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Office of Public and Intergovernmental Affairs

Remarks by Former Deputy Secretary W. Scott Gould

VA Small Business Conference
Chicago, IL
May 25, 2011

Good morning. It’s great to be here with small businesses. Secretary Shinseki and I have both worked in the private sector. We’ve been in your shoes—trying to figure out how to work with the federal government. Hopefully you will leave here today with a better understanding of how you can do business with us.

It’s the small businesses of America, who as the president says, “are the backbone of the American economy and the cornerstones of America’s promise.” Two-thirds of American jobs are created by small business and roughly 50 percent of Americans work for a small business.

Over the last two years, the president and the administration have taken decisive action to empower America’s entrepreneurs and small business owners such as you in many ways including: tax relief; improved access to capital; counseling; support for start-ups and small businesses poised for high-growth and innovation; and more protection for small businesses in the wake of the recession.

If you have not already, I encourage you to find out more about all of these from the Small Business Administration or our own small business office at VA. Incidentally, SBA’s re-designed website, www.sba.gov, allows you to type in your zip code to find out what government resources are available for small businesses in your area.

What you do drives the economic engine in this country. When I was the CEO of my own small business, profits didn’t go into a working capital fund, they went straight to payroll--into people’s pockets.

When I was at a bigger company, IBM, we acquired a new company every two weeks. One thing we looked for in these purchases was a business with the ability to weather the up and down cycles of the economy. Companies with federal contracts were attractive for that reason. Contracting with the federal government provides a great opportunity for a small business to diversify its income source.

VA’s Commitment to Small Business

VA is here to help you help us help Veterans. Our mission is unique among cabinet agencies. We serve Veterans, and there are nearly 23 million of them. Of those, over eight million are enrolled in VA’s healthcare system. Last year alone, six million Veteran-patients walked through our doors. Annually, over four million Veterans and survivors receive VA compensation and benefits. And in final tribute, each year approximately 100,000 Veterans and family members are laid to rest in one of our 131 national cemeteries. In the words of President Lincoln, our mission is to “care for [those] who shall have borne the battle” and their families.

We are committed to enabling small business to add value to achieve that mission. One third, or $18 billion, of our discretionary budget is used to purchase goods and services from the private sector. In 2010, VA spent 38 cents of every reported procurement dollar with small business.

In light of that, we recognize that the supplier community is a critical component to our success at meeting the changing needs of our Veterans.VA has embarked on an end-to-end re-engineering of our acquisition process to improve the process as a whole.

Our goal is to deliver high quality products and services to Veterans in a timely manner. We are focused on developing good relationships with our suppliers by improving transparency, collaboration and participation in the acquisition process. We are working with suppliers and internal customers to identify and address contracting and delivery barriers.

We are also increasing VA’s access to industry innovations. VA’s Innovation Initiative, known as “VAi2” gives a structured way to identify, evaluate, and fund promising solutions using one to two-year fixed-price awards in a competitive process that takes about six months, vs. the standard acquisition cycle of 18 months. Under VAi2, we opened an Industry Innovation competition last year. So far, VA has awarded nine contracts with a total value in excess of $21 million.

We launched another industry innovation competition in February worth up to $100 million in contract awards. That closed in April. We received 260 concept papers providing innovative technology solutions to improve the way we serve and care for Veterans. Of these, we have recently invited 68 businesses into the second stage of the competition which entails submission of a full proposal based on the concept paper. I encourage you to become familiar with this initiative. You can find information about it and on future VAi2 opportunities at their website.

We’ve hosted five forums around the country focused on improving our relationships with our suppliers and conducted surveys internally with our staff and externally with our suppliers. We’ve conducted several focus groups with our own contracting officers and have hosted two public webinars with VA suppliers. We have plans to do much more.

As you may know, at VA we are required by law to put Veterans first when it comes to procurement, but I want to deliver this message very clearly: we don’t work with Veterans only.

At the time of the enactment of this Veterans First approach in 2007, the Federal Acquisition Regulation had a strict hierarchy of small business programs, which placed 8(a) and Historically Underutilized Business Zone firms ahead of Veterans and service-disabled Veterans. That preference has been replaced with parity in other agencies but the law requires VA to give Veterans preference. The "Buy Indian" legislation which requires the Bureau of Indian Affairs to consider firms owned by Native Americans before other firms, established precedent for Veterans First in VA.

VA’s Small Business Goals

While we must put Veterans first, we are committed to meeting our other small business goals. Currently we aim to have 33.5 percent of our contracts go to small businesses. Last year we were at 33.1 percent and midway through FY 2011 we are nearing our goal at 33.3 percent. Our goal is for 12 percent of contracts to go to Veteran-owned small businesses. We are doing well in this category. Last year, 18.7 percent went to Veteran-owned small businesses and this year we are at a 17.7 percent annualized rate. For service-disabled Veteran-owned small businesses, our goal is 10 percent. Last year we exceeded that goal and were at 16.4 percent; so far this year we are at 14.3 percent.

Our small-disadvantaged business goal—which includes minority-owned businesses—is 5 percent. In 2010 we passed our goal and were at 7.2 percent and this year we are already at 6.1 percent.

We fall short, however, when it comes to women-owned small businesses and Historically Underutilized Business Zone companies. Our performance from 2010 to 2011 shows some progress. Our aim is to do 5 percent of our contracting work with women owned small business. In 2010, they received 3.6 percent of our contracts and this year we are at 3.9 percent. With HUBZone, our goal is 3 percent. Last year we were at 1.6 percent and this year we are doing better half way through the fiscal year at 2 percent.

We’re working hard towards these goals. Historically there is a surge towards the end of the fiscal year as contracting facilities work to meet their goals. Your presence here is well-timed.

One good way to enter the government contracting world at VA is to partner with Veteran-owned businesses. Another option is to become a subcontractor. For example, in June we expect to award up to 15 prime contracts for our $12 billion, five-year program known as Transformation Twenty-One Total Technology, or T4. The program is designed to meet the full range of VA’s long-term technology needs and will give VA access to the best of industry’s capabilities without extended acquisition lead time. Seven of the 15 contracts will go to Veteran-owned small businesses—and all of those contracts will be hiring a lot of subcontractors. So be on the look-out for opportunities with T4.

Working with VA: What Small Businesses Should Know

If you haven’t worked with the federal government before, we can help you make that adjustment. Federal contracting is a different world. Spending other people’s money requires a focus on value and transparency.

Here are some things you should know about what VA offers small businesses:

  • We conduct contract bundling reviews. Representatives from our small business office review all procurements over $5 million to help ensure that we have determined whether a set aside or preference for small businesses would be appropriate to the acquisition strategy. Our small business office staff also reviews the acquisition to help ensure we are compliant with the regulations on bundling.

  • VA trains acquisition officials. We are very proud of our Acquisition Academy to train and certify our VA acquisition team. We were the first civilian agency to have such an academy. Available courses range from short-term classes to a three-year internship. The academy’s curriculum includes training acquisition officers on the proper management of subcontractors, on small business rules and regulations and how to identify opportunities for small business as part of their acquisition strategy.

  • We counsel entrepreneurs. Our small business office holds monthly industry sessions where we invite vendors and discuss how to do business with VA. We answer their questions, and point them to experts who can help them with capacity building.

  • Our small business office also participates at conferences and distributes informational materials that describe how to do business with us. We attend over 100 events a year and counsel small businesses on how to work with us and facilitate business-to-business collaboration.

  • We’ve established department-wide procurement goals. Each month, I receive performance reviews on how each of our business lines is doing. For example, each of our regional health care hubs, known as Veterans Integrated Service Networks, or VISNs, report to me on their progress towards our small business goals. The same goes with our benefits and cemetery administrations. Incidentally, representatives of our VISNs are here today—so I encourage you to introduce yourselves and learn from them about what they do and their contracting needs.

Our senior executives will be on the hook this year too—we are developing small business contracting goals to be part of their 2011 performance evaluations. We monitor the effectiveness of current policy, procedures, and plans for enhancing utilization of small businesses.

As part of that, VA has initiated a rigorous monitoring program for subcontracts that requires prime contractors to submit an annual report of revenues going to subcontractors and we are now following up by requesting a report from subcontractors to confirm those revenues. We will penalize firms that do not meet their goals.

The Department of Veterans Affairs is serious about strengthening our supplier relationship and meeting all of our small business goals. We simply cannot achieve our mission without America’s small business community. Because when we improve our relationship with you, we are able to serve Veterans better. For their sake, we must get this right.

Team with Veterans. Hire Veterans. They make excellent business partners and they are also excellent employees. They have been tried, tested and trained in their military careers. They bring value to business and have access to current training through the GI Bill, which we administer, and our Vocational Rehabilitation and Education program that Ruth Fanning addressed earlier.

Before I go, I want to remind you that VA has procurement opportunities open across the country. I encourage you to review all the VA opportunities at FedBizOpps.gov. I wish you success in your business. I hope you enjoy your time here today. I know it will be worth your while. Please be in touch with our Office of Small and Disadvantaged Business Utilization. Their staff is here today to answer any questions you may have, as well.

Thank you for your time. May God bless our men and women in uniform and may God bless our Veterans.