Legion testifies on challenges facing veteran-owned small businesses

Davy Leghorn, assistant director of The American Legion's National Veterans Employment and Education Division, testified June 7 before the Subcommittee on Investigation, Oversight and Regulation. Leghorn’s testimony focused on the challenges facing veteran-owned small businesses operating as wholesale distributors under the Department of Veterans Affairs (VA) Medical Surgical Prime Vendor-Next Generation (MSPV-NG) program.

“MSVP Next Generation not only reduces federal contracts for veteran-owned businesses, but also sidesteps the rule of two,” Leghorn said. “Privatizing the functions of the VA Office of Acquisitions and Logistics presents a conflict of interest and harms small businesses.”

The “rule of two” is an obligation for government purchasing officials to conduct market research. If it validates that two small businesses can do the job at a fair and reasonable price, then the contract is set aside to be awarded to small businesses. The Veterans Health Care, Benefits and Information Technology Act of 2006 intended for the VA to adhere to the rule of two even after they have met the minimum goals for utilizing service-disabled veteran-owned small businesses. This was affirmed by the Kingdomware Tech. Inc. v. United States Supreme Court decision in 2016. Since then, the VA has created internal regulations and policies to work around the court’s ruling, leveraging the narrative that veterans’ lives are at stake due to the burden placed upon them by the decision.

“We believe VA is the most qualified to deliver health care services to veterans, and we want them to step up to their responsibilities,” Leghorn said. “The intimation that the adherence to the Vets First procurement priorities could potentially cause catastrophic disruption to the health care supply chain is markedly false.”

To help the VA carry out their mission of serving America’s veterans, Congress established the Veterans First Contracting Program, also known as Vets First. This program gives the VA authority to award sole-source contracts to veteran-owned small businesses so long as they are a responsible source. The contract falls between $150,000 and $5 million, and the contract can be made at a reasonable price.

“Despite this authority, the VA has continued to impede its own authority and work against the intentions of Congress by creating internal regulations and policies that make it harder to award contracts to veteran-owned small businesses,” said Rep. Trent Kelly, R-Miss.

The VA filed a justification and approval to move thousands of medical products under the control of four prime vendors, according to Kelly. Many of these products could be purchased from veteran-owned small businesses. Instead, the VA is including small businesses at the subcontracting level and have provided no details for a plan.

“The VA has used many excuses for these actions, the most common being that it’s too burdensome or too expensive to work with veteran-owned small businesses,” Kelly said.

The American Legion is an advocate for reasonable number of federal contracts to be set aside for veteran-owned small businesses, according to Resolution No. 154.

“It is clear from today’s discussion that the theory that contracting with veteran-owned small businesses is expensive and burdensome is nothing more than a misconception,” Kelly concluded. “Therefore, the VA needs to take their responsibility to help America’s veterans succeed in all aspects of life seriously. We shouldn’t try to meet goals for veterans — we should try to exceed them.”