Johnson planning bill to change VA small business contracting process

Tuesday - 8/7/2012, 5:34am EDT

Rep. Bill Johnson (R-Ohio)

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Scott Denniston, executive director of National Veteran-Owned Business Association

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An Ohio congressman is drafting legislation to make it easier for service-disabled veteran-owned businesses to obtain contracts in a set-aside program at the Veterans Affairs Department. No longer would an applicant have to prove they control 100 percent of their company's decision-making to be eligible.

"It makes absolutely no sense that a veteran who owns 51 percent of the company, which is the majority of the company ... would not be considered in control of the company," said Rep. Bill Johnson (R-Ohio), in an exclusive interview with Federal News Radio. "I don't know of any company where any one person, other than a sole proprietorship, has 100 percent control."

Johnson, who is chairman of the House Veterans Affairs Oversight and Investigations Subcommittee, did not provide specifics about the bill's new requirements. But he did say the legislation will address what he believes is VA's "misinterpretation" of current law.

Rep. Bill Johnson (R-Ohio) (Photo:House.gov)

VA implemented the 100 percent control requirement in response to a 2010 law aimed at preventing ineligible companies from winning the department's service-disabled veterans contracts.

The 100 percent provision creates a "bright line" and removes subjectivity from the process examiners use to decide whether a business qualifies for the service-disabled veteran set-aside program, testified Thomas Leney, executive director of VA's Office of Small and Disadvantaged Business Utilization, in a subcommittee hearing Thursday.

"We have improved our quality control and become more aggressive in referring firms that we suspect are misrepresenting their status," Leney said in written testimony. "In FY 2011 we referred 25 firms to the Office of Inspector General (OIG) for investigation as possible misrepresentation. So far in FY 2012, we have referred 59 firms."

But Johnson questioned the VA's interpretation, saying the rule falls short of the law's intent to ensure contracting opportunities for service-disabled veterans.

"We try to stay away from legislative solutions because it's better when the VA understands the need for change," he told Federal News Radio. "But when the VA is reading part of the law, but not the intent of the law, and interpreting the language in a way that is ... making it difficult for veterans to get verified and become a contractor," Congress must step in.

Scott Denniston, executive director of National Veteran-Owned Business Association

VA's verification program has always been a balance between increasing veterans' access to government contracts while ensuring fraudulent players aren't awarded federal funds, said Scott Denniston, the director of the VA's Office of Small and Disadvantaged Business Utilization from 1987 to 2009.

"It's a step in the right direction, but it's a question of how far you want to take that step," he said. "I think the system is inherently flawed when half the people that apply get turned down."

Denniston, who is now executive director of the National Veteran Small Business Coalition, said he agrees with Johnson that improvements are necessary. But he stopped short of endorsing the idea of legislation.

"Personally, I don't think new legislation is necessary as much as Congress getting VA to write reasonable rules and interpret them reasonably and consistently," he said. "That could be done over lunch between the congressman and the [VA secretary]."

VA said it will work with Congress to address concerns about the rules.

"VA is constantly looking to improve its processes for ensuring eligible veterans have priority in getting VA contracts," said Josephine Schuda, a spokeswoman for VA.

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