent hearing before the House Small Business Committee this week, Justin Brown, a lobbyist for the Veterans of Foreign Wars (VFW) highlighted the seriousness of the problems veterans face in the current economy.
As of February 2010, more than 1.1 million veterans are unemployed. The jobless rate among the youngest veterans is a staggering 21 percent, he said. More veterans are unemployed than are currently serving in both Iraq and Afghanistan.
For returning veterans, the prospect of starting a business is appealing. An SBA survey found that 22 percent of veterans were either purchasing or starting a business, or considering doing so. “However, for a veteran interested in entrepreneurship, the reality is quality resources are scarce, disjointed, and available to few,” Brown said.
Like any budding entrepreneur, access to capital is the biggest problem. The SBA has two loan programs targeted at veterans: the Patriot Loan Express and the microloan program.
The Patriot program makes up to $500,000 available for most uses, features low interest rates and qualifies for up to an 85 percent guarantee from the SBA. So you would think veterans would be flocking to the program. But since its inception, only 155 loans have been made nationwide, he said. One would speculate the lack of participation is most likely due to layers of red tape and low demand.
Microloans up to $35,000 are available to any small business that qualifies according to size guidelines, but since last October, only 53, or 5.32 percent, of the 997 loans have been made to veterans. Even more alarming is the fact that only three loans have gone to disabled veterans, according to Brown.
What’s more, although the 2003 law required the government to award 3 percent of all contracts to firms owned by disabled veterans, it has yet to meet that goal. Ironically, the Defense Department is one of the biggest laggards, Brown noted.
To their credit, lawmakers have attempted to address these problems. Two years ago it passed a law ordering the SBA to create an interagency taskforce to coordinate veteran small business programs. But the agency has yet to follow through.
In some case, however, Congress itself is the problem. The House recently passed the Job Creation through Entrepreneurship Act of 2009. Among its provisions, it would increase the number of veterans’ business centers around the country. But the bill has been stalled in the Senate by political infighting that is clogging the legislative agenda.
For veterans to succeed not only with federal contracts, but as small business owners, they need: training, capital, compliance, and interagency cooperation, Brown said. But today, despite their sacrifices, their options are limited. Federal agencies continue to ignore their public mandates and programs are still starved for funds. Surely, those who have given so much to their country deserve better.
by Keith Girard – April 8, 2010 – Copyright © 1999-2010 – AllBusiness.com, Inc. All rights reserved.
