[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
CONTINUING TO SERVE: FROM MILITARY TO ENTREPRENEUR
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HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
JULY 10, 2019
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[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 116-032
Available via the GPO Website: www.govinfo.gov
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U.S. GOVERNMENT PUBLISHING OFFICE
36-965 WASHINGTON : 2019
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HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELAZQUEZ, New York, Chairwoman
ABBY FINKENAUER, Iowa
JARED GOLDEN, Maine
ANDY KIM, New Jersey
JASON CROW, Colorado
SHARICE DAVIDS, Kansas
JUDY CHU, California
MARC VEASEY, Texas
DWIGHT EVANS, Pennsylvania
BRAD SCHNEIDER, Illinois
ADRIANO ESPAILLAT, New York
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
ANGIE CRAIG, Minnesota
STEVE CHABOT, Ohio, Ranking Member
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member
TRENT KELLY, Mississippi
TROY BALDERSON, Ohio
KEVIN HERN, Oklahoma
JIM HAGEDORN, Minnesota
PETE STAUBER, Minnesota
TIM BURCHETT, Tennessee
ROSS SPANO, Florida
JOHN JOYCE, Pennsylvania
Adam Minehardt, Majority Staff Director
Melissa Jung, Majority Deputy Staff Director and Chief Counsel
Kevin Fitzpatrick, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Nydia Velazquez............................................. 1
Hon. Steve Chabot................................................ 2
WITNESSES
Mr. Davy Leghorn, Assistant Director, The American Legion,
Washington, DC................................................. 5
Mr. Scott M. Davidson CPT, USA, Retired, Managing Principal &
CEO, The GCO Consulting Group, McLean, VA...................... 6
Ms. Torrance Harrington Hart, Owner, Teak & Twine, Springfield,
VA............................................................. 8
Ms. Laurie Sayles, President and CEO, Civility Management
Solutions, Greenbelt, MD....................................... 9
APPENDIX
Prepared Statements:
Mr. Davy Leghorn, Assistant Director, The American Legion,
Washington, DC............................................. 35
Mr. Scott M. Davidson CPT, USA, Retired, Managing Principal &
CEO, The GCO Consulting Group, McLean, VA.................. 40
Ms. Torrance Harrington Hart, Owner, Teak & Twine,
Springfield, VA............................................ 45
Ms. Laurie Sayles, President and CEO, Civility Management
Solutions, Greenbelt, MD................................... 47
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
Statement from Hon. Ross Spano - Speech on Veterans
Entrepreneurship Act of 2019............................... 57
IFA - International Franchise Association.................... 58
CONTINUING TO SERVE: FROM MILITARY TO ENTREPRENEUR
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WEDNESDAY, JULY 10, 2019
House of Representatives,
Committee on Small Business,
Washington, DC.
The committee met, pursuant to call, at 11:32 a.m., in Room
2360, Rayburn House Office Building, Hon. Nydia M. Velazquez
[chairwoman of the Committee] presiding.
Present: Representatives Velazquez, Finkenauer, Golden,
Kim, Crow, Davids, Veasey, Schneider, Delgado, Houlahan, Craig,
Chabot, Radewagen, Kelly, Balderson, Hern, Hagedorn, Stauber,
Burchett, Spano, and Joyce.
Chairwoman VELAZQUEZ. Good morning. The committee will come
to order. I am pleased to be chairing this hearing today to
discuss ways the Small Business Administration can help our
nation's veterans transition from the military to civilian life
by launching and growing a successful small business. Every
year, more than 200,000 of our nation's heroes make the
transition out of our military. Some pursue employment
opportunities, others go back to school or learn a new trade.
Some decide to pursue the American dream and launch a small,
innovative business. For these returning servicemembers, the
Small Business Administration can play a key role in helping to
turn their small business dreams into a reality.
Through their commitment to serving our country, veterans
develop an unwavering mindset that often makes them uniquely
suited to take on the challenges of starting a new business.
They are leaders, doers, and remarkably driven. Today's
veterans are the most educated and technologically trained
servicemembers ever, and often, they have firsthand exposure to
the government procurement process. This means we have a sector
of the population that is primed to be the innovators and
business owners of tomorrow. They have the potential to
strengthen our nation's economy, create jobs, and drive
economic growth.
Yet, despite the rich tradition of owning a small business,
starting and running a business can be challenging. Veterans,
like other entrepreneurs, face many obstacles. Finding
affordable access to capital, getting products to market,
developing a network, and finding new customers can prove to be
steep undertakings.
Even more troubling, we have witnessed the share of new
veteran entrepreneurs decline steadily from 12.49 percent in
1996, to 4.16 percent in 2016. Clearly, more needs to be done
to help our nation's veterans launch, grow, and succeed in
entrepreneurship.
For that reason, I am committed to improving the Small
Business Administration's programs to ensure they are
effectively serving our nation's heroes. I am pleased to
support a number of these measures--from lending to contracting
to training and counseling--that will make it easier, not
harder, for our veterans to get their businesses up and
running.
With approximately 2.5 million veteran-owned businesses
generating over $1 trillion, it is clear for many men and women
leaving the service that entrepreneurship provides a promising
path to continue serving their country, creating jobs in their
local communities while supporting their families. I am pleased
that we will have an opportunity at today's hearing to hear
from several veteran entrepreneurs about their firsthand
experiences with these programs.
I commend each and every one of you for your service to our
country. It is my hope that they can highlight for us what they
found beneficial, where improvements can be made, and identify
gaps in how these services reach veterans.
I thank all the witnesses for being here today. Your
testimony will help inform the committee as we work toward the
goal of supporting veteran small business ownership. With that,
I thank each of the witnesses for joining us today, and I look
forward to your testimony. I would now like to yield to the
Ranking Member, Mr. Chabot, for his opening statement.
Mr. CHABOT. I thank the Gentlelady for yielding, and for
holding this hearing today, and we want to thank the witnesses
for being with us. Today we are asking for input on what I
believe is a strong bipartisan package of bills that we hope to
mark up later this month. Again, I thank the Chairwoman for
conducting this process with bipartisanship. Each of these
bills has a member of both parties as an original sponsor and
co-sponsor.
One of this Committee's main goals when considering Federal
contracting matters is to streamline and reduce the red tape
small businesses must endure. So I would like to thank Mr.
Kelly and Mr. Crow for sponsoring H.R. 1615, the VA-SBA Act,
which will help accomplish that goal for veteran-owned and
service-disabled veteran owned small businesses. I would also
like to take this time to thank our colleagues at the House
Veterans Affairs Committee for their close collaboration with
this Committee on that matter.
H.R. 1615 eliminates duplication in contracting programs
between the SBA and the Department of Veterans Affairs. Both
operate separate, yet conflicting, verification programs with
different eligibility rules and regulations. These two
disparate programs create inconsistent outcomes and confusion
among veteran entrepreneurs. Last year, the House Small
Business Committee and House Veterans Affairs Committee held a
joint hearing exploring whether government-wide verification by
a single entity would be a viable solution. This legislation is
the culmination of those efforts.
I would also like to hear our witnesses' thoughts on my
bill, H.R. 499, which is designed to align how the VA and the
rest of the Federal Government treat surviving spouses of
service-disabled veteran small business owners. This bill
ensures that the surviving spouses of service-disabled veteran
small business owners can retain the company's special status
for a certain period of time after the death of the veteran
spouse. This policy is already codified in Title 38 of the
United States Code. However, there is a lack of parity between
Title 38 and the Small Business Act. I have heard from several
small businesses, including one in my district, that this
discrepancy creates legal uncertainty and confusion in the
application of this important policy. The bill aims to rectify
that.
Additionally, we will examine how the SBA administers
disaster loans to businesses that experience hardships and
economic losses because their employees enter military service.
Led by Representative Andy Kim of New Jersey, and
Representative Tim Burchett of Tennessee, the National Guard
and Reserve Entrepreneurship Support Act expands the businesses
eligible for a military reservist economic injury disaster loan
for those that have employees called to Active Duty to those
called for active service.
Finally, our Committee hopes to advance H.R. 3537, the
Veterans Entrepreneurship Training Act of 2019. This bill,
offered by Committee Members Schneider of Illinois and Spano of
Florida, amends the Small Business Act to authorize for 5 years
the Boots to Business program which helps transitioning
servicemembers launch and grow small businesses. This is
another example of how we can come together to advance
bipartisan legislation to serve those who served our nation so
proudly. I want to thank Mr. Spano and Mr. Schneider for their
work on that bill. And I am looking forward to the discussion
today, and I yield back, Madam Chairwoman.
Chairwoman VELAZQUEZ. Thank you, Mr. Chabot. The gentleman
yields back. And if committee members have an opening statement
prepared, we will ask that they be submitted for the record.
I would like to take a minute to explain the timing rules.
Each witness gets 5 minutes to testify, and the Members get 5
minutes for questioning. There is a lighting system to assist
you. The green light will be on when you begin, and the yellow
light comes on when you have 1 minute remaining. The red light
comes on when you are out of time, and we ask that you stay
within that timeframe to the best of your ability.
I would now like to introduce our witnesses. Our first
witness is Mr. Davy Leghorn. Davy Leghorn is the Assistant
Director of the Veteran Employment and Education Division of
the American Legion, the largest veteran service organization
in the United States. Mr. Leghorn oversees employment and small
business portfolios and administers the American Legion's
national veteran hiring initiative. He previously worked as a
National Appeals Representative for the American Legion at the
Department of Veterans Affairs' Board of Veterans' Appeals,
where he provided representation to veterans, their spouses,
and dependents in appellate hearings before the veterans law
judges. Mr. Leghorn also served as a mortar infantryman in the
Army. Thank you for your service and thank you for being here
today.
Our second witness is Mr. Scott Davidson. Mr. Davidson is
the Managing Principal and CEO of the GCO Consulting Group, a
growing service-disabled veteran owned small business. Mr.
Davidson provides specialized consulting expertise in GSA
schedule contracting compliance. Mr. Davidson served honorably
in the United States Army as an enlisted soldier, non-
commissioned officer, and a commissioned officer, and served
multiple combat tours throughout southwest Asia to include Iraq
and Afghanistan. He was medically retired from the United
States Army as a captain for injuries sustained during his tour
in Iraq in July 2007 while he was working as a counter-IED and
convoy security officer.
Mr. Davidson continues to serve the veterans community as
the co-founder of the Bourbiz, a professional and personal
resource networking event for veterans, military spouses, and
caregivers in which the events connect attendees with a wide
range of resources to grow. Thank you for your service and all
that you are doing to support veterans in our country.
Our third witness today is Ms. Torrance Hart. Ms. Hart is
the founder of Teak and Twine, a small business that designs
beautifully made and thoughtfully packaged gifts. After serving
8 years in the Air Force, Ms. Hart connected with a Veterans
Business Outreach Center to help launch her small business. She
attended Boots to Business, where she learned valuable
information about entrepreneurship and was connected to local
entrepreneurial resources. Thank you for your service. I am
really looking forward to hearing your experience in the Boots
to Business program.
I would now like to yield to the Ranking Member, Mr.
Chabot, to introduce our final witness.
Mr. CHABOT. Thank you, Madam Chair. Our next witness is
Laurie Sayles, President and CEO of the Greenbelt, Maryland
company, Civility Management Systems, or Civility MS, for
short. Ms. Sayles started her career by enlisting in the Marine
Corps, serving there for 10 years, and achieving the rank of
Staff Sergeant. A woman minority, service-disabled veteran
owned small business, Civility MS provides project, program,
financial, and grants management, training, conference
logistics, acquisition, and administrative support through
contractual work for several Federal agencies.
Sergeant Sayles obtained her bachelor's degree in social
science from the University of Maryland University College. She
also received a business project management certificate from
UMUC, and is a member of the Project Management Institute,
Women Impacting Public Policy, Women Marines Association,
National Veterans Owned Business Association, and the National
Marine Corps Business Network.
Sergeant Sayles, thank you for your service to our country,
and thank you for being with us today. We look forward to
hearing your testimony as we do all the testimony from all the
witnesses, and I yield back.
Chairwoman VELAZQUEZ. Thank you.
Mr. Leghorn, welcome back to the committee. You are
recognized for 5 minutes.
STATEMENTS OF DAVY LEGHORN, ASSISTANT DIRECTOR, THE AMERICAN
LEGION; SCOTT M. DAVIDSON CPT. USA, RETIRED, MANAGING PRINCIPAL
& CEO, THE GCO CONSULTING GROUP; TORRANCE HARRINGTON HART,
OWNER, TEAK & TWINE; AND LAURIE SAYLES, PRESIDENT AND CEO,
CIVILITY MANAGEMENT SOLUTIONS
STATEMENT OF DAVY LEGHORN
Mr. LEGHORN. Chairwoman Velazquez, Ranking Member Chabot,
and distinguished members of the Committee, on behalf of our
national commander, Brett Reistad, and the 2 million members of
the American Legion, we thank you for the opportunity to
testify this morning.
We are privileged to present our position on several pieces
of legislation up for consideration. Our written testimony is a
matter of record, so we will briefly summarize our discussion
on just two bills.
The American Legion supports expanding eligibility for SBA
programs that permit loan assistance to businesses when
deployments are not part of a military conflict, and allow loan
recipients to defer repayments of principal and interest on
disaster loans when they are ordered to active service for more
than 30 consecutive days. Currently, these programs are
underutilized because their eligibility restrictions do not
fully reflect current deployment practices.
Both the Guard and Reserve have transitioned from a
strategic Reserve into an operational force to meet the need of
an all-volunteer force in an era of persistent conflict in
which Active Duty and Reserve component alike are expected to
deploy regularly. The American Legion Resolution No. 17
positioned on the operational Reserve urges Congress to reform
laws and policies governing the Reserve components to provide
them programmatic sustainability as an operational force. The
proposed Patriot Employer Protection Act is in line with our
resolution. Members of the Guard and Reserve are an integral
part of our national defense, and the Nation should do
everything we can to support their service.
Next, we will discuss the VA-SBA Act. Last year, the
Federal Government aligned the regulations governing SDVOSB
definitions, but even with the deconflicted regulations, the
maintenance of two Federal certification programs for veteran
small businesses still continues to be a source of confusion.
The American Legion Resolution No. 155, Support
Verification Improvements for Veteran Businesses, concurs with
H.R. 1615's proposal to have SBA absorb the responsibility of
VA's CVE. Currently, VA requires businesses applying for SDVOSB
status to address size, ownership, and control issues prior to
certification. In contrast, SBA allows businesses to self-
certify that they meet the regulatory threshold. Self-
certification permits businesses to qualify for all Federal
contract awards with the exception of the Veterans First
contracting program at VA.
The problem with two SDVOSB identification processes is
simple: It creates confusion for contracting officers seeking
to award contracts, and for veterans seeking certification. To
compound the confusion, many State and Federal agencies now
inquire whether veteran-owned businesses are VA certified,
resulting in many veteran firms acquiring VA certification when
it isn't necessary.
The American Legion believes we should finish the work that
began when we moved toward the single set of SDVOSB definitions
by consolidating the accrediting process to a singular
certifying agency. SBA has a proven workflow platform that can
potentially handle SDVOSB certifications. VA will likely
continue validating veteran and service-connected disability
status, but SBA is aptly poised to verify size, ownership, and
control standards.
Moving the verification program is not a punitive measure.
The Vets First program under VA's stewardship has successfully
demonstrated SDVOSBs as a credible workforce. VA can be proud
of the work they did in overcoming many programmatic hurdles.
Their efforts and investments prove to State and Federal
agencies the value of veteran businesses as a preferred
contracting group.
However, for the veteran small business industrial base to
grow beyond just the Vets First program, verification must
leave the confines of the VA. So with a move towards a singular
standard for SDVOSB definition, the shifting of appellate cases
to SBA's Office of Hearing and Appeals and SBA's successful
integration of certified.SBA.gov, this is the right time to
move verification to the SBA and sunset the system of self
certification.
Chairwoman Velazquez, Ranking Member Chabot, and
distinguished members of the Committee, we thank you for the
opportunity to explain the position of the 2 million members of
the American Legion, and we look forward to any questions you
may have.
Chairwoman VELAZQUEZ. Thank you, Mr. Leghorn.
Mr. Davidson, you are now recognized for 5 minutes.
STATEMENT OF SCOTT M. DAVIDSON
Mr. DAVIDSON. Thank you.
Chairwoman Velazquez, Ranking Member Chabot, and
distinguished members of the Committee, on behalf of GCO
Consulting, a service-disabled veteran owned business, and my
fellow servicemembers, I thank you for inviting me here today
testify to this morning.
I had the honor and privilege of serving my country in the
United States Army as an enlisted soldier, a non-commissioned
officer, and a commissioned officer in both peace and wartimes.
I was not afforded the opportunity during my military
separation to participate in the transition assistance program,
or the Boots to Business program, due to my medical retirement.
Starting a business was not on my mind as my military
career abruptly ended, due to injuries sustained during a
combat tour in Iraq. I had no time to plan my exit and prepare
for transition back into the civilian world, because a medical
evaluation board was convened to decide my future in early
2007. I was abruptly notified of the results of the proceedings
while recovering at Eisenhower Medical Center.
My career in the Armed Services officially ended, and less
than 6 weeks later, I was back at home. I had never attended
any military transition assistance programs in that short
period of time before I was released from the hospital care and
the warrior transition unit.
Although I fumbled through this time in my life, I learned
a lot regarding the stress and rigors of transitioning, and
then ultimately starting a business. Eventually, I was able to
attend the Boots to Business program years after I started my
own business, thanks to some great veteran mentors in my
network like Jack Manderville (ph) and Pat Baker.
I immediately recognized the value of this course. While my
company is more than a decade old, the company continues to
grow, because of programs like Boots to Business and
Entrepreneurship Boot Camp for Veterans at Syracuse University.
The road to entrepreneurship has shaped a unique transition
experience for me from my military experience to becoming a
veteran entrepreneur. I am proud that I can share my experience
and insight today as they directly relate to the matters
discussed regarding veterans business ownership.
It is important for me to note, though, at this time, that
throughout my entire time in that transition process, and even
today, that I have never changed my steadfast affinity for the
United States Army, and the pride and privilege that I have and
I feel every day that I was given the opportunity and I was
able to serve.
The first point I would summarize is Boots to Business.
First, I would like to focus on the importance of codifying
Boots to Business as an integral part of transition assistance
program for servicemembers who may be deciding to choose
entrepreneurship as a path after leaving the service. Boots to
Business may be the first exposure to entrepreneurship for the
servicemen who are receiving actual baseline of what the
requirements are to start and run a business. Boots to Business
provides real insight and an opportunity for servicemembers to
understand what it takes to start a business in the civilian
world, and how to make it successful.
This program would have assisted me in several areas as I
stumbled through early on in my transition, processing, and
starting my business. Transitioning from the military is always
going to be stressful. Any insight the Armed Services can
provide to a transitioning servicemember will alleviate the
stressors and allow for a business plan to be laid.
Recently, it is my understanding that in the NDAA 2019, a
portion of Boots to Business curriculum has been made mandatory
for transitioning servicemembers. This is a great change that
will expose servicemembers to resources and knowledge that may
encourage them to take the step in the direction of
entrepreneurship and channel the Warrior Ethos that has had
them succeed in the military, and also focus on boots and
success in the boardroom.
The Army builds soldiers. Boots to Business educates these
patriots so they can successfully establish and grow veteran
businesses from now and in the future.
The next item I will talk about is moving the
responsibility of the VACB functions to the SBA. Over the last
11 years, my firm has been on the operational front lines of
assisting veteran business owners with the CVE process. From
the VIP system to the dysfunctional VEMS system, I have heard
countless stories of frustration and near defeat from veteran
business owners in working with the VA over the years to become
CVE certified.
In the end, after all the day-to-day system and customer
service issues my clients and consultants face, at CVE, we are
often asked the following question: Why do we have the VA,
which is a separate agency certifying veteran business size and
control determination, when the SBA is responsible for the size
control determination for all businesses to even include the
self-certifying veteran-owned and disabled service veterans
systems through the SAM system?
The answer is simple. It is not necessary. And the solution
to the issue of size and control determination certification
already exists inside the Small Business Administration. The
SBA possesses a certification system that mirrors other
programs like the SBA is already administering successfully,
like the 8A business development program. The SBA also has a
certification program that is available through
certified.SBA.gov. It would only make logical sense to adopt
the SBA's existing system and adapt it to the certification
process for veteran businesses instead of risking significant
amounts of taxpayer dollars on trying to fix a system that is
broken, or attempting to build one from scratch.
Veteran businesses should not have to take on any
additional burden or separate certification requirements that
may stifle growth and strain resources. A single certifying
agency and system determining the size standard for all
businesses should fall under the responsibility of the very
agency it is tasked for to build and grow the Nation's economy,
and that is the Small Business Administration.
I thank you for your time today, Chairwoman Velazquez,
Ranking Member Chabot, and distinguished members of the
Committee. I look forward to answering any of your questions.
Chairwoman VELAZQUEZ. Thank you, Mr. Davidson.
Ms. Hart, you are recognized.
STATEMENT OF TORRANCE HARRINGTON HART
Ms. HART. Chairwoman Velazquez, Ranking Member Chabot, and
distinguished members of the Committee, thank you for giving me
the opportunity to speak today.
I am an Air Force veteran, former military spouse, and also
the founder of Teak and Twine, and I am here to talk about my
involvement in Boots to Business, and to lend support for this
valuable program, its role in empowering military veterans, and
especially for military spouses to try entrepreneurship.
Like Mr. Davidson, starting a business after I left the Air
Force was definitely not my first choice. The whole time I was
in the military, I had wanted to go to business school, but
once my time in the Air Force was winding down, I was also a
military spouse. And the thought of taking 2 years to move away
to another city and go to business school, and after that, how
was I supposed to get a job? Would we be separated for even
longer? And so, ultimately, after a lot of soul searching, I
decided I am just going to skip business school and dive
straight into entrepreneurship, and just try to figure it out
myself.
I attended Boots to Business a few months before separating
from the Air Force, because a lot of my friends in the military
had recommended the program to me. While I was already well on
my way in my entrepreneurial journey, the course validated many
of my early decisions, and would have been especially valuable
if I had wanted to raise capital as the course does a great job
of laying out options for how to raise money from angel
investors, as well as getting loans.
Even better for me is that it put me in touch with my local
Veterans Business Outreach Center, or VBOC, which continued to
be a resource after Boots to Business was over. For the next
coming months and even years, I continued to reach out to my
VBOC representative whenever I had an issue in my business, or
a big question that I was struggling to tackle.
In the 4 years since I left Active Duty, I have moved my
business two times across the country due to the military, and
my customers have never even known. To be honest, I have grown
Teak and Twine bigger than I ever thought I would, and have
done so in the most remote and isolated duty locations
imaginable. We may not have had a target, but I always had a
local VBOC representative that I knew I could reach out to.
My business allowed me, even as a military spouse, to build
a career that I absolutely love, and I am so grateful that I
wasn't able to pursue my first choice. Even better, everywhere
I have been, I have gotten to hire from a group of the most
hungry and talented and incredible people, the military spouses
that are stationed at the same duty location as me.
For many of the military spouses I have talked to, being a
military spouse means giving up completely on their career
ambitions. Frequent moves to remote locations make it hard to
establish what many of us think of as a real career. I see
entrepreneurship as the secret weapon for military spouses. It
is a way to create something that can support your family, give
you flexibility you need during deployments, give you the
freedom to do something that you love, and it moves with you
when needed, and even allows you to give back to other military
spouses. It is an incredible career that is open to anyone, no
matter where you are.
The Boots to Business program is vital to giving military
spouses the resources, information, and the foundation they
need to unleash the amazing possibilities of entrepreneurship.
Thank you so much for the opportunity to speak today.
Chairwoman VELAZQUEZ. Thank you, Ms. Hart.
Ms. Sayles, you are recognized.
STATEMENT OF LAURIE SAYLES
Ms. SAYLES. Good morning, Chairwoman Velazquez, Ranking
Member Chabot, and members of the Committee. My name is Laurie
Sayles. I am a veteran who served 10 years in the United States
Marine Corps and the owner of Civility Management Solutions, a
professional consulting company supporting government as well
as commercial.
Civility provides various professional services, training,
and support for Department of Homeland Security, HHS, Air
Force, Army, NASA, GAO, as well as the Department of Veterans
Affairs, also on both prime and subcontracts. Civility has
clients, thanks to the contracting programs through both the
SBA and the VA. I am a verified service-disabled veteran owned
small business, SBA certified economically disadvantaged, and
woman-owned small business, and certified 8A.
I, like many, have my share of experiences with both SBA
and the VA to acquire the proper certifications. Thus, my
testimony today will address the requirements of the veterans
programs with the hope of providing recommendations to the
Committee that will assist and enable the SBA to obtain the
desirable outcomes for veteran business owners.
I have always been an entrepreneur, and I have tried many
ventures from an early age. Thanks to the Marine Corps, I
increased in leadership, integrity, teamwork and being
steadfast, which is essential in entrepreneurship. I also
earned respect as an African American woman in a man's world
and now am an outspoken advocate, actively involved in Vet
Force and WIPP. As an officer on Vet Force, I have heard the
frustrations of many veteran small business owners regarding
certification and contracting opportunities within the VA.
For many veterans, returning to civilian life can be
difficult. It is a process, and it takes time to adjust. We
depend upon the VA for all of our benefits, and we need them to
operate in excellence as we were trained to do.
However, the confusion of acquiring a verification from the
VA, while being able to self-certify with the SBA is baffling.
The issue is that the two agencies have different definitions
and standards of control.
For example, we have seen the VA require that a veteran
exercise with absolute control over the business. Meanwhile,
the SBA recognizes non-veteran owners as having a say over some
matters of the business. Recently, the SBA spearheaded efforts
to address this, and several other issues, by publishing rules
on September 28, 2018 which require service-disabled veterans
work at their company during normal business hours, and this
leads to a rebuttal presumption that veterans are not actually
in control. The SBA would also prefer veterans work closer to
their headquarters, or job sites as published rules mention
that if a veteran is not located within a reasonable commute to
the company, there is a rebuttal presumption that he or she
does not control the firm.
For most veterans who may have hoped that using the SBA
regulations would eliminate some of the more cumbersome VA
requirements, the SBA's adoption of those requirements may be
disappointing. Since the SBA has both the specialty and
expertise in developing, certifying, and maintaining their
programs, it was never clear to me why the VA manages small
business verifications for veterans.
While attending my third Vet Force meeting, I inquired
about why would I focus on being verified by the VA if the Vets
First program was not applicable at all Federal Government
agencies, especially since most of the attendees were
complaining about its difficulty. To keep it simple, the VA
should do what they do for veterans, and that is care for our
benefits, and the SBA should do what they do for small business
owners, and that is provide us with certifications, training,
and resources.
The newly appointed VA Office of Small Business Development
Utilization Leadership announced an effort to create a pilot
program for women veterans as they have realized a shortage of
women veterans participation in VA contracting awards, because
since the institution of the Vets First program, the VA's
women-owned small business goals have not been met.
While H.R. 190 was a great step in its passage in the
House, it is my recommendation that Congress put also economic
and earned status veterans contracting programs on equal
footing. One group should not have a variance over another. The
work should be on the business owner to market their companies,
offerings just like 8A companies, and deliver the offerings
timely, and at the best cost.
The VA continuously meets the goals of service-disabled
veterans, basically due to the Vets First program, but as we
see the growth of more veteran small business owners, the value
of all Federal agencies, at least meeting the 3 percent goal,
may be possible once the SBA has the oversight of the VA
verification.
I urge the Committee to ensure that we make the contracting
program a priority, and strengthen the veterans small business
program so that we have the ability to grow. That concludes my
testimony, and I am happy to answer any questions.
Chairwoman VELAZQUEZ. Thank you to all the witnesses. I
recognize myself for 5 minutes. After listening to you, I
believe that the committee is on the right path to harmonize
programs that have been put into law to help veterans,
especially those returning or transitioning from military
service to civilian life, and our role here is to help you
realize your dreams and aspirations.
I would like to hear from you in your own words why it is
so important that we codify the Boots to Business program? Mr.
Leghorn.
Mr. LEGHORN. Thank you for your question, ma'am. The
American Legion supports Boots to Business, and because we
support robust transition programs in general, I mean, it takes
the military years to train someone to become a servicemember,
but they expect a week of transition courses to suffice when it
is time for reintegration in the private sector. You know, Mr.
Davidson's story of his transition is a prime example of
everything that the Army could have gotten wrong.
The American Legion is committed to any additional
resources we can give to servicemembers as they transition to
put them on better footing and to prevent another instance
where a servicemember has to endure something like Mr. Davidson
has gone through.
Chairwoman VELAZQUEZ. Mr. Davidson. Thank you.
Mr. DAVIDSON. Thank you, Ms. Chairwoman. Boots to Business
is important because having seen it after the fact and not
having the ability to go through it the first time and then,
you know, having been afforded that opportunity, it levels the
playing field in a sense. It gives the servicemember the
ability to understand what they are in for, if they are going
to go down the path of transition with regards to
entrepreneurship. It is very important. It may not be the full
toolbox that they need, but what it will do is give them pause
and establish a baseline for them to understand this is what is
required if I am going to go down this path of
entrepreneurship. I can start my plan now. If it is 24 months
prior to when they are leaving the service, it is very
important, because they get to see exactly what is required
with regards to just the lift of it, right, to build the
business plan, to go ahead and look at what the assets are that
they have to acquire, to understand what access to capital is.
To go through that curriculum, they understand that part, and I
think that is a very important piece.
So with Boots to Business, absolutely. That is why it needs
to be codified, because if you give them that opportunity, and
they are able to see it and have that type of lead time, it
will absolutely make a difference in their life with regards to
the path they choose with transition. And transition is hard
enough as it is, but at least let's have them be able to lay a
plan with educated, you know, responses that they can, you
know, have access to.
Chairwoman VELAZQUEZ. Thank you.
Ms. Hart.
Ms. HART. I think the Boots to Business program is so
valuable because you have so many questions when you are
starting a business. You just really don't know anything, and
it is also this time in your life that you could really go into
a huge amount of debt without moving in the right direction. So
the last thing that I would want to see is military members
trying to transition out, acquiring a ton of debt for a
business that hasn't been thought about correctly, where they
have issues with product market fit that they haven't thought
of.
So it is this way where you can kind of--if you already
have an idea, you can solidify your idea and get the resources
you need to be heading in the right direction without wasting
time or money. And if you are not sure if entrepreneurship is
right for you, then it has a great portion at the beginning of
the course where you can kind of have this gut check to see if
it might be a good fit for you.
Chairwoman VELAZQUEZ. Thank you.
Ms. Sayles.
Ms. SAYLES. Ma'am, when I got out, it was not offered. No
training was being provided. It would have been wonderful to
have the opportunity, to have that opening. When I joined the
Marine Corps, I was 21. I had already done several
entrepreneurial journeys before I even joined the Marine Corps.
College was not an option for me in my mindset, off the top; I
was accustomed to making my own money as an independent woman.
However, the Boots to Business program has allowed veterans
now to get out, military personnel to get out and get opened up
to what is available to them. I went from being a receptionist
after leaving Active Duty in the Marine Corps, being a Staff
Sergeant leading people in order to enter into the corporate
America world. Secretary, admin assistant, operations manager,
program manager, before I became President and CEO of Civility
Management Solutions. That was a very long journey, and it
would have been nicer to have some support along the way prior
without wasting 20 years of my time at that time. Thank you so
much, ma'am.
Chairwoman VELAZQUEZ. Thank you.
Maybe any of you could answer this question, or comment on
it. We know how many veterans are coming back from Iraq and
Afghanistan, and yet, what we have seen recently is a decline
in entrepreneurship among veterans. Do you have any insight--is
there is any underlying reason? What more can we do when we
have programs like this, and we are going to take action to
codify the program and to make it easier for veterans to access
those type of entrepreneurial programs? Do you have, or do you
know of any facts that are related to the issue of the
declining of entrepreneurship among veterans?
Mr. LEGHORN. Thank you for the question. I will try to
answer it. I believe the reason we saw a dip in veteran startup
is because we are still kind of climbing out of the recession.
And as the economy gets better within the coming years, I think
we are going to see an uptick in veteran entrepreneurship in
general.
Mr. DAVIDSON. I agree with Mr. Leghorn with regards to the
recession, but the other thing I do see, and it is somewhat
anecdotal. In working with a lot of young veterans as they
transition out now and what we have been doing, a lot of times
I hear things like, and it might also be related to the
recession, is they have trouble with access to capital. They
have trouble with actually understanding most of the process.
They say Boots to Business is a great start for them, but they
also feel like there is still a convoluted process on the after
part of that. So once they transition out, for some reason,
they are not connecting to the programs that are available to
them to help them continue on in all those difference types of
programs.
Chairwoman VELAZQUEZ. Thank you. My time has expired. I
recognize the Ranking Member, Mr. Chabot.
Mr. CHABOT. Thank you, Madam Chair.
Before asking questions, I just want to, again, thank all
the panelists for their service. We really do appreciate that,
and thank you so much for that.
This Committee is always evaluating whether the SBA's
programs are effectively and efficiently meeting the needs of
the small business owners that they are intended to help. Mr.
Leghorn, in your testimony, you stated the Guard and the
Reserve have transitioned from a strategic Reserve into an
operational force. With this in mind, does the SBA military
disaster loan draft legislation that we are working on better
align with today's military forces as they currently exist? Is
that your understanding?
Mr. LEGHORN. Congressman Chabot, thank you for your
question. We absolutely think that this is a step in the right
direction. Over the years, we have been using Guard and Reserve
components like we never have before in terms of the tempo of
their deployments, and you know, they have become an integral
part of our Armed Services and national defense at this point,
and just across the board, we need all the programs to catch up
to that. And so, we appreciate everything you folks are doing
to improve that for the servicemembers.
Mr. CHABOT. Great. Thank you very much.
Mr. Davidson, could you talk a little bit about how
important it is for programs, and we have discussed it to some
degree already, the Boots to Business, to be exposed to
separating servicemembers early in the process?
Mr. DAVIDSON. Yes, Congressman. So I would say that it is
kind of like a wide range of the importance of programs. I
think Boots to Business is very important, but I also believe
that we need to also push the curriculum with regards to how
they network and mentorship pieces with regards to how they are
developing those networks with entrepreneurship.
So there is incredible programs out there that are free,
non-profits, you know, whether it is--I mean, we could run the
gamut, American Corporate Partners. That is probably the best
known one out there, and that is staged for people who are on
Active Duty?
But I think that is one of the things that I believe that
is one of the items that if not missing, it needs to be pushed,
is that they need to be able to understand the social part of
the network. They need to be able to have that mentorship with
regards to how they actually reach and interact with
individuals and work that part, and that is something that
especially, again, interacting today with most people, those
types of programs have to be integrated.
Boots to Business, great baseline, absolutely, but then you
have all the other, I would say, aspects that need to be kind
of combined, because I think Boots to Business is a great
program, but everything we know can always be improved.
So, I always think there is a 2.0 and a 2.1 and a 3.0 that
is going to be out there, that you have to take these other
programs that are very important parts of that entire process.
Even if it is not entrepreneurship, it is something else, they
still have to understand how to network. They still have to
understand the importance of mentorship and things of that
nature, so I think those programs are----
Mr. CHABOT. Thank you very much. I have got 2 minutes left
and two questions to go through.
Ms. Hart, in your testimony you mentioned, again, the Boots
to Business program, that it does a nice job outlining the loan
process and how to raise capital. When you were going through
this process, did you find that accessing capital was
challenging and any specifics about that?
Ms. HART. I bootstrapped my business off of sales from the
beginning, so I thought the information was really helpful, but
I didn't take advantage of it myself.
Mr. CHABOT. Okay. Thank you. And finally, Ms. Sayles,
regarding the VA-SBA Act, do you think housing the
certification function at the SBA and eliminating the VA's
separate program will help decrease any confusion and encourage
more small business owners, women, and veterans to pursue their
certifications and enter the Federal marketplace?
Ms. SAYLES. Yes, sir. Without a doubt, it will make a
difference because currently, the certified.SBA.gov website has
done an outstanding job in general for us. I am a woman-owned
small business as well, and just because I am also certified as
an 8A, a lot of the questions that were requested previously
from self-certifying myself as a woman-owned was no longer
necessary, because they already had the information.
So in the end, it was a good possibility that it will
eliminate many of the questions that the VA is asking us within
the SBA because they will have all the required documents
previously from other certifications. The only thing they will
really need is a DD-214.
Mr. CHABOT. Thank you very much.
And I have got 13 seconds left, so in that time, I just
want to, again, thank you for your service. We really do
appreciate it, and yield back.
Chairwoman VELAZQUEZ. The gentleman yields back, and now we
recognize the gentlelady from Iowa, Chairwoman of the
Subcommittee on Rural Development, Agriculture, Trade, and
Entrepreneurship, Ms. Finkenauer.
Ms. FINKENAUER. Thank you, Chairwoman Velazquez. And I just
want to, again, say thank you all for being here today, thank
you for your service, and thank you for your advocacy as well.
This is just an incredibly important hearing to be having, and
I am very supportive of the Boots to Business program, and to
hear your perspective is invaluable, so thank you.
And one of the things--I am going to take it in a little
bit different direction, you know. I know we are working to
create an environment that helps veteran entrepreneurs succeed,
but weeding out fraud also should be part of the conversation.
We hear about predatory lenders and dishonest vendors, but our
veteran entrepreneurs also face other sources of fraud we need
to be paying attention to as well which was very much brought
to my attention, you know, since my time in Congress, but
before this as well.
And even, you know, this Monday, I was with a veteran in my
home district at a press conference about something that he
went through himself, you know. Jeff was, again, a veteran in
my district, who was actually defrauded by a dishonest
university. He attended a for-profit university, ITT Technical
Institute, in pursuit of a bachelor's degree that he hoped
would further his career and give him the skills that he
needed, and he worked hard, and he did everything right.
His story is absolutely heartbreaking. He did everything he
was supposed to do, and then the school actually closed right
before he was completing his last course that he needed to
graduate. Now, you know, he is stuck with thousands in debt. He
is struggling to get the relief that he deserves, and actually
is spending time and resources he could have used to further
his business aspirations.
And today, actually, I am working with some of my
colleagues to introduce the Relief for Defrauded Students Act
of 2019. This bill would help folks like Jeff who are lied to
about the training they would receive, and how much they would
pay and whether their credits would be recognized. The
Department of Education actually has rules on the books already
to cancel the Federal loans of students who were defrauded by a
university but is actually not enforcing those rules,
unfortunately. So this bill would actually require the
Department to follow through on the obligations and codify
that.
We know right now there is 158,000 veterans and student
borrowers in the exact same situation as Jeff who are waiting
for the Department to act. In fact, I mean, some of the stories
we have heard, we have had predatory for-profit universities
going and talking to our Marines who have had brain damage or
traumatic brain injuries, knowing that they wouldn't even be
able to complete the courses but getting them to sign up.
I mean, these are the types of stories we have heard. They
are heartbreaking. It is not how our country should be working,
and we need to get that relief to the folks who deserve it and
need it.
And what I am wondering, you know, what would that relief
actually do? I mean, Jeff himself is sitting--I think he said
$15,000 in Federal student loans that could be canceled, and
should be canceled, because of the rules we already should
have, we do have on the books that are not codified yet and are
not being enforced. What would that mean for somebody who is
wanting to start their own business to have that relief? Mr.
Leghorn, would you be able to touch on that?
Mr. LEGHORN. Sure. Thank you for your question. Having
$15,000 in the pocket when you are looking at starting a
business is a windfall, and one of the good things that Boots
to Business does is it helps you identify whether there is--it
makes you do market research and helps you identify if your
product is actually needed, so it guides you in how you spend
that money. So going back to your question, yeah, that would be
wonderful.
Ms. FINKENAUER. Anybody else want to touch on it all? I
know I am about out of time.
Mr. DAVIDSON. Thank you for the question. Again, I echo his
sentiment. I mean, if we have--and I am sure everybody knows,
especially if you bootstrapped your business from your own
generated sales. If you can avoid having $15,000 in debt, that
is a significant issue with access to capital, as we know, and
that actually leads to additional predator lending practices,
because what will happen is you have to go to high-risk lenders
that will take absolute advantage of you at APR rates, you
know, loan rates that are beyond belief which we see all over
the place. They claim they are veteran-friendly, but we all
know where they are actually--what their rates are and how they
are getting that claw back from individuals.
So it does put you in a significantly, you know,
unfortunate position, because in order to get the business off
the ground, if you don't have the ability to kind of bootstrap
and then build your sales, you are going to wind up with those
predatory lenders, unfortunately. So, yeah, I think that that
is a great way to be able to alleviate that type of stress-
related access to capital and debt.
Ms. FINKENAUER. Thank you, Mr. Davidson. I know we have a
few more seconds. Ms. Sayles or Ms. Hart, do you have any
comment?
Ms. SAYLES. I actually don't have much of a comment
regarding fraud on that matter, but I do want to talk about
subcontracting, which is also in the way of fraud, to the point
that what needs to actually happen is that the Federal
Government should become a little bit more responsible to
helping the new small businesses on any subcontract work that
you have so that if you are removed from the contract and
receiving zero dollars of revenue from helping a prime get a
contract, then there should be some action within the Federal
Government, specifically the Office of Small Business. They
should be able to be able to support you during that time.
Ms. FINKENAUER. Got it. Thank you all so much and thank you
all for being here again, and thank you for your service. This
is a great hearing to have. I yield back.
Chairwoman VELAZQUEZ. The gentlelady's time has expired.
Now we recognize the gentlelady from American Samoa, who is the
Vice Ranking Member of the committee, Mrs. Radewagen, for 5
minutes.
Mrs. RADEWAGEN. Hello, friend. Good morning. I want to
thank Chairwoman Velazquez and Ranking Member Chabot for
holding this important hearing today, and I particularly want
to thank you all for joining us today with your important
information.
I am proud to represent American Samoa, which has the
highest enlistment rate out of any State or territory in the
United States, and also proud and humbled to be Vice Ranking
Member. Ensuring that veterans have the opportunity for
economic advancement after serving our country is one of my top
priorities, and we have some very successful veteran-owned
small businesses in American Samoa.
So my time is short, but my first question is for the
entire panel. Can you describe if the current two-system
structure at SBA and VA causes problems among contracting
officers in choosing to award contracts with veteran-owned
small businesses? In other words, are contracting officers
declining to award contracts to veteran-owned small businesses
because of the confusion arising between the two existing
programs? Mr. Leghorn.
Mr. LEGHORN. Thank you for your question. So with regards
to contracting officers and how they award contracts,
currently, there is only one front end certifying system, and
that is at the VA, and only for a limited scope, and it is only
used at VA for one program. And, so, if you are a contracting
officer at another agency, usually your job requires you to
verify that an SDVOSB or a VOSB is who they say they are
yourself. But it is a shortcut for you to just straight up ask
them are you certified by VA CVE. And this causes a lot of
problems and confusion with veterans because veterans don't
realize that to do business with the Federal Government, they
only need to be self-certified. But for the purposes of Vets
First, they need to be CVE certified. I hope that answers your
question.
Mrs. RADEWAGEN. Mr. Davidson.
Mr. DAVIDSON. Thank you for the question. I also echo Mr.
Leghorn's sentiment. The confusion is just that. The reality is
that there are two sets of rules, and they are often asked that
question: Are you CVE certified? And I know people who
absolutely do not do business with the VA but they do business
with 15 other agencies, and they don't require the CVE, and
they say no. In some cases, after they have done market
research, they are passed over for those types of
opportunities. I have actually had those unfortunate
conversations with vendors. So yes, it does cause confusion
because they don't answer it the right way, and they say well,
I am not because I don't do business with the VA. I do business
with the Department of Defense. I do business with the
Department of Homeland Security and everybody else, so I never
felt the need to be CVE certified. So that does cause that type
of confusion and unfortunately can cause issues with business.
Thank you.
Mrs. RADEWAGEN. Ms. Hart.
Ms. HART. I am not the best person for this one. Thank you.
Mrs. RADEWAGEN. Ms. Sayles.
Ms. SAYLES. Yes, ma'am. I was biting at the edges here to
have a comment about this. I love your country, by the way,
your part of our world.
Now, I can say that contracting officers have an issue with
providing contracts to veterans outside of the VA specifically
because of some of the way the rules are set up where you have
to have two or more in order to be able to provide them for the
SDVOSB set aside where that doesn't apply so much to the 8A
opportunity. And as a woman that has worked with about 128
employees, $11.5 million in revenue for another woman-owned
small business before I started mine, and people knew me, my
reputation was there, my work performance was there, but they
were not able to access Civility Management Solutions through
me being a service-disabled veteran owned small business. And I
was a little disheartened with the fact that that program
really doesn't have strength to it as 8A does.
Mrs. RADEWAGEN. Thank you, Madam Chairwoman. I yield back.
Chairwoman VELAZQUEZ. The gentlelady yields back, and the
gentleman from Maine, Chairman of the Subcommittee on
Contracting and Infrastructure, Mr. Golden, is recognized for 5
minutes.
Mr. GOLDEN. Thank you, Madam Chair. The first thing, Mr.
Leghorn, I wanted to welcome you here, and thanks to all of you
for your service. But Mr. Leghorn, I want to let you know I am
a member of the Corey Edwin Garver American Legion. We call it
the Mighty Post 202. It is where the new State commander for
Maine comes out of, so you should look him up. A great guy and
pretty active, I think, on the national level.
So I just wanted to ask you to make sure I understand your
testimony that you think that the VA's certification process
where they are making sure that businesses are what they say
they are, you know, before awards are contracted, the VA's
process is preferable, but that you do want to see that process
adopted by SBA, and then have SBA take the lead on CVE as an
example.
Mr. LEGHORN. Yes. That is exactly what we are saying. We
absolutely want that process to move over to the SBA and sunset
self-certification, because, again, just having two certifying
processes is not only confusing to contracting officers, but
veterans seeking certification as well.
Mr. GOLDEN. So go with the SBA as the lead but have them
adopt the VA process?
Mr. LEGHORN. Correct.
Mr. GOLDEN. All right. Thank you. I just wanted to make
sure. I appreciate that.
Ms. Hart, I wanted to ask you. You, I think, talked about
how you were connected with a Veterans Business Outreach
Center. How close were you to that business outreach center?
Was it close to where you were living? Was it far away? Could
you talk a little bit about that experience?
Ms. HART. Sure. So when I started Teak and Twine, I was in
Destin, and they were an hour away in Panama City. So I did go
and visit a couple times, but most of the answers they provided
were over the phone. When I moved to New Mexico, they were
hours away, and they were still able to be helpful, just over
the phone.
Mr. GOLDEN. All right. That is reassuring to hear. The
closest one we have is in Rhode Island, which is a ways away
from Maine, so I have always been a bit concerned by that, but
it sounds like you feel like a lot of what they do can be done
over the phone, and by email, and social media.
Ms. HART. I do think that the VBOC would be--their services
would be improved by going to bases on a regular basis, and
establishing a program where there is kind of a community
element to it, and a mentorship element to it. You can reach
out to the VBOC, but we all know that sometimes you just need
people to come to you, and so I do think that it should be more
localized. If they are not traveling, then there needs to be
someone closer.
Mr. GOLDEN. And whenever possible, the presence near bases
is what you are saying.
Ms. HART. Right, or even a non-VBOC person on that base who
is kind of a rep, like a business owner who is further down the
line, just happens to be stationed there. They could foster a
community there, not necessarily being part of the VBOC.
Mr. GOLDEN. Yeah. That is helpful.
Mr. Davidson, this is kind of off topic, but I wanted to
ask you. You went through a MEB. Did you get some kind of
separation payment as part of your medical separation?
Mr. DAVIDSON. Thank you for the question. I was medically
retired, so I did. So, I mean, I eventually--in a perfect
world, DFAS works at the speed of business, but it didn't.
Mr. GOLDEN. It didn't.
Mr. DAVIDSON. And I eventually did start to get my pay.
Mr. GOLDEN. I am actually curious if you came across any
issues later down the road with VA and the disability rating
and a lump sum payment there being offset in some kind of
clawback?
Mr. DAVIDSON. So there wasn't--so the interesting thing, I
was rated, you know, by the Physical Disability Evaluation
Board first so I have a rating from them, you know. The MEB
does its process, and you go to the disability evaluation
board. I have the rating from them, and they retired me, so I
didn't go to the VA until a very long time after, because I was
already retired, and I didn't look at it. And when I did that,
yes, there was a part of an offset, but as you know, because if
it is related to a combat injury, if you are retired, you are
exempt even from the military retirement, not the VA. We know
the VA is tax-free, but my regular Army military retirement, I
do not pay taxes on that. So that has kind of helped, I think,
with the alleviation of things, and they kind of got that, but
no. There was hiccups up and down that lane, and I did have to
work with DFAS for a very long time to correct a lot of those
issues.
Mr. GOLDEN. Yeah. I have just come across some veterans
that have found themselves in some pretty tough places and
didn't understand what was going to happen to them, and so they
weren't prepared for it when it came.
Mr. DAVIDSON. I wasn't, but I will say that I did find
people, especially with the Wounded Warrior transition type
group that did help tremendously, and they did work very hard
in order to help me, but again, it did take a long time.
Mr. GOLDEN. All right. Thank you very much. I yield.
Mr. DAVIDSON. Thank you.
Chairwoman VELAZQUEZ. The gentleman yields back, and we
recognize the gentleman from Mississippi, Mr. Kelly, for 5
minutes.
Mr. KELLY. Thank you, Chairlady, and thank you, Ranking
Member, for holding this very important. I want to thank each
of you witnesses, first of all, for your service in uniform to
this great Nation; and second, I want to thank you for coming
here and taking time to give your testimony; and I also want to
thank you for supporting my bill, the VA-SBA Act.
As we have heard today, the VA proactively verifies
service-disabled veteran owned small businesses, while the SBA
allows business owners to self-certify. This process creates
inconsistent outcomes, such as businesses qualifying as a
service-disabled veteran business for VA contracts, but not
other Federal agency contracts or vice versa.
While the SBA certified business awards are subject to
scrutiny, the lack of front-end verification also leaves the
door open for fraud and abuse. We have already made significant
strides in the right direction. The National Defense
Authorization Act for fiscal year 2017 has struck at SBA and VA
to unify the definitions for service-disabled veteran owned
small businesses, and begin moving regulatory responsibilities
from the VA to the SBA.
President Trump's reform plan for the Federal Government
released last year cited the need for a one-stop shop for small
business Federal procurement programs. The SBA has already made
headway through the launch of their website certified.SBA.gov,
and we are committed to working with them to see it through.
The VA-SBA Act marks the next significant step towards
unification of the two programs under one umbrella. At the SBA,
and as Ranking Member Chabot mentioned earlier, will reduce red
tape and confusion for veteran small business owners.
I also serve as the Ranking Member on the Military
Personnel Subcommittee of the Armed Services Committee. We work
very hard on many of these issues on that Subcommittee, and
passed down a nonpartisan through the mark. I am on that
Subcommittee with Chairwoman Speier. We focused on soldiers and
sailors and airmen and Marines transitioning to business when
they leave the service, assistance to spouses who have to move
quite frequently and to do things that help them to perform a
career as opposed to just a job at a base moving to another
job, things that would do that.
Some of those things are, like, certificates, so they cross
State lines and that they are able. We also focused on day care
and many of those things that are issues for our soldiers. We
will continue to focus on that. This Committee, Small Business,
is very bipartisan in nature, and I thank the Chairwoman and
the Ranking Member for making that both last term and this term
in Congress. We will continue to look for solutions for our
veterans because it is very, very important.
I also am very focused on surviving family members,
especially those Gold Star family members, and there are
several issues that cross those lines when a veteran dies. I
have a veteran small owned business, how we transition, and
make sure that we don't take it away from those spouse and
children because they are not a veteran. Because you guys all
know, especially you, Ms. Hart, that the family members serve
also. My wife has served all 33 years with me, and it is
probably been harder on her than it has me, and so we have a
responsibility to those spouses and those children, especially
the Gold Star members who we lost in combat, but for all
veterans who pass on.
So with that, Mr. Leghorn, just very briefly, are you
familiar with H.R. 499, and do you have any thoughts on the
bill, whether you think that treatment of surviving spouses of
service-disabled veterans small business owners with the SBA in
extending the program to take them when they pass on? Do you
have any experience with that, Mr. Leghorn?
Mr. LEGHORN. Congressman Kelly, thank you for your
question. You know, it is funny you mention that, because the
American Legion actually has a resolution that supports
allowing Gold Star spouses to take on the certification, the
SDVOSB certification of their deceased spouse, so we would
absolutely support something like that.
Mr. KELLY. You know, and that is just an area--I think
sometimes we lose sight of the spouses, and their opportunities
and professional careers are set on the sideline so that our
soldiers and sailors and Marines can go forward and do their
jobs. And so, I think we need to look at some SBA things that
help those surviving spouses and also actual spouses to do
that. And with that, Ms. Chairman, I yield back.
Chairwoman VELAZQUEZ. The gentleman yields back, and now we
recognize the gentleman from Colorado, Mr. Crow, who is the
Chairman of the Subcommittee on Innovation and Workforce
Development.
Mr. CROW. Thank you, Chairwoman, and thank you to all of
you for your testimony and your leadership. I really appreciate
it. This is helpful hearing from all of you.
One of the most common things that I hear about from
veterans in my community is this chicken-or-egg problem about
having to have a track record before being able to access
capital and secure loans. And, of course, they say, Well, how
do I get the track record if I don't have the money to start my
business?
So, I would love to hear from you on any additional things.
I know there was some discussion earlier. Several of you
mentioned this in your opening statements. I would love to have
any additional thoughts or ideas on this. And Ms. Sayles, I
would love to start with you.
Ms. SAYLES. Thank you so much, sir. As far as having past
performance, which is what determiners in the Federal
Government space, hence, the whole thing about subcontracting,
the Federal Government advisors, PTAC advisers, VBOC, anyone
that you are actually going through with your training, VIP,
Veterans Institute for Procurement, by the way, they also would
advise us to start with subcontract opportunities in order to
get past performance. If you don't have past performance, then
you are not going to have opportunities within the Federal
Government. And here is why some of the rules and regulations
need to be stricter when it comes to being a subcontractor
within the Federal Government holding the prime responsible.
As far as capital, without a doubt, and as a woman as well,
there is a lot of difficulty when obtaining capital. I was
fortunate to be attached to WIPP, Women Impacting Public
Policy, and they advised me of someone that has actually done a
lot of advocacy work to help us as women as well as veterans
and as minorities being able to obtain capital. I was just
fortunate to have that connection, but many people are
struggling with that.
Ms. HART. I thought this was one of the places where Boots
to Business really excelled. They went through many different
resources available between loans and getting investors. I
mean, as high level as, like, venture capital firms they even
talk about. I ended up renting out a guest room in my house on
Airbnb, and starting that way and then bootstrapping the rest
of the way, so kind of being creative. But I think that there
is definitely kind of a romancing of, like, starting on credit
cards, and then, you know, your business is just going to do
really well and come in and save the day. You hear that story
over and over from really big companies now, that that is how
they started. They maxed out a couple credit cards, and so that
is what they hear. And so having someone tell you that that
definitely isn't the way to go is also helpful.
Mr. DAVIDSON. I think it sets the stage, unfortunately, for
what we talked about earlier, predatory lending practices, and
a lot of people we have seen, especially in the space in
working with veteran entrepreneurs, I have seen people,
specifically organizations focus on veterans and claim veteran
friendly because they know they are actually somewhat of a
vulnerable population because they are in a very stressed
situation when you are transitioning.
And when someone entices you with Hey, I am going to give
you $25,000. It is going to be a high-risk loan. I am going to
put you at 22 points, potentially, at APR. You are going to
take it. But that is where I think it is important that the
education process is there for these veterans and these
servicemembers, so they understand that. So I think it is a
significant problem. I hear horror stories, and I am
considerably worried about that because the practice continues.
And just like Ms. Hart had said, you hear these stories about
credit cards and things of that nature. I see on the other side
where there are a lot of these predatory lenders out there that
are under the guise of being veteran-friendly, and they are
targeting that population. And we have seen it time and time
again with incredible rates that put them at significant
disadvantages with regards to being able to advance their
business as they start to even grow it.
Mr. CROW. Thank you.
Mr. DAVIDSON. Thank you for the question.
Mr. LEGHORN. Congressman Crow, I think what you said in the
beginning was absolutely true. You have got to have money to
make money, but you also need money to just even borrow money,
because what we have seen with either private equity banks or
anything else, if you are looking for money to scale, you need
collateral, and that is something that transitioning
servicemembers do not have, because the military lifestyle, the
nomadic nature and the unpredictability, it is not conducive to
amassing collateral for when you need money later.
So one of the things I was thinking that we can do is to
administer Boots to Business earlier in a servicemember's
career, to get them thinking about entrepreneurship, letting
them know early on that if this is a path that you want to go
down, that you need to start amassing collateral early in your
career.
Mr. CROW. That is helpful. Thank you.
Chairwoman, I yield back.
Chairwoman VELAZQUEZ. The gentleman yields back. And now we
recognize Dr. Joyce from Pennsylvania. He is the Ranking Member
of the Subcommittee on Rural Development, Agriculture,
Entrepreneurship, and Trade.
Mr. JOYCE. Thank you, Madam Chairwoman, and thank you,
Ranking Member Chabot, for sponsoring this today. This is
important for us. What you bring to the table, the information
you bring to us, we all attentively listen to. I am the spouse.
My wife is former United States Navy. She is a small business
owner. She also is a member of the American Legion. I look out,
thank you, and have walked this walk with you. This is so
important, what information you bring to us here today.
My first question is for you, Mr. Leghorn. You mentioned in
your testimony that sometimes the Boots to Business training
leads to transitioning of servicemember to understand, or
realize, that it is not the right time or course for them to
start their business. Do you feel that offering alternative
vocational and trade training programs for our veterans that
make that determination could be similarly beneficial for
transitioning our servicemen and servicewomen?
Mr. LEGHORN. Dr. Joyce, thanks for your question. I
absolutely do think that is crucial, and one of the things that
happened with the TAP revamp that happened with the VOW Act in
2011 is that they created the transition GPS, which has three
Capstone courses. One of them is entrepreneurship, known as
Boots to Business, but there is a vocational training portion,
and there is also an educational training portion for folks
that are college bound. So you know, the American Legion
believes that all three of those Capstone courses should be
made mandatory during a servicemember's transition.
Mr. JOYCE. Mr. Davidson, do you feel that vocational
training also has an importance as we transition, what Mr.
Leghorn just alluded to?
Mr. DAVIDSON. Thank you, Doctor. I do, because
entrepreneurship, of course, it may not be for everybody, but
that vocational training, I think as we have seen a decline in
the United States over the years, and I think it is missing. It
is a very important component to how we grow the economy. I
think if you do offer those alternatives, because not everybody
is going to want to own a business, and not everybody is going
to want to go and be, you know, a program manager or be stuck
to something that they are not there for. And let's say they
had some type of vocational skill inside the military, I do
think it is an important skill that they have the ability to
explore that type of career and type of additional training. I
would say not voc rehab, but vocational training.
Mr. JOYCE. Mr. Leghorn, currently we see workforce
development as an important need as our economy is booming, and
we realize that many people who go into heating and air
conditioning, welding, plumbing can go on and develop their own
businesses. In your experience, have you seen this occur?
Mr. LEGHORN. Yes. Absolutely. The American Legion works
with a lot of feeder programs that gets people scholarships to
go into the skilled trades, and we hear phenomenal stories
about people earning a lot of money in the trades because you
are dealing with jobs that can't be outsourced, you know. You
can't send jobs of, you know, people coming into your home and
fixing your dishwasher or air conditioner to another country.
It has to be done in America, and it has to be done by someone
you trust, and there is nobody more suited for that job than
veterans.
Mr. JOYCE. I think you raise a very important point that
has not fallen on deaf ears here at this Committee. Your
service to the United States has been incredible, but your
insights, what you bring us to the table today, your own
personal experiences, your development of business as being the
entrepreneurs, as understanding that what we need is to be able
to transition from military to the workforce, that has been
incredible. I thank you all. I thank you for your service.
Madam Chair, I yield my time.
Chairwoman VELAZQUEZ. The gentleman yields back, and the
gentlelady from Kansas, Ms. Davids, is recognized for 5
minutes.
Ms. DAVIDS. Thank you, Madam Chairwoman.
Well, first, I want to thank the witnesses for being here
today and coming to testify before the Committee and for your
years of military service. My mom served in the Army for 20
years, so you know, I appreciate the commentary from multiple
people about the impact on family members. I mean, I certainly
was proud to be raised by a strong, single mom who was a Drill
Sergeant. I have got the pushups to prove it.
But you know, growing up with a parent in the military, I
know how hard it can be frequently moving. It can be hard on
building those personal networks that sometimes people, when
they go into entrepreneurship, depend on, and also that has
second- and third-order effects, especially on accessing
capital and, you know, networks and accessing capital are some
of the major barriers that veterans face. And even veterans who
are successful at starting their own businesses can continue to
struggle.
A constituent of mine, Mr. Walter Justice, is an Air Force
Special Forces veteran who was in Vietnam, and owns Tendou
Martial Arts Academy in Kansas City, Kansas. I am also a
martial artist, so a special place in my heart for all of that.
Mr. Justice has been in business for 20 years, and one of his
main concerns is addressing some of the changing atmosphere
around marketing, around the technologies that are coming up.
And I know that hearing some of the comments that you all
have made, Mr. Leghorn, I thought it was, you know, the idea
that it takes years to get trained up and then the expectation
that a week of transition time is enough.
Can you speak a little bit to maybe the ways that--and
maybe it is already happening, so I would love to hear more
about it, but the ways that Boots to Business or some of the
other SBA programs are helpful in getting veterans up to speed
or at least knowledgeable about some of the changing landscape
that we are seeing because certainly I imagine that is
impacting the businesses that you all are seeing and
participating in. We will start with Mr. Leghorn.
Mr. LEGHORN. Thank you for your question, ma'am. One of the
things that is good about TAP is that I think by law, it has to
be updated every 2 years. I believe Boots to Business may not
be on that same cycle, but I think with the current bill, it
reauthorizes every 5 years, so that would give you folks time
to make them relook at their curriculum to encompass all the
advancement that has happened because I mean, I am pretty sure
everyone here as seen marketing change rapidly within the last
couple of years from email to digital and content marketing,
and it is just that that learning curve is huge. I personally
hear a lot of demand for learning that.
Ms. DAVIDS. So you are looking at a couple of the other
programs. There might be some updates that we could do to, like
a Boots to Business program.
Mr. LEGHORN. Uh-huh.
Ms. DAVIDS. Okay. Thank you. And then if anyone else has--
please.
Mr. DAVIDSON. Yeah. I would just echo that sentiment. It is
going to be probably solely focused on the social media and
marketing aspect. We see that a lot of times, and I know Mr.
Leghorn and I have worked on several different projects. That
experience needs to be integrated and updated on a constant
basis, because it can make or break significant businesses. And
when done well, it is done well. Again, it is not an overnight
thing, but we have seen significant successes in those types of
strategies, which I think should be updated and taught and
improved inside of those TAP programs. Thank you.
Ms. SAYLES. Yes. I also attended Veterans Institute of
Procurement in Beltsville, Maryland, which a program that is
overseen by Barbara Ash in Montgomery County that is
specifically focused on veterans interested in doing work
within the Federal Government space, and we are brought in,
free of charge, as far as our stay and our food. We have to
just pay for our transportation to arrive. So I think that is a
great, great program that should continue and be expanded.
Ms. HART. When I moved to a very rural location, I wanted
to help other military spouses at that location, and social
media has been a huge part of growing my business. And I
thought it would be so cool if I could come into a Boots to
Business class as, like, a one-hour guest speaker and talk
about what has worked for me. I went in, and it basically
didn't work, and so, I think that having something like that
where you bring in local knowledge would be awesome.
Ms. DAVIDS. Thank you very much. I appreciate your service
and your testimony here today. And with that, I yield back.
Chairwoman VELAZQUEZ. The gentlelady yields back, and now
we recognize the gentleman from Tennessee, Mr. Burchett, for 5
minutes.
Mr. BURCHETT. Thank you, Chairlady, and I appreciate the
leadership you and the Ranking Member have shown in promoting a
very good bipartisan working environment for our Nation's small
business, and I want to thank you for that, ma'am. And I want
to thank our distinguished panelists today, both for your
service to our country as members of our military. My dad
fought in the Corps in the Second World War, and ma'am, his
colonel was a man named Chesty Puller on an island called
Peliliu. I am sure you have heard of that. He was the First
Marine Division and then went on to Okinawa and then went to
China for a short while to fight the communists.
My mama actually did not serve technically, but she flew an
airplane during the war. She had lost a brother fighting the
Nazis, so my family has a very good history, rich history in
our military service, and they are both buried at Veterans
Cemetery, and I am honored to be their little boy.
But I want to thank you all for what you what you did, and
I want to apologize to you for some of treatment you have
received. You took an oath to uphold our Constitution, and we
made some promises to you all, and frankly, we haven't kept
them. And dadgumit, it kind of ticks me off, and that is not in
my notes, but that is just from the heart, so I will get back
to my notes before I create an international incident and get
visited by some four star general somewhere.
But Mr. Leghorn, you state in your testimony that the SBA's
current disaster loan program has strict eligibility
requirements for those in our military. How will expanding the
definition from Active Duty to active service better assist
those small business owners that have an essential employee
called up to serve their country?
Mr. LEGHORN. Congressman, thank you for your question. So
currently, Guard and Reservists are only eligible for what we
call MREIDL, the loan program, when they deploy under Title X.
And the change from Active Duty to active service in statutory
text will allow, let's say, a National Guardsman that is called
up by the governor under Title 32 for disaster relief to
receive that loan, take advantage of that loan. It will allow a
business who maybe employed several National Guardsmen that
deployed for that disaster relief to also receive that loan. So
that is the main gist of what would happen when we change that
statutory text.
Mr. BURCHETT. Okay. I am very optimistic that the Patriotic
Employer Protection Act, which I was happy to work with my
colleague, Mr. Kim, on will help protect our employees who are
National Guard and Reservists when they are called upon to
serve their country. I want to thank you all again for your
service, and I will not ask any more boring questions for you
all, so you all can get on some more important things.
Chairlady, thank you again, ma'am, for your consideration and
your bipartisanship.
Chairwoman VELAZQUEZ. Thank you. The gentleman yields back,
and we recognize Mr. Hern, Ranking Member of the Subcommittee
on Economic Growth, Tax and Capital Access from Oklahoma.
Mr. HERN. Thank you, Madam Chairwoman. It is great to be
here. I thank our witnesses for being here as well. Thank you
for your service to our country. Like many on this panel, I am
the son of a 22-year Air Force veteran, 1955 to 1977, so my dad
turned 84 on the 4th of July, so I can never forget his
birthday.
I thank you for being here today and testifying to the
challenges of transitioning from military careers to a new
career in a civilian life. As a small business owner for over
34 years, I certainly know firsthand of how difficult it is to
become a successful entrepreneur. I also know that veteran
entrepreneurship is declining, and it can be extremely
difficult for our veterans to transition from the military into
a career entrepreneurship.
Because of this, myself and several of my colleagues
support the programs, organizations, and people who help
provide our veterans with the resources they need to start
their careers and become successful. We actually have 115,000
veterans in northeast Oklahoma where I serve. In my district,
this includes organizations and people like Pete Lewiler, who
was my veteran of the month in March, and Rachel Runfola from
Oklahoma Veterans Connection, a referral network which assists
them in finding various benefits; Mark Lownsberry from
Volunteers of America, an employment service organization which
helps veterans to find gainful employment; and Jonathan and
Jessica Shepherd and Stacey Hester from Eagle Ops, an active
outreach to veterans which provides relational and resource
connections to veterans, and there are many, many, many more. I
could spend the rest of my time talking about the wonderful
organizations that are veteran-led to help veterans.
My first question as the Ranking Member of the Subcommittee
as the Chairwoman spoke about, it is my goal to help provide
access to capital to the transitioning servicemembers who need
that resource.
Ms. Hart, in your testimony, you discuss the Boots to
Business program, and you said it does a good job outlining the
loan process and how to raise capital. I know you just touched
on it with Congresswoman Davids, but could you elaborate more
and describe the challenges you experienced? You started to
touch on it on accessing capital and how this program helps to
overcome these challenges?
Ms. HART. Well, I bootstrapped, so I didn't use any of the
programs that the business talked about, but I think one of the
most important things that it does is tells you also bad ways
to raise money, one of which would be running up credit card
debt or predatory loans, as folks have talked about. So in that
way, that was certainly helpful to, you know, steer me towards
staying very lean and not relying on credit cards.
Mr. HERN. Sometimes we make the access too easy and create
bad behaviors that are not conducive to being successful, and
not only does that not--that happens in the veterans world in
transition, it happens in the civilian world, and so it is
great to have organizations that work to help prevent that. So
it is great to have folks that are sitting on either side of
you that have experienced things as we go across the veterans
community.
Anybody else want to talk about the Boots to Business
program, because we have talked about it a lot over the past 7
months in here as it relates to our veterans. Any positives or
negatives?
Mr. DAVIDSON. I will just reiterate positives, sir. It is
just--I think it gives tools and it educates the individuals to
create a baseline for them to understand what they are getting
into, and just like with access to capital, making good
judgment. It will help them foster that good environment to
hopefully make decisions that will avoid catastrophic mistakes
with predatory lenders and things of that nature, but also give
them what the reality of is that it is not an easy thing to
start a business as yourself knows as a small business owner,
and that it will help them at least to start to focus on
structure because going from a structured environment to what
would be the civilian world of unstructure and building it
yourself, I think those types of things bring that--Boots to
Business kind of shows a little bit of a life of reality with
its curriculum, and it educates the servicemember enough to say
is this for me, or is it not for me? Or at least it plants a
seed for them to start to think am I going to be a veteran
entrepreneur?
Mr. HERN. Ms. Sayles, that kind of leads me into my last
question here. What advice would you give this Committee to
help future veteran entrepreneurs themselves as we aim to
tackle the issue of accessing capital to finance small
businesses?
Ms. SAYLES. I think that there needs to be some information
in the literature that is shared within the banking industry,
specifically on finding better means to work with small
businesses as a whole when they are new. A lot of them are not
interested in working with you if you don't have $10 million
revenue, or $5 million revenue, and so that puts us in a
position where we have to go to alternatives.
There are definitely alternatives including some non-
profits to get some lending, but most importantly, they need to
enforce something that will open the doors a little bit more,
force small businesses to be able to get capital, so they don't
have to use credit cards.
And in my case, it was not so much credit cards, but it is
called factoring in the Federal Government space, and some of
them can be very much predatory as well. However, I had an
advocate at the table with me that fought on my behalf which
made a difference which I know is an exception.
Mr. HERN. I thank each of you. I am also in the banking
world, so I know kind of the transition in government
regulations that have occurred over the last decade, and it
does make it very difficult for banks to meet some of the
capital requirements they have in order to work with small
businesses that don't have a lot of history. So duly noted that
things we need to work on. Madam Chairwoman, I yield back.
Chairwoman VELAZQUEZ. The gentleman yields back. Now we
recognize the gentleman from Minnesota, Mr. Stauber, Ranking
Member of the Subcommittee on Contracting and Infrastructure.
Mr. STAUBER. Thank you very much, Madam Chair. To the
witnesses, thank you for your time and attention, and I want to
thank each and every one of you for your service. That is not a
cliche that comes, you know, lightly. You have given us the
opportunity to live in a free country. My wife is also a
veteran, and she attempted to get a VA loan, and there were
some difficulties in 2010.
So you are speaking to a member that has been involved in
potentially going into small business and having that roadblock
because as a female veteran, we want our veterans, and in
particular, our female veterans to have that opportunity, the
entrepreneurial spirit that you all have, and be successful in
America.
I am just--I want to say that I am a co-sponsor of the VA-
SBA Act. I know that you have the--it is going to work. I know
that we need--there is some tweaks right now, but the testimony
that I have heard is incredible. And it is so interesting for
us to hear because many of us on this panel have experienced,
or been told firsthand there is not a better example than to
hear it firsthand, and your witnesses have told us some of the
concerns you have had.
We are going to make this better. It is our job to make
sure that our veterans are taken care of during their service,
and make sure that upon or prior to separation, you have the
ability to continue living the American dream if you want to be
an entrepreneur.
Now, Ms. Sayles, you talked about your leaving and going
into a position that you did. Was it the desirable one at that
point? I want to tell you that to have the VA-SBA Act go
through, it is going to give you all the opportunity and future
veterans the opportunity to succeed.
I am proud to be a member of the Small Business Committee
on Subcontracting and Procurement. It is an extremely important
that as Member Hern said, that the financial part of it is
available. You shouldn't have to climb over mountains to be
given that opportunity to get lending your way. I am excited to
be able to move this forward. And I don't really have any
questions, per se, because many of them have been asked.
As a member, one of the last to speak, I mean, I think that
it is important that we thank you for your service. Thank you
for being witnesses today and know that the Small Business
Committee is here to represent you. And I am looking forward to
this Act going through, and thank you once again.
Thank you, Madam Chair, and I yield back.
Chairwoman VELAZQUEZ. Thank you. And the gentleman yields
back. We are going to go into a second round of questions, and
I will recognize the gentleman from Maine, Mr. Golden, for 5
minutes.
Mr. GOLDEN. Maine, Colorado. They are both cold. Not this
time of year.
But you know, real quick, while I know that my Ranking
Member, Congressman Stauber is here, I wanted to ask Ms.
Sayles. You talked a little bit about--actually, my friend here
from Colorado that was sitting next to me, Congressman Crow,
called this--I am going to borrow the term, rent a vet problem.
And you talked about it, and Representative Stauber and I are
on the--you know, we Chair and are a Ranking Member of the
Subcommittee on this. I would like to hear how prevalent is
this issue of, you know, subcontractors who are vets being used
to get the contract and then kind of hung out to dry?
Ms. SAYLES. Well, actually, sir, it is two different
issues. A rent a vet is when we are referring to a veteran that
has actually accepted a nice six-figure income to sit in the
position as a President and CEO of a company, and yet, someone
else is actually running the company.
But as far as subcontracting, it is a big issue because it
is, you know, the means of getting into the Federal Government
space. I have an example of offering up an opportunity through
my relationships within the Federal Government. They trusted
me. They knew that I could bring the work. They knew that I
could perform.
However, I did not have the certification at that time
which was 8A, in order for a sole source opportunity to land,
so I utilized another company that had it. Unfortunately, that
company, as far as being equitable in the share, was not
completed. I was able to stay on the contract until the end,
but upon a 6-month extension, for an example, they removed me
from the contract. They took 40 percent of my revenue. I had to
lay off three people, and I had to reduce salaries across the
board in my corporate office.
Mr. GOLDEN. Do you have any ideas about how we can improve
the oversight of that?
Ms. SAYLES. The idea I would have would be Office of Small
Business Development Utilization Office, which is the overseer
of any small businesses working within the Federal Government.
Let them be involved. Instead of telling us if you are a
subcontractor, we can't do anything about it, they should be
able to intervene in some way and be able to support the
contracting officer in getting some type of filing of a report
that they are doing what they said they were going to do with
supporting a subcontractor to come on to the contract, instead
of removing them.
Mr. GOLDEN. Thank you. I would be interested in continuing
to talk. Maybe we can connect, and I will have my staff ask to
get you.
Ms. SAYLES. Yes, sir. Thank you.
Mr. GOLDEN. Thank you. I also just wanted to ask quickly
for anyone out there. Do any of these offices or opportunities
help veterans, including those looking to start a business with
dealing with, you all know this problem, State licensing and
certification, you know. When you get out, and you have got the
skill sets, maybe even a skill set you learned in the military
that you could use to launch a business, but we have got these
50 States with different licensing requirements, certification
processes. Like, do any of these programs help veterans
navigate that and figure out how to cut through some of that
red tape?
Mr. LEGHORN. Thank you for your question, sir. I think the
VBOCs, because they are regionally located, they provide that
specific service in counseling veterans as they go back to
where they came from, or where they lived prior to joining the
service. When they connect with the VBOCs, the VBOCs are going
to be able to tell them what licenses and certifications you
need to start a business in the industry that you desire to be
in.
Mr. GOLDEN. Thank you. I mean, this is a problem I think
among spouses, too, who have to sometimes relocate, but it is
just one that, you know, I have tried to work on at a State
level, but tough to do at a national level. So it is just a
huge problem that holds people back, so I don't know. If you
all have any ideas, share them with us.
And lastly, I would just ask. The great programs that you
are all talking about, I have never heard of them, you know.
TAPS is wonderful, but when I was getting out, I was infantry,
I just wanted to get out. And so, it is nice to hear that there
is, like, a reboot program out there, but still, I never heard
of it. And I am just one veteran, but I am sure I am not
unique.
So real quick, we have got, like, 30 seconds. Does anyone
have anything to say about what is the best way, in your
experience, to get word about these programs out to veterans on
the street?
Mr. DAVIDSON. Thank you, sir. It is going to be social
media, right. You are going to have to--especially you talked
about going to rural areas. I think that is one of the biggest
complaints that I hear is that people feel like they are left
out, especially when they relocate to Butte, Montana, or
somewhere along those lines. They feel like they are outside
of, let's say, a large city, and they don't have those
resources. There is ways that we can connect, and I think that
is where we are failing them is through those programs. They
need to be able to socially connect them.
Mr. GOLDEN. We always hear about veterans being lost in a
sea of goodwill. If we can't get the word out to them about the
programs, they can't take advantage of them. So thanks for that
feedback.
Chairwoman VELAZQUEZ. The gentleman yields back, and now we
recognize the gentleman from Ohio, Mr. Balderson, for 5
minutes.
Mr. BALDERSON. Thank you, Madam Chair, and thank you all
for your service, and thank you all for being here today. My
question is for Mr. Davidson. The SBA has the 8A program to
provide business training, counseling, marketing, and technical
assistance to small businesses that have been certified. The
certification is intended for organizations that are owned and
controlled by socially and economically disadvantaged citizens.
Do you believe disabled veterans, small business owners, are
socially or economically disadvantaged after having given so
much for this Nation?
Mr. DAVIDSON. Sir, thank you for that question. I want to
start by saying that it is an interesting question with regards
to veterans being socially and economically disadvantaged,
because the one thing I would say about veteran-owned
businesses and disabled service veteran-owned businesses, it is
the only status you have to earn, if you think about it.
So there is nothing else out there. Everything else is done
either by birthright or affinity in a sense, but for veteran-
owned businesses, let's say--take the service disabled part out
of it, it is an earned benefit. So with that in mind, I would
say unfortunately, in some cases, let's say a service disabled,
there would be an economic or social disadvantage to them.
And I know individuals, even in the 8A program, that have
actually gotten in on the 8A program from experiences that have
occurred from their military service, especially with regards
to if you are, you know, isolated in an area for a certain
period of time would qualify you for those types of things.
And, of course, if you are looking at, and I will tell you
from experience that you get a stigma attached to you with
regards to if you are a service-disabled veteran or veteran. So
I do think there are disadvantages, unfortunately, with regard
to being certified that way and how we are viewed in a certain
manner.
So I do believe that there is a very--there is absolutely a
parallel, and I also know, like I said, veterans that have
become 8A certified with their experiences that they have had
from being a service-disabled veteran.
Mr. BALDERSON. Let me follow up with you on that great
response. What would be the benefits of allowing all service-
disabled veterans and small businesses to receive equal 8A
treatment?
Mr. DAVIDSON. I think it is--we see it now. I see how the
8A program grows, right? You have your build-up phase, phase
one, years 1 through 4, and then you graduate to phase 5
through 9. I think it is the same thing. I think they would
receive the same benefit. But I do caution, and I believe, you
know, Ms. Sayles, same thing. She would be a part of the 8A
membership program.
One of the failures that I see all the time in 8A programs
is that there is a--you have a set-aside program, right, that
works very well with the 8A, but it is only for 9 years. A lot
of programs I see, you see that revenue drop because they no
longer have that advantage once they graduate from the 8A
program, and they are no longer sitting there and having that
one lane.
So I think if we are going to apply it to the veterans, I
think the same thing has to be improved with the 8A program, is
that you need to properly prepare them for that graduation
phase. And I know that the SBA does a good job of it now, but I
think they also have to recognize that one day, essentially, it
shuts off, right. I mean, you lose that advantage, and I think
that is an important part of how we would probably want to
develop that program a little bit, so they understand that
after the 9 years, you may no longer have this benefit, and you
should be absolutely ready to be able to market and compete in
a certain market. It is going to be a free market, essentially,
that you are not going to have this benefit anymore.
Mr. BALDERSON. Okay. Thank you very much.
Madam Chair, I yield back my remaining time.
Chairwoman VELAZQUEZ. The gentleman yields back, and Mr.
Stauber is recognized.
Mr. STAUBER. Thank you, Madam Chair.
Just another question for those, obviously, you are
separated. Could this government have done better by giving you
some education, either at the end, or just before you separated
from service? And I will ask this for everyone. Just give us a
20-, 30-second answer. Mr. Leghorn.
Mr. LEGHORN. Thank you for your question, sir. I think it
is crucial that we not only give classes regarding transition
assistance at the end of a servicemember's career in the
military, but we should do it in the middle and towards the
beginning as well. The more you allow somebody to plan for
their separation, the better footing they are going to be.
Mr. STAUBER. Mr. Davidson.
Mr. DAVIDSON. Thank you, sir. In my personal experience,
unfortunately, I was in a very unique place where I was
abruptly, you know, retired because of a medical injury. I
didn't have time to transition or plan at all, so I was within
a 6-week period, and I believed that I was going to be a career
military person. So, I believe just even from a little bit of
education, there was a great benefit. And just again, having
the ability to go back and see it now, and I was able to
observe Boots to Business, thanks to some friends of mine, and
even the Boots to Business reboot. Absolutely it is an
invaluable tool that they need.
Mr. STAUBER. Ms. Hart.
Ms. HART. I knew 2 years before I was going to get out that
I thought I would start a business when I did get out, and I
actually started my business a year before I separated and was
doing the two concurrently, and that runway was invaluable. It
made it so that by the time I got out and lost my income, I had
another income. If I had started my business the day after, it
would have been a huge gap financially.
And so, I wish I had taken Boots to Business earlier.
Taking it when I did solidified some of the things that I had
done, but it definitely could have helped taking it before.
Mr. STAUBER. I would say you are probably the exception.
You were preparing for your exit, and that is why you were
successful.
Ms. Sayles.
Ms. SAYLES. Thank you, sir, for the question. My thoughts
on it actually is that yes, it is definitely something that is
required, something that was not offered at all during the time
in the 10 years that I served in the military. Also, I was a
Marine, you know. We were operating under different rules and
regulations than every other branch of the military, as far as
I am concerned. They are strictly focused on you being a Marine
while you serve, so you are not trying to do a lot of outside
activities.
However, her story is a great story because there was time
to prepare having a year in and getting some training and some
insight. It is hugely valuable for her, and it would be for
anyone that is interested in entrepreneurship. And also, sir, I
must add. When you think about someone who has put in 20-plus
years, getting out of the military and then deciding to go off
and get a 4-year college degree is not something you would
think that they would be interested in doing. So
entrepreneurship is a great option for them.
Mr. STAUBER. I expected those answers. Ms. Hart, yours was
a little bit different, but I think you were forward-thinking
enough to do that. My wife was 24 years, and it was the end,
the end date. With that transition, it is hard.
So, I think, we, as elected members, need to ensure that
that is put in place. We owe that to you, and as Mr. Davidson
just said, you have earned that. We owe and honor your service.
Thank you, Madam Chair. I yield back.
Chairwoman VELAZQUEZ. Thank you. I have one further
question for either Mr. Davidson or Ms. Sayles. In the Federal
contracting space, so the government, the Federal Government is
the largest purchaser of goods and services around the world.
The most effective way we can empower veteran-owned businesses
is facilitating for them to do business with the Federal
Government. What is the number one challenge that you can share
with us that you are facing when you are doing business with
the Federal Government?
Mr. DAVIDSON. So thank you for the question, Madam
Chairwoman. I think the biggest issue is education. Not just
for me, I am just saying for in general. I think if we look at
a hole in the contracting population, commercially speaking,
Main Street businesses, you are looking at 95 percent of that
is the type of businesses that veterans run. We are stuck in a
Beltway where about 5 percent makes up the majority of what
government contracting opportunities are. They are all sitting
here in the hub. So when we leave this area of the Beltway, the
rest the businesses for veterans are Main Street. They are not
even thinking about that they have these opportunities. So it
is a matter of us educating them and letting them know of the
government procurement opportunities.
I will give you a perfect example. We have very large
veteran-owned businesses that I know that are commodity
brokers, right. Black Rifle Coffee Company is a perfect example
of it. They want to work in the Federal space. They have no
idea. They are doing an incredible job, but they don't know how
to get into the space, and they even tried to come in. I am
just saying as an example, I am not saying they are the end
all, be all, but the success they have had on a Main Street
type business selling coffee, right, how does that translate to
contracting? Well, we know there is a lot of different ways
with regards to how, you know, people buy coffee, especially
for the military, but they don't know how to get in.
And I always use that example is that they have tried and
they have tried to learn, but it is the education process. But
I think that is where we are missing our gap. We are stuck in a
bubble in a 5 percent that represents the most of the buying
power for the Federal Government through veterans here, and
maybe San Diego and a couple other spaces, but it is mostly
generated here. We are forgetting about Main Street or the 95
percent.
Chairwoman VELAZQUEZ. Thank you very much.
Let me take this opportunity to thank all of you for taking
time to be here today. I know you all have busy schedules, but
what you have shared with this committee today is so important.
Veteran-owned small businesses and entrepreneurs play a key
role in strengthening our economy and creating jobs. With
200,000 servicemembers transitioning from the military to
civilian life each year, the need for additional counseling
resources, access to capital, and contracting opportunities
will increase.
The testimony we heard today provides invaluable insight
into the challenges and benefits of being a veteran
entrepreneur in this country, and will help guide the committee
as it moves forward with legislation to prepare veterans for
entrepreneurship. I want to thank all of you for being here and
for your tireless and undying service to our country.
I would ask unanimous consent that members have 5
legislative days to submit statements and supporting materials
for the record. Without objection, so ordered. And if there is
no further business to come before the committee, we are
adjourned. Thank you.
[Whereupon, at 1:18 p.m., the Committee was adjourned.]
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