Vets say the VA fails to give former warriors preference in contracting

McClatchy NewspapersOctober 21, 2011 

WASHINGTON — Rodney Marshall just wanted to sell a few electric griddles to VA hospitals.

Instead, the 40-year-old former Marine ended up in a battle with the Department of Veterans Affairs over whether they're following a law designed to help companies owned by service-disabled veterans.

"It sickens me that the place that vets go to get help won't even buy from us," Marshall said. "They weren't even considering us."

Marshall, who returned from the Persian Gulf War with injuries to his knees, hips and back, as well as post-traumatic stress disorder, runs a commercial kitchen supply business in Portage, Mich., with his wife.

Frustrated by not being able to seek a pair of VA supply contracts because the bidding was restricted, Marshall filed a protest against the department with the U.S. Government Accountability Office. He claimed that the VA failed to follow a 2006 law — known as "Veterans First" — requiring it to set aside work for qualifying service-disabled, veteran-owned firms.

After an investigation, the GAO agreed. The VA now has two months to respond to the GAO's recent findings.

The dispute comes as President Barack Obama on Friday announced plans to formally end the 8-year-old war in Iraq. He plans to bring most of the 50,000 remaining troops home by the end of the year and pledged that economic opportunities would be available to them.

But there could be another battle ahead for Marshall and other veterans like him who've long complained of the VA's purchasing practices.

An internal VA memo dated Oct. 17 and obtained by McClatchy states that, because the GAO is part of the legislative branch, the VA was not bound by its decision. It said the issue would likely be decided by the courts.

"The GAO recommendation does not change how VA will acquire goods and services in support of its mission," the memo stated.

Marshall said the VA was "smacking the law in the face. That's how a lot of us in the veterans' business community are taking it, that the decision means nothing."

Prior to the memo's release, VA spokesman Josh Taylor had said in a statement: "VA takes its contracts with small business very seriously and will continue to strongly support eligible veteran-owned small businesses who seek to do business with the federal government."

But the VA also noted that it awards more contracts to service-disabled, veteran-owned businesses than other federal agencies. They received $3.1 billion in VA contracts in fiscal 2010 of the more than $15 billion worth of business the agency does.

Marshall's company, Aldevra, has one kitchen supply contract with the VA, apart from the others he has been unable to win.

But by prevailing in his protest, the former Marine lance corporal has shed light on VA's contracting practices that veterans and supporters contend has denied many other former troops turned business owners the opportunity to compete.

"It's been an ongoing battle," said Frank Clay, a service-disabled veteran and VA contractor from Olathe, Kan. "Out of all the federal agencies, they (the VA) should rule in favor of the set-aside and try to make the process better."

Clay, whose Clay Group company distributes medical and janitorial products, said he doesn't understand why the agency isn't embracing "the spirit" of the 2006 law.

"The irony is, this is the Department of Veterans Affairs," Clay said.

Indeed, the GAO's decision on Marshall's protest underscores the continuing frustration that a lot of veterans and their supporters sometimes have with VA policies.

They said that for all of the VA's worthwhile efforts, they were puzzled that an agency whose ostensible purpose is to champion the concerns of veterans seems to occasionally go out of its way to thwart them.

The GAO's findings, however, are more than just one small businessman's victory over a massive government bureaucracy, supporters said.

"It's a significant decision because it will open up additional opportunities to veterans and service-disabled veterans who wouldn't have had access to those same opportunities," said Pamela Mazza, a Washington attorney whose firm represents small- and mid-sized government contractors, including many owned by veterans.

The VA buys the bulk of its goods and services — 60 percent, according to the GAO — from a pre-screened list of federal contractors known as the Federal Supply Schedule. It's a catalogue of companies offering everything from toilet paper to storage tanks.

But getting on that list can be a hurdle for some, particularly newer, less experienced businesses like Marshall's. He couldn't bid on the two kitchen supply contracts because they were restricted to contractors on the schedule.

Even the VA's own website cautions, "Being a contractor can require significant investment of time and expenditure of resources."

Scott Denniston, former director of VA's Office of Small Business and Center for Veterans' Enterprise, said that the agency's reliance on the schedule has hurt service-disabled, veteran-owned small businesses.

"Absolutely," Denniston said. "If you look at all the things VA is using the Federal Supply Schedule for, you can extrapolate that a lot of that money could have gone to the service-disabled veterans community."

The VA maintains that its contracting practices were "in the spirit of the Veterans First legislation."

But according to the GAO, the VA rejected the idea that the Veterans First law, or even the VA's own rules, required it to first seek eligible veteran-owned small businesses before going to the Federal Supply Schedule to find contractors.

Veterans are perplexed by that interpretation of the law.

"'Veterans First,'" said Rick Weidman, executive director for policy and government affairs at Vietnam Veterans of America, "means you should be considering veterans first."

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McClatchy Newspapers 2011

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