Disabled vets seek to strengthen set-aside program.

Veterans organizations want Congress to give service-disabled veteran-owned businesses top priority in set-aside programs and make it easier to award sole-source contracts to those firms, said Rick Weidman, chairman of the Task Force on Veteran Entrepreneurship.

Service-disabled veterans' share of prime contract dollars increased to 0.28% in fiscal 2004, when the set-aside program was in place for less than half the year, up from 0.2% in 2003, according to Eagle Eye Publishers Inc. "In other words, federal agencies missed their (3%) SDVOB contracting goals by ... over 90%," said Eagle Eye President Paul Murphy.

But Weidman, who heads a coalition of several veterans groups, told Set-Aside Alert the figures may be inflated by double-counting. He said some agencies have discovered, for example, that a current 8(a) contractor is also a service-disabled veteran, so they count the existing contract in both categories, increasing their SDV numbers without awarding any new contracts.

Weidman said Congress needs to settle the question of priority among various set-aside programs. SBA regulations do not explicitly establish an order of priority among SDV, 8(a) and HUBZone companies. In the preamble to the rule implementing the veterans' set-aside, SBA said, "This regulation provides that the [contracting officer] should look at the 8(a), HUBZone, and SDVO Program before considering setting-aside the requirement for [other small businesses]." (SAA, 5/14/04)

The head of OMB's Office of Federal Procurement Policy, David Safavian, said he also believes disabled veterans should have first preference. (See story, page 1.)

Some procurement officials believe there are not enough qualified SDV firms to meet the congressionally mandated 3% contracting goal. In the past two years the number of SDV companies registered in the Central Contractor Registration has tripled to nearly 7,000, said Frank Ramos, director of the Defense Department's Office of Small and Disadvantaged Business Utilization.

But Eagle Eye's research shows that the top 25 SDV contractors received more than half the total dollars going to such firms in 2004.

Weidman said many service-disabled veteran business owners do not yet know about the set-aside program, and others have not registered because they don't want to get involved with the federal bureaucracy. He said that will change if business owners see a realistic chance of making money. "If you have the contracts, the veterans will come," he told a joint hearing of subcommittees of the House Small Business Committee and the Veterans Affairs Committee May 24.

The veterans' groups are urging Congress to make two changes in the set-aside program. They want to scrap the requirement that contracting officers seek competitive bids under the "rule of two," rather than awarding a sole-source contract; and they want the law changed to say agencies "shall" set aside a contract if a qualified SDV is available; the current law says contracts "may" be set aside.

Full implementation of the veterans' contracting program is "a moral, ethical and security imperative," John Lopez, chairman of the Association for Service Disabled Veterans, told the subcommittees.

Top SDVOB Contractors, 2004
(Millions of Dollars)

 1. Colsa Corp.                           49
 2. EMB Security LLC                      29
 3. Tessada & Associates Inc.             26
 4. Applied Marine Technology Inc.        24
 5. Ames Corp.                            23
 6. Syntectics for Management Decisions   20
 7. NLX LLC                               18
 8. Catapult Technology Ltd.              18
 9. K.O.O. Construction                   15
10. Ares Group Inc.                       15

Source: Eagle Eye Publishers