Disabled Vets' Set-Aside: Too Far or Not Far Enough The set-aside and sole-source contracting program for service-disabled veterans has been operating for less than three months, but it is already igniting controversy. A coalition of veterans’ groups is urging Congress to make SDV set-asides mandatory, comparable to the provisions of 8(a) and HUBZone set-asides. But a leading defender of the 8(a) program complained that the Small Business Administration has already exceeded the intent of the law by giving businesses owned by service-disabled veterans equal status with 8(a) and HUBZone firms. The differences were aired July 15 at a joint hearing by subcommittees of the House Small Business Committee and the House Veterans Affairs Committee. Representatives of several federal agencies described their efforts to identify more businesses owned by service-disabled veterans, but they acknowledged that meeting the congressionally mandated 3% procurement goal will be a challenge. Before the set-aside program was created, SDV companies received less than two-tenths of 1 percent of federal prime contract dollars in fiscal 2003, according to GSA’s Federal Procurement Data System. The interim regulations establishing the SDV procurement program say contracting officers “may” set aside contracts for those firms; regulations governing the 8(a) and HUBZone programs provide that contractors “shall” set aside work when two certified, qualified businesses are available to bid. The Task Force for Veterans’ Entrepreneurship, whose members include most major veterans service organizations, urged Congress to give the SDV program similar mandatory status. Rep. Nydia Velazquez (D-NY) said SBA’s interim rule goes beyond the authority of the law by giving SDV firms parity with 8(a) and HUBZone contractors. In issuing its interim rule in May, SBA said contracting officers “should look at the 8(a), HUBZone, and SDVO Programs before considering setting aside the requirement for [other small businesses].” The rule does not say which of the three programs should get first priority. Creation of the SDV set-aside “escalates in-fighting within the business community,” said Steven Schooner, co-director of the Government Procurement Law Program at George Washington University in Washington. “This program does not create new opportunities for small business,” he told the committee. “The program merely redistributes opportunities…It pits small businesses against each other.” The Task Force for Veterans’ Entrepreneurship also urged Congress to set up a certification program through the Department of Veterans Affairs to guard against firms falsely claiming to be owned by service-disabled veterans. Professor Schooner agreed, saying SBA’s self-certification system “opens the door for abuse.” Underlining the difficulty of meeting the 3% goal, as of July 9, only 5,006 out of nearly 180,000 small businesses in the Central Contractor Registration identified themselves as SDV-owned. “These numbers do not bode well for being able to meet our goal,” testified Frank Ramos, director of the Defense Department’s Office of Small and Disadvantaged Business Utilization. Agency representatives acknowledged that no one has an accurate estimate of how many SDV-owned firms exist. Part of the agencies’ outreach is aimed at finding companies that are already in the federal marketplace, but have not registered as SDV-owned. In March GSA found only 167 firms on its schedules that were designated as SDV-owned. The agency notified schedule holders about the new set-aside, and by June 30 the number of businesses identifying themselves as SDVs had more than doubled, said Brad Scott, administrator of GSA Region 6. But those were not new companies; they were existing federal contractors who changed their registration. James Hudson, an SDV business owner from Centennial, CO, told the subcommittees the set-aside program “will likely prove most beneficial to service-disabled veterans already in the federal procurement system.” The SBA rule and the amendment to the Federal Acquisition Regulation were issued as interim rules; they could be changed after regulators consider public comments.