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Veterans say Pentagon is failing them

The federal government promised four years ago to try and send some business to those who served their country in the military. Since then, such contracts have fallen by half, and veterans groups are fighting mad about it. By Michael Moran.
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When Bob Harris heard four years ago that the federal government had set itself the goal of awarding at least 3 percent of all contracts to veterans, the disabled Navy veteran and computer consultant put together a bid for a Veterans Administration cyber-security contract, investing some $300,000 in the effort. But Harris soon discovered what other veterans had before him: The government is not putting its money where its mouth is.

IN FACT, SINCE THE Bush administration took office, the percentage of total contract money going to veterans has plummeted, with the Department of Defense’s enormous coffers proving particularly elusive to the men and women who served their country.

“I expected a little more enthusiasm,” says Harris, who broke his back at the U.S. Naval Academy in the early 1980s but served his five years on board ship nonetheless. Harris Consulting, his Alexandria Va.-based firm, has won contracts from several Fortune 500 firms, but the VA was another story.

“I didn’t get any enthusiasm, though,” he says. “Frankly, they just didn’t care.”

It was not supposed to work this way. Under legislation passed by Congress in 1999, the Pentagon and all U.S. federal agencies are required to try to award at least 3 percent of their total budget for procurement to companies owned by veterans, in particular “service-disabled veterans” — those who lost limbs or were otherwise maimed in service of their country.

Angela B. Styles, who handles federal procurement policy at the Office of Management and Budget, told Congress earlier this year that the Bush administration wants to expand contracts going to veteran-owned businesses and “is working hard to place the interests of small and new entrants to the procurement system at the forefront of our policy.”

Yet since the Bush administration took office, the federal government’s performance in this area has been exceedingly poor.


Data obtained from the government’s Federal Procurement Data System shows that the overall share of federal contract dollars flowing to veterans has fallen by nearly half since 2000, from close to 1 percent that year to about 0.5 percent in fiscal 2002, the last year for which statistics are available.

Particularly galling to veterans groups is the failure of the Defense Department to address the issue. These same statistics show that, of the approximately $60 billion allotted to the Pentagon for procurement in 2002, only about $786 million — or 0.51 percent — went to veterans. A mere $150 million, just 0.1 percent, was awarded to businesses run by those maimed in battle or, like Harris, in accidents while serving in the military.

“Since 1999, when the goal was set, they’ve gone down,” says Rep. Rick Renzi, R-Ariz., and a member of the Veterans Affairs Committee in the House. “The Pentagon was close to 1 percent, and now they’re about half a percent.”


Renzi, who has sponsored legislation in the current session to address the problem, says, “The Pentagon can offer excuses, but they’re just that: excuses.”

A Pentagon spokeswoman, Cheryl Irwin, took issue with that idea. She noted that the goal is not a legal requirement and said that defense officials are doing their best to improve the current numbers.

“We continue to search for these small businesses that can fill DOD needs, but we suspect that there are simply not enough of them that sell what we buy,” she said in an e-mail response to “Additionally, when we find one small business owned by a service-disabled veteran, we tend to find a cluster of them (which means that the service-disabled veterans are competing against each other for the same contract). This may be a result of the nature of businesses ‘maimed’ people can own and operate.”

Because the 3 percent threshold is a “goal” rather than a legal requirement, veterans groups have little leverage on the issue. Unlike the 5 percent “set-asides” for minority and female-owned businesses that are legally required when federal contracts are let, veterans groups have tried to be patient, according to one lobbyist, hoping that a sense of obligation on the part of the military and some prodding by sympathetic members of Congress would make the difference.


But their patience appears to have run out this spring as a flood of new funding for defense-related endeavors failed to trickle down to vets. With the Pentagon’s procurement budget now at $70 billion, and with defense officials largely overseeing the distribution of hundreds of billions of dollars in contracts for reconstruction in Iraq, lobbyists say they faced a “closed door” in discussions with the Defense Department on how to involve some of the 800,000 veteran-owned businesses in fulfilling these contracts.

“This latest go-round in Iraq really has kind of tipped the scales, and it’s boiled over to the point where we’re like, ‘What the hell is going on?’” one lobbyist for veterans issues said, requesting anonymity. Several veteran business owners contacted for this article, including a Vietnam-era vet whose soft drink distributorship was repeatedly turned down for contracts at Army bases in the Southwest, said they felt deeply betrayed.

“The very people to create disabled veterans are some of the worst non-compliers,” said Joseph Forney, who says he was told no first by the Pentagon, and then by Coca-Cola when he asked the Atlanta-based giant for regional subcontracts.

“You’d think the federal government would be most willing to help those who fight for them,” he says.

Other veterans would not publicly criticize the military, some out of loyalty, and some out of fear that future opportunities would be lost forever.

“Maybe they’ll fix this thing, you know?” one disabled veteran businessman said. “They’ll remember who said what.”

There are some 23 million veterans in the United States, about 2 million of them classified as disabled. Congressional data estimates that about 800,000 small businesses are owned by those veterans — some 200,000 of them by disabled vets.

“These are the very same guys and gals they’ve sent into the cauldron of fire over there, and you’d think they would embrace the idea of making sure they can make a living out of what is left of their lives,” the veterans lobbyist said.

Renzi, the Arizona Republican, concedes that Congress may not have been aggressive enough in overseeing the issue. Among other things, he notes, the Defense Department was directed by Congress in 1999 to create a database of veteran-owned businesses so that the military’s local “small-business contract officers,” who are spread around the country, could actively seek matches that would advance the goal toward 3 percent. The Veterans Administration has created a VetBiz Vendor Information Pages Web site, but it currently remains under construction.

Michael Moran is senior correspondent at