The Service-Disabled Veteran-Owned Small Business in the Federal Marketplace

Summary

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A. The Veterans Entrepreneurship and Small Business Development Act The Veterans Entrepreneurship and Small Business Development Act (VESBD Act) established a goal for all federal agencies to annually award no less than 3% of all contracts to small business concerns owned and operated by service-disabled veterans.15 In the years immediately following its enactment, the VESBD Act was largely ignored.16 Federal agencies, such as the Department of Defense, have spent billions of dollars in their procurement programs; however, only a small fraction of dollars were awarded as contracts to service-disabled veteran-owned business concerns.17 To explain this failure, agency procurement officials contended that they lacked an effective means by which to implement the law.18 To satisfy Congress's intent, the officials advocated for contracting methods to restrict competition exclusively among service-disabled veteran-owned businesses.19 The proposed solution included the use of contracting methods such as competitive set-asides and sole-source contracts.20 Unfortunately, the VESMD Act lacked any of the tools necessary to meet Congress's goal, and the status quo of the previous twenty-five years remained.21 The goal-to award at least 3% of all federal contracts to service-disabled veteran-owned small businesses-would remain elusive.22 In 2003, the situation improved only slightly when Congress passed additional legislation as an attempt to remedy the problem.23 B. The Veterans Benefit Act In response to the failure of federal agencies to meet the 3% goal, the 108th Congress passed the Veterans Benefit Act (VB Act) of 2003.24 The VB Act not only restated Congress's original intent to assist service-disabled veterans in federal contracting, but it also provided mechanisms to meet the law's objectives.25 The law authorized contracting officers to conduct competitive contract set-asides and sole-source procurements among service-disabled veteran-owned small businesses.26 Despite changes to the law, federal agencies still failed to achieve the 3% goal.27 To reinforce Congress's commitment to assist service-disabled veterans, President Bush signed an executive order the next year.28 C. Executive Order 13,360 On 20 October 2004, the President signed Executive Order 13,360.29 The order provided much-needed direction and a clear mandate to the heads of federal agencies.30 Agency officials no longer could ignore the legislative framework that Congress created to assist service-disabled veteran-owned businesses.31 In the order, the President outlined the respective roles for the Administrator of the Small Business Administration, Administrator of the General Services Agency, Secretary of Defense, Secretary of Veterans Affairs, and Secretary of Labor.32 The President also directed all federal agency heads to develop a "strategic plan" to implement the policies as prescribed by Congress.33 In the years immediately following the executive order the number of contracts awarded to service-disabled veteran-owned small businesses increased, but at a sluggish rate.

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The Service-Disabled Veteran-Owned Small Business in the Federal Marketplace

I. Introduction

Since 2001, more than 35,000 American servicemen and women have been wounded in combat around the globe.2 In addition to the combat wounded, other members of the armed forces have incurred injuries while in the line of duty.3 Annually, the defense disability system handles about 20,000 new compensation and pension claims.4 Many of these veterans are eligible for status as service-disabled.5

In recognition of the sacrifices of service-disabled veterans, Congress passed legislation to assist them in entering the federal marketplace as small business owners and operators.6 More specifically, Congress shaped a legislative framework that provides a competitive advantage to these veterans in federal contracting.7 The law puts into place a goal for federal agencies to annually award at least 3% of all procurement dollars to small business concerns owned and operated by service-disabled veterans.8 Unfortunately, government agencies continually fail to meet the 3% goal, even though contracting officers have the tools required to administer the program.9 To comply with Congress' intent, agency procurement officials must increase contracting opportunities for service-disabled veteran-owned small businesses.10

This article will introduce agency heads, contracting officers, Judge Advocates, and veterans to the laws and programs designed to assist service-disabled veteran-owned small businesses in federal contracting. To accomplish this goal, the first section of this article presents a summary of the laws intended to assist se...

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