Once again, the U.S. Department of Veterans Affairs (VA) plays it safe under the guise of advocacy for Veteran entrepreneurs. Many Veteran entrepreneurs are pleased with VA’s new “aggressive” socioeconomic procurement preference program goals—but should they really be pleased?
Six months into Fiscal Year 2019, the VA Office of Small and Disadvantaged Business Utilization (OSDBU) announced new “aggressive” goals for Service-Disabled Veteran-Owned Small Business (SDVOSB) and Veteran-Owned Small Business (VOSB). The new “aggressive” goals represent the first increase in SDVOSB and VOSB goals at VA in ten fiscal years, despite VA significantly exceeding the goals each year.
To be sure, VA is the leader in contracting with SDVOSBs and VOSBs—as it should be. VA has unique and unprecedented contracting authorities under Public Law 109-461, the Veterans Benefits, Healthcare and Information Technology Act of 2006. The entrepreneurial provisions of the Act, Sections 502 and 503, were implemented in VA as the Veterans First Contracting Program, effective June 20, 2007. Additionally, notwithstanding Federal law, spending its acquisition dollars in the Veteran business community is a logical extension of VA’s mission.
Section 8127 of Title 38 United States Code requires the Secretary of Veterans Affairs to annually establish procurement preference goals for SDVOSBs and VOSBs. This hasn’t happened each year as required, and in some instances happened with just a matter of weeks remaining in the fiscal year.
A goal is generally defined as the object of a person’s or organization’s ambition or effort, an aim to achieve a desired result or outcome. Can you imagine any Veteran entrepreneur setting, as their business goal, ambition, or desired outcome—to do less business? But that’s exactly what VA’s “aggressive” SDVOSB and VOSB will allow—for VA to do less business with SDVOSBs and VOSBs, and still achieve its goal.
To put this into context, VA had goals of 12% and 10% for VOSBs and SDVOSBs, respectfully, in Fiscal Year 2018, the same flatlined goal for many years. Based on a goaling report extracted from the Federal Procurement Data System—Next Generation (FPDS-NG) on March 1, 2019 (this goaling report is not the official SBA goaling report, but quite representative of VA’s accomplishments) VA reported accomplishments of $6,022,997,584 and $5,764,665,630 for spending with VOSBs and SDVOSBs, respectively, which represented accomplishments of 22.23% and 21.27% for VOSBs and SDVOSBs, respectively, against the total reported eligible small business dollars of $27,091,608,999.
If VA’s new “aggressive” VOSB and SDVOSB goals were in place in Fiscal Year 2018, VA could have spent over $1.4 Billion less for VOSBs and over $1.6 Billion less with SDVOSBs and still met the new “aggressive” goal. That is VA could have spent nearly $4.6 Billion less with VOSBs and still have met the “aggressive” goal. This is what VA’s new “aggressive” goals allow for—to spend less with VOSBs and SDVOSBs and still pat itself on the collective back for exceeding the “aggressive” goals.
For further context, for the current fiscal year, through April 30, 2019, and as of May 1, 2019, VA reported expenditures with VOSBs and SDVOSBs of $2,588,034,021 and $2,459,280,458, respectively, which represents accomplishments of 23.99% and 22.80% for VOSBs and SDVOSBs, respectively, against the total small business eligible dollars reported of $10,788,534,579. Under the new “aggressive” goals, VA could have spent nearly $754 Million less and over $841 Million less with VOSBs and SDVOSBs, and still have met its new “aggressive” goals.VA FY 2019 thru 4-30-2019 AO 5-1-2019
Please keep in mind, VA and Federal departments and agencies can and do take credit for expenditures with companies in multiple socioeconomic procurement preference program categories. For example, an expenditure with a SDVOSB is also counted in the VOSB and small business categories.
Do the new “aggressive” goals foretell what is to come? Will VA’s plans for its Med/Surg Prime Vendor Program result in lower spending with VOSBs and SDVOSBs and they know this, ergo, the new “aggressive” goals? There must be a valid explanation as to why VA sets substantially lower goals than its actual accomplishments for VOSBs and SDVOSBs. Some have opined VA’s new “aggressive” goals which all but guarantee they will continue to be exceeded by VA are an insurance policy for VA executives having, as part of their performance standards, accomplishments of small business and socioeconomic procurement preference program goals. Everyone saw how performance ratings and bonuses work at VA during the patient wait time scandal which rocked VA several years ago.
VA’s OSDBU is thankfully under new leadership these days. But it appears they are picking up where the previous leadership team left off, under the guise of advocacy with their new “aggressive” goals.
This is lunacy masquerading as advocacy. What do you think? Please take the “Advocacy or Lunacy” Survey at: https://www.surveymonkey.com/r/VF8JDS8. Survey results will be published with the next VA socioeconomic update in June and shared with Veteran Service Organizations and others.
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 Percentages from FPDS-NG used in this document are rounded to the nearest one-hundredth of a percent, and dollars are rounded up to the nearest whole dollar.