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Letter to Department of Veterans Affairs Secretary Eric Shinseki - Noncompliance of the Small Business Act


Location: Washington, DC

House Small Business Subcommittee on Contracting and Workforce Chairman Richard Hanna (R-NY) and Veterans' Affairs Subcommittee on Oversight and Investigations Chairman Mike Coffman (R-CO) today wrote to the Department of Veterans Affairs Secretary Eric Shinseki about the legality of their small business procurement advocate performing the functions of two jobs instead of focusing on small contractors.

The Small Business Act mandates that the Director of the Office of Small and Disadvantaged Business Utilization (OSDBU) must concentrate on their advocacy responsibilities for small businesses and prohibits them from holding any other position. However, during Congressional testimony, the Veterans Affairs Director of OSDBU admitted that he is also performing the job of Director of the Center for Veterans Enterprise, an office that primarily serves an auditing function rather than promoting small businesses. The role of the OSDBU is to promote the maximum practicable utilization of small businesses in federal contracting at each agency, both at the prime and subcontract level. This role should be focused solely on advocating for small business contracts and acquisition assistance, as well as fighting insourcing and unjustified contract bundling.

The official in question, Tom Leney, testified during last week's joint-Committee hearing. The hearing focused on inconsistencies in service-disabled veteran's federal contracting programs at the Small Business Administration and Department of Veterans Affairs and how they inadequately serve veterans.

Hanna and Coffman wrote in the letter, "…during the March 19 hearing, Mr. Tom Leney stated that he is both the OSDBU Director and the Director of the CVE. When asked about the conflict with Section 15(k), Mr. Leney responded, "I can do both because the act of verifying veteran-owned small businesses enabled 5,400 veteran-owned small businesses to participate in a program that has distributed more than $3.8 billion in procurement dollars to veteran-owned small businesses. So I think that this program that the VA has established has created a gold standard. In the federal government, when people know that a firm has been verified by the VA, they can take it to the bank. And the results, this is real money to real vets, and it is a program that benefits veterans. And there are 5,400 firms in this program that get those benefits. So I personally do not have any issue with a conflict of interest because we are helping vets."

Section 15(k) of the Small Business Act was amended by a provision in the latest National Defense Authorization Act (NDAA), elevating the Director of OSDBU position to a senior acquisition leader in the agency and prohibiting them from holding any other position so they can concentrate on their small business advocacy responsibilities. The provision began as the Small Business Advocate Act of 2012 (HR 3851), which was introduced by House Small Business Committee Chairman Sam Graves (R-MO). The legislation was a response to a 2011 GAO report that found seven agencies in noncompliance of the Small Business Act. Former Subcommittee Chairman Mick Mulvaney (R-SC) sent letters to the noncompliant agencies challenging them to comply. The agencies took steps to comply with the Small Business Act, however, evidence remains that most agencies haven't complied with the recent NDAA Small Business Act provisions signed into law on January 2.

The committee requested that information documenting how VA intends to achieve compliance with the Small Business Act be provided by April 24, 2013.

Full text of the letter is available in PDF format below:

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