Multiple Agencies Provide Assistance to Service-disabled Veterans or Entrepreneurs, but Specific Needs Are Difficult to Identify and Coordination Is Weak
Gao ID: GAO-09-11R October 15, 2008As of July 2008, the Department of Defense (DOD) reported that almost 33,000 servicemembers had been wounded in action as part of Operation Enduring Freedom or Operation Iraqi Freedom. Some of these servicemembers could have injuries that keep them from easily entering or returning to the workplace upon their exit from the military. For some service-disabled veterans, starting a business may be one option for entering or returning to the workforce. In the Veterans Entrepreneurship and Small Business Development Act of 1999 (P.L. 106-50), Congress stated that too little had been done to help veterans, particularly service-disabled veterans, in starting small businesses. This law established the framework for the Small Business Administration (SBA), the Department of Veterans Affairs (VA), the Department of Labor (DOL), DOD, and others to coordinate in providing entrepreneurial assistance to veterans and servicedisabled veterans. To improve coordination and enhance small business assistance to veterans, the law required that these agencies enter into memorandums of understanding (MOU) as specified in the 1999 Act (but not all of the agencies were required to participate in each of the MOUs); established the National Veterans Business Development Corporation (now known as The Veterans Corporation) to assist veterans, including service-disabled veterans, in forming and expanding small businesses; and established a government wide federal procurement goal for the participation of small businesses owned and controlled by service-disabled veterans. The Military Reservist and Veteran Small Business Reauthorization and Opportunity Act of 2008 (P.L. 110-186) amended P.L. 106-50 and contained provisions directing these agencies and their resource partners to improve coordination when providing entrepreneurial assistance. For example, it (1) established the authority for an interagency task force, chaired by the SBA Administrator, to coordinate these efforts; (2) increased the number of Veterans Business Outreach Centers (VBOC) by at least two centers in fiscal years 2008 and in 2009, subject to funding from Congress; (3) directed the SBA Administrator to sponsor an independent study on gaps in the availability of VBOCs across the country; and (4) directed SBA to create written materials on self-employment and veterans' entrepreneurship and provide them to DOL for use in its Transition Assistance Program, which helps servicemembers exiting the military. Furthermore, P.L. 110-186 required that GAO describe the (1) types of assistance that may be needed by service-disabled veterans who want to become entrepreneurs and (2) resources that are available to assist such service-disabled veterans.
Although veteran service organizations (VSOs) and others indicated that service-disabled veterans have needs that are common to many entrepreneurs, they also stated that these veterans may need additional help in gaining access to capital, building a support network, and accommodating individual disabilities as they start a business. In particular, because of their military service away from their home community, some veterans may have poor credit histories and few assets. As GAO noted in a 2005 report, some active-duty servicemembers did not receive correspondence from creditors on time during deployments and fell behind in payments, which could have led to negative information being entered into their credit reports and would have made it more difficult and expensive to obtain credit in the future. These negative outcomes could make access to capital more challenging. The time that servicemembers spend away from home also could adversely affect veterans' support networks, which could be a useful tool when starting a small business. Depending on the type and extent of their disability, service-disabled veteran entrepreneurs may have additional needs, due to physical limitations or psychological challenges, which could require specific types and delivery methods of entrepreneurial assistance. Federal officials and their agencies have difficulty in identifying the needs of service-disabled veteran entrepreneurs as a group, partly because their needs are specific to an individual's circumstances. The agency officials also noted that their data on assisted servicedisabled veterans rely on service-disabled veterans identifying themselves as such, but some of these veterans may be reluctant to do so. Multiple agencies provide federal resources to assist veterans and service-disabled veterans or individuals starting small businesses; but few resources are targeted specifically to providing entrepreneurial assistance for service-disabled veterans. Vocational Rehabilitation and Employment (VR&E's) self-employment track is the only federal program that exclusively targets service-disabled veterans who want to become entrepreneurs. VR&E offers five tracks to rehabilitation that are available to qualified veterans. Any qualified veteran may choose the self-employment track, which also offers additional financial assistance to start a small business to those with the most severe service-connected disabilities and for those for whom self-employment is likely the only way to achieve vocational rehabilitation. SBA, VA's Center for Veterans Enterprise, DOL, and their resource partners provide some assistance to service-disabled veterans with financing, business plan development, and education and training. But these entities primarily focus on providing veteran and service-disabled veteran entrepreneurs with information and referrals to other federal, state, and local resources. In assessing the legal framework to coordinate entrepreneurial assistance and resources across federal agencies, we found that statutory objectives and mandates were not fully satisfied and weak coordination could add to the difficulty that veterans face in navigating federal programs. These unfulfilled statutory requirements include a delay in establishing an interagency task force to coordinate federal efforts to provide small business assistance to veterans and service-disabled veterans; agencies not executing and achieving the objectives of required MOUs, and continuing problems of The Veterans Corporation in attaining financial selfsufficiency.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Jack E. Edwards Team: Government Accountability Office: Financial Markets and Community Investment Phone: (202) 512-8246GAO-09-11R, Multiple Agencies Provide Assistance to Service-disabled Veterans or Entrepreneurs, but Specific Needs Are Difficult to Identify and Coordination Is Weak
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GAO-09-11R:
October 15, 2008:
The Honorable John F. Kerry:
Chairman:
The Honorable Olympia J. Snowe:
Ranking Member:
Committee on Small Business and Entrepreneurship:
United States Senate:
The Honorable Nydia M. Velázquez:
Chairwoman:
The Honorable Steve Chabot:
Ranking Member:
Committee on Small Business:
House of Representatives:
Subject: Multiple Agencies Provide Assistance to Service-disabled
Veterans or Entrepreneurs, but Specific Needs Are Difficult to Identify
and Coordination Is Weak:
As of July 2008, the Department of Defense (DOD) reported that almost
33,000 servicemembers had been wounded in action as part of Operation
Enduring Freedom or Operation Iraqi Freedom. Some of these
servicemembers could have injuries that keep them from easily entering
or returning to the workplace upon their exit from the military. For
some service-disabled veterans, starting a business may be one option
for entering or returning to the workforce.
In the Veterans Entrepreneurship and Small Business Development Act of
1999 (P.L. 106-50), Congress stated that too little had been done to
help veterans, particularly service-disabled veterans, in starting
small businesses.[Footnote 1] This law established the framework for
the Small Business Administration (SBA), the Department of Veterans
Affairs (VA), the Department of Labor (DOL), DOD, and others to
coordinate in providing entrepreneurial assistance to veterans and
service-disabled veterans. To improve coordination and enhance small
business assistance to veterans, the law required that these agencies
enter into memorandums of understanding (MOU) as specified in the 1999
Act (but not all of the agencies were required to participate in each
of the MOUs); established the National Veterans Business Development
Corporation (now known as The Veterans Corporation) to assist veterans,
including service-disabled veterans, in forming and expanding small
businesses; and established a government wide federal procurement goal
for the participation of small businesses owned and controlled by
service-disabled veterans.[Footnote 2]
The Military Reservist and Veteran Small Business Reauthorization and
Opportunity Act of 2008 (P.L. 110-186) amended P.L. 106-50 and
contained provisions directing these agencies and their resource
partners to improve coordination when providing entrepreneurial
assistance.[Footnote 3] For example, it (1) established the authority
for an interagency task force, chaired by the SBA Administrator, to
coordinate these efforts;[Footnote 4] (2) increased the number of
Veterans Business Outreach Centers (VBOC) by at least two centers in
fiscal years 2008 and in 2009, subject to funding from Congress; (3)
directed the SBA Administrator to sponsor an independent study on gaps
in the availability of VBOCs across the country; and (4) directed SBA
to create written materials on self-employment and veterans'
entrepreneurship and provide them to DOL for use in its Transition
Assistance Program, which helps servicemembers exiting the military.
Furthermore, P.L. 110-186 required that we describe the (1) types of
assistance that may be needed by service-disabled veterans who want to
become entrepreneurs and (2) resources that are available to assist
such service-disabled veterans.[Footnote 5] P.L. 110-186 placed
importance on interagency coordination in the delivery of assistance
and resources. As agreed with your offices, we assessed the legal
framework for coordinating entrepreneurial assistance to service-
disabled veterans and discuss in this report the status of agencies
efforts to meet their legal requirements. The law required us to report
to the Senate Committee on Small Business and Entrepreneurship and the
House Committee on Small Business not later than August 15, 2008. The
purpose of this report is to document our compliance with this
reporting requirement. We briefed these Committee staffs on the results
of our work. Enclosure I contains the briefing slides that we provided
and used on August 7, 2008.
To assess the types of assistance that may be needed by service-
disabled veterans who want to become entrepreneurs, we reviewed studies
on self-employment; entrepreneurship activities; and assistance
available to veterans and service-disabled veterans, including studies
from the SBA Office of Advocacy and a VA task force. Additionally, we
reviewed documents and information from interviews with responsible
agency officials at SBA, VA, DOL, and DOD on the types of assistance
that may be needed by service-disabled veterans who may want to become
entrepreneurs. We also summarized documents and information from
interviews with veteran service organizations (VSO), which represent
and advocate for the needs of veterans and others on the types of
entrepreneurial assistance that may be needed by service-disabled
veterans.[Footnote 6] To identify the resources that are available to
assist service-disabled veterans who want to become entrepreneurs, we
(1) conducted interviews and analyzed documents on programs offered by
SBA, VA, DOL, DOD, and their resource partners for service-disabled
veterans who are interested in starting a small business and (2)
explored the Web-based information that the agencies and their resource
partners provide. We also visited and interviewed officials at the VBOC
in Farmingdale, New York. To satisfy this objective and to assess
compliance with the requirements pertaining to interagency coordination
in P.L. 106-50, as amended by P.L. 110-186, we reviewed MOUs entered
into, as required by P.L. 106-50, to understand the extent to which
federal agencies deliver the services themselves or coordinate their
resources with others. As part of this work, we determined the progress
made toward the establishment of an information clearinghouse on the
entrepreneurial assistance available to veterans and service-disabled
veterans, as required of certain agencies and resource partners in P.L.
106-50 and to be executed through an MOU. We also determined the status
of the interagency task force, required by P.L. 110-186, to coordinate
the federal efforts to provide small business assistance to veterans
and service-disabled veterans. We conducted this performance audit from
March 2008 to October 2008 in accordance with generally accepted
government auditing standards. Those standards require that we plan and
perform the audit to obtain sufficient, appropriate evidence to provide
a reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
Background:
P.L. 110-186 designated a number of federal agencies with
responsibilities related to assisting veterans and service-disabled
veteran entrepreneurs. In particular, the law contained provisions for
SBA, DOL, and VA. SBA and DOL, respectively, provide small business and
employment assistance to qualifying persons, including veterans and
service-disabled veterans. SBA's mission is to aid, counsel, assist,
and protect the interests of small business concerns. As such, SBA and
its resource partners provide small business assistance, such as
business development and loan guarantees, to qualifying persons,
including veterans and service-disabled veterans, who want to start a
small business.[Footnote 7] DOL's mission is to foster and promote the
welfare of the job seekers, wage earners, and retirees of the United
States. DOL programs are available to assist all persons, including
veterans and persons with disabilities, seeking employment assistance;
however, DOL-funded One-Stop Career Centers have the discretion to
offer entrepreneurial training.[Footnote 8] VA, which serves and honors
America's veterans, provides assistance to veterans, including service-
disabled veterans, interested in becoming entrepreneurs through its
Center for Veterans Enterprise (CVE) and its Vocational Rehabilitation
and Employment (VR&E) program. CVE offers veterans and service-disabled
veterans technical assistance and coaching, including assistance with
federal procurement opportunities; while VR&E offers a vocational
rehabilitation track focused on self-employment.
Under P.L. 106-50, many of these same agencies were required to enter
into MOUs to coordinate the entrepreneurial assistance they provide to
veterans, including service-disabled veterans. The law laid out the
requirements for three MOUs. In an MOU between SBA and SCORE, SCORE was
to appoint a National Veterans Business Coordinator; assist in the
establishment of a toll-free telephone number and Web site to provide
access for veterans to information about the entrepreneurial counseling
and training available through SCORE; and compile statistics on the
services that SCORE provided to veterans, including service-disabled
veterans. A second MOU among VA, SBA, and the Association for Small
Business Development Centers (ASBDC),[Footnote 9] was to include
provisions such as (1) the establishment of an information
clearinghouse to collect and distribute information to veteran
entrepreneurs on the assistance programs of federal, state, and local
governments and of the private sector and (2) training and counseling
to veterans interested in starting a small business. A third MOU among
VA, SBA, and DOL was to provide for the coordination of vocational
rehabilitation services, technical and managerial assistance, and
financial assistance to veterans and service-disabled veterans
interested in small business assistance.
We have previously reported on several issues related to
entrepreneurial assistance for veterans and service-disabled veterans.
In a June 2000 report, we concluded that VA has the infrastructure to
reach veterans, and that SBA has the expertise and infrastructure for
operating business loan guarantee programs. We recommended, however,
that congressional committees encourage greater sharing of expertise
between the two agencies.[Footnote 10]
In April 2003, in response to a mandate in P.L. 106-50, we described
The Veterans Corporation's (1) efforts to provide small business
assistance to veterans, including service-disabled veterans; (2) use of
and controls over federal funds in providing these services; and (3)
efforts to become financially self-sufficient. We found that The
Veterans Corporation faced challenges in providing entrepreneurial
assistance to veterans, such as difficulty in obtaining information
from government sources on transitioning military personnel and on
veteran businesses as well as limited government participation in its
activities. We reported, however, that, at that time, it was too soon
to assess the effectiveness of the corporation's programs.[Footnote 11]
In August 2004, we conducted additional work and found that The
Veterans Corporation continued to face significant challenges in its
efforts to become financially self-sufficient. We recommended that The
Veterans Corporation develop outcome-oriented goals and objectives,
make some program changes to reduce expenses, and provide Congress with
updated information on its progress toward financial self-sufficiency.
[Footnote 12] While The Veterans Corporation had no objections to our
recommendations, it offered information that it believed would explain,
clarify, or correct points made in the draft report related to
strategic planning and financial self-sufficiency. With respect to
financial self-sufficiency, The Veterans Corporation stated that its
strategy was sound, and that sound execution of its plan would result
in achievement of its self-sufficiency goal. Our analysis focused on
the then current state of federal funding and The Veterans
Corporation's self-sufficiency projections. We concluded that there was
uncertainty regarding The Veterans Corporation's attainment of self-
sufficiency.
Summary:
Although VSOs and others indicated that service-disabled veterans have
needs that are common to many entrepreneurs, they also stated that
these veterans may need additional help in gaining access to capital,
building a support network, and accommodating individual disabilities
as they start a business. In particular, because of their military
service away from their home community, some veterans may have poor
credit histories and few assets. As we noted in a 2005 report, some
active-duty servicemembers did not receive correspondence from
creditors on time during deployments and fell behind in payments, which
could have led to negative information being entered into their credit
reports and would have made it more difficult and expensive to obtain
credit in the future.[Footnote 13] These negative outcomes could make
access to capital more challenging. The time that servicemembers spend
away from home also could adversely affect veterans' support networks,
which could be a useful tool when starting a small business. Depending
on the type and extent of their disability, service-disabled veteran
entrepreneurs may have additional needs, due to physical limitations or
psychological challenges, which could require specific types and
delivery methods of entrepreneurial assistance. Federal officials and
their agencies have difficulty in identifying the needs of service-
disabled veteran entrepreneurs as a group, partly because their needs
are specific to an individual's circumstances. The agency officials
also noted that their data on assisted service-disabled veterans rely
on service-disabled veterans identifying themselves as such, but some
of these veterans may be reluctant to do so.
Multiple agencies provide federal resources to assist veterans and
service-disabled veterans or individuals starting small businesses; but
few resources are targeted specifically to providing entrepreneurial
assistance for service-disabled veterans. VR&E's self-employment track
is the only federal program that exclusively targets service-disabled
veterans who want to become entrepreneurs. VR&E offers five tracks to
rehabilitation that are available to qualified veterans. Any qualified
veteran may choose the self-employment track, which also offers
additional financial assistance to start a small business to those with
the most severe service-connected disabilities and for those for whom
self-employment is likely the only way to achieve vocational
rehabilitation.[Footnote 14] SBA, VA's Center for Veterans Enterprise,
DOL, and their resource partners provide some assistance to service-
disabled veterans with financing, business plan development, and
education and training. But these entities primarily focus on providing
veteran and service-disabled veteran entrepreneurs with information and
referrals to other federal, state, and local resources. According to
SBA, it would only refer someone to another agency or government entity
if they were seeking a service that SBA does not provide; however, it
often refers individuals to local SBA district offices, local SBA
lenders, or local chapters of an SBA resource partner. According to
DOL, a service-disabled veteran who visits a One-Stop Career Center and
is interested in entrepreneurial assistance will be referred to
federal, state, and local resources or, in some cases, to
entrepreneurial training that is available through the One-Stop Career
Center or its partners.
In assessing the legal framework to coordinate entrepreneurial
assistance and resources across federal agencies, we found that
statutory objectives and mandates were not fully satisfied and weak
coordination could add to the difficulty that veterans face in
navigating federal programs. These unfulfilled statutory requirements
include a delay in establishing an interagency task force to coordinate
federal efforts to provide small business assistance to veterans and
service-disabled veterans; agencies not executing and achieving the
objectives of required MOUs, and continuing problems of The Veterans
Corporation in attaining financial self-sufficiency. Specifically:
* P.L. 110-186 required that an interagency task force be established
within 90 days of the statute's enactment on February 14, 2008. The law
designated the SBA Administrator as the chairperson of the task force.
As of October 2008, the interagency task force had not been
established, and SBA officials were unable to provide an expected
establishment date. According to SBA officials, the delay in forming
the interagency task force was caused by the need to seek legal
clarification from SBA's General Counsel regarding the appointment of
senior-level representatives to the task force and the appointment of
four nonfederal members.[Footnote 15] Officials from VA, DOL, and DOD
(three of the other agencies mandated to participate) had not been
notified about the status of the task force and did not know who would
represent their agency. This situation has resulted in a concomitant
delay in carrying out the task force's assigned duties. These duties
include coordinating activities and developing proposals related to (1)
improving capital access and capacity of small businesses owned and
controlled by veterans and service-disabled veterans through loans,
surety bonding, and franchising and (2) increasing and improving
training and counseling services to small businesses owned and
controlled by veterans.
* In an effort to coordinate entrepreneurial assistance to veterans,
P.L. 106-50 called for agencies and resource partners--such as SBA, VA,
DOL, SCORE, and the ASBDC--to enter into MOUs as specified in the act.
None of the MOUs required under P.L. 106-50 is currently operative.
When asked why the MOUs were no longer operative, SBA officials said
that they had institutionalized the activities developed under the
MOUs, and VA officials said that subsequent MOUs to which they were a
party were drafted and signed by VA, but were not signed by SBA. As we
have previously mentioned, one MOU was between SBA and SCORE. According
to a SCORE official, the coordinated activities (e.g., establishing a
National Veterans Business Coordinator and a toll-free telephone
number) called for in section 301 of P.L. 106-50 have been incorporated
as requirements in the yearly Notice of Grant award that SCORE receives
from SBA instead of in an MOU. We also reviewed the language of the
Notice of Grant and the tasks specified in the law and found that they
have been accomplished. The second MOU, among other things, required
that SBA, VA, and the ASBDC establish an information clearinghouse on
the entrepreneurial assistance available to service-disabled veterans.
This clearinghouse was to include information on office locations, key
personnel, telephone numbers, and e-mail addresses; however, a single
clearinghouse was never established.[Footnote 16] While agencies have
some efforts under way to coordinate and provide information on their
assistance through their Web sites and referral processes as called for
under the third MOU between VA, SBA, and DOL, several sources noted
that coordination was inconsistent and weak. VSOs and others told us
that service-disabled veterans wanting to start a small business may be
referred to multiple programs, which adds to the confusion and
frustration of navigating available assistance from various agencies
and programs. In addition, VSOs said that service-disabled veterans may
not know where to go to access entrepreneurial assistance because it is
fragmented among agencies and no single source exists to provide
information about available assistance from the multiple programs (see
Enc. II). For example, one VSO official said that the lack of a single
source of information on the available entrepreneurial assistance is
the biggest barrier to accessing such assistance because service-
disabled veterans must contact multiple agencies to try to understand
what assistance is available. According to an official with another
VSO, without a single source of information, service-disabled veterans
have difficulty locating all of the available resources and they become
frustrated. Not executing or achieving the objectives of two of the
three MOUs may contribute to the agencies not focusing sufficient
attention on coordinating their assistance to service-disabled
veterans. Weakness in coordinating available assistance adds to the
difficulties that service-disabled veterans face in navigating multiple
programs and obtaining entrepreneurial assistance.
* P.L. 106-50 required that The Veterans Corporation institute and
implement a plan to raise private funds and become a self-sustaining
corporation. In 2004, we reported that The Veterans Corporation had
pushed back its deadline for mandated self-sufficiency from 2004 to
2009. In its 2007 annual report, The Veterans Corporation stated that
it doubts it will ever become self-sufficient, due to the difficulty in
raising private funding to support its mission.[Footnote 17] The
inability of The Veterans Corporation to become financially self-
supporting significantly hampers its ability to provide the services
outlined in P.L. 106-50. These services include assisting veterans with
the formation and expansion of small businesses by working with and
organizing public and private resources, and establishing and
maintaining a network of information and veterans' assistance centers.
Conclusions:
While our discussions with VSOs and others appeared to suggest that
adequate resources were available to help service-disabled veterans
interested in starting small businesses, it was clear to us that better
coordination is needed across these federal programs and their resource
partners. In passing P.L. 110-186, Congress recognized this need as
well. The mandated interagency task force would provide a formal
mechanism for the relevant agencies to improve their coordination.
However, the task force has not yet convened as mandated, and there are
no firm plans to do so. Establishment of the task force and
implementation of its mandate will be important steps for federal
agencies that have a mutual interest in helping service-disabled
veterans become self-sufficient, including successfully becoming
entrepreneurs. Furthermore, the potential exists through the MOU
process to better streamline the technical assistance provided by
federal agencies that aid service-disabled veteran entrepreneurs.
Reactivating relevant tasks that were required under the MOUs specified
in P.L. 106-50 would help agencies better coordinate their services.
Improved coordination among the agencies would help alleviate service-
disabled veterans' confusion and frustration in navigating the
assistance available from multiple agencies and programs. Service-
disabled veterans seeking entrepreneurial assistance would also benefit
from a clearinghouse containing information on the available federal
resources.
Recommendation for Executive Action:
We recommend that the SBA Administrator expedite the agency's efforts
to convene the interagency task force required under P.L. 110-186 to
coordinate assistance to service-disabled veteran and veteran-owned
small businesses. In addition to addressing this mandated
responsibility, the interagency task force should:
* encourage SBA, VA, DOL, and other resource partners to strengthen the
coordination of entrepreneurial assistance to veterans and service-
disabled veterans, and determine whether more formal agency agreements
(such as MOUs of the type required in P.L. 106-50) are needed and:
* encourage VA, SBA, and others to work together, as called for in P.L.
106-50, to establish a clearinghouse of information (including contact
information) on the federal and local resources available to service-
disabled veterans who are interested in becoming entrepreneurs.
Agency Comments:
Before providing a briefing on August 7, 2008, we supplied SBA, VA,
DOL, AND DOD with statements of facts related to the information
pertaining to each agency. We received technical comments that we
incorporated where appropriate. We subsequently provided a draft of
this report to these four agencies and requested comments. We received
written agency comments from SBA and VA. Both Agencies generally agreed
with our findings and recommendation (see enclosures III AND IV,
respectively). In its response, SBA Described the programs and
assistance it makes available to veterans and service-disabled veterans
who are interested in becoming entrepreneurs. We discuss these programs
in greater detail in our briefing slides (see enc. I). SBA also stated
that they are continuing to work through the specific requirements
contained in P.L. 110-186 as they proceed with establishing the
interagency task force. Additionally, SBA said that it routinely
coordinates with AVA and DOL to ensure proper coordination of veteran
programs and resources. In its letter, VA pointed out that it maintains
an online database that it believes satisfies the requirement for an
electronic clearinghouse as required under P.L. 106-50. The Department
welcomed the opportunity to offer this program as a launching platform
for the more robust information repository. In addition, DOL provided
separate technical comments which we incorporated, as appropriate, in
the report. DOD did not provide written or technical comments.
We are sending copies of this report to interested congressional
committees and other parties. We also make copies available to others
upon request. In addition, the report will be available at no charge on
GAO's Web site at [hyperlink, http://www.gao.gov].
If you or your staffs have any questions about this report, please
contact me at (202) 512-8678 or edwardsj@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. Major contributors to this report were
Debra R. Johnson, Assistant Director; Jill M. Evancho; William B.
Shear; Rachel E. Siegel; and Paul G. Thompson.
Signed by:
Jack E. Edwards:
Acting Director, Financial Markets and Community Investment:
Enclosures - 4:
[End of letter]
Enclosure I: Briefing slides:
Briefing to Staff of the Senate and House Small Business Committees on
August 7, 2008:
Multiple Agencies Provide Assistance to Service-Disabled Veterans or
Entrepreneurs, But Specific Needs Are Difficult to Identify, and
Coordination Is Weak:
Briefing to Staff of the Senate and House Small Business Committees:
August 7, 2008:
Overview:
* Mandate and Objectives;
* Background;
* Scope and Methodology;
* Summary of Findings;
* Discussion of Objectives.
[End of section]
Mandate and Objectives:
The Military Reservist and Veteran Small Business Reauthorization
and Opportunity Act of 2008 (P.L. 110-186, Section 206) requires GAO
to:
1. Describe the types of assistance that may be needed by service-
disabled veterans who want to become entrepreneurs.
2. Describe the resources that are available to assist service-disabled
veterans who want to become entrepreneurs.
Because of the emphasis on coordination in P.L. 110-186, we also
assessed the legal framework for coordinating entrepreneurial
assistance to service-disabled veterans.
Background:
As of July 2008, Department of Defense (DOD) data showed that almost
33,000 military servicemembers had been wounded in Operation Enduring
Freedom and Operation Iraqi Freedom. Some of these servicemembers could
have injuries that keep them from easily entering or returning to the
workplace upon their exit from the military. For some service-disabled
veterans, starting a business may be one option for entering or
returning to the workforce.
In the Veterans Entrepreneurship and Small Business Development Act of
1999 (P.L. 106-50), Congress stated that too little has been done to
help veterans, particularly service-disabled veterans, in starting
small businesses. The law established the framework for the Small
Business Administration (SBA), Department of Veterans Affairs (VA),
Department of Labor (DOL), DOD, and others to coordinate in providing
small business assistance to veterans and service-disabled veterans.
* Among other things, the law required SBA, VA, DOL, and other resource
partners to enter into pertinent Memoranda of Understanding (MOUs) to
improve coordination and enhance small business assistance to veterans.
* The law also established the National Veterans Business Development
Corporation (The Veterans Corporation) to assist veterans, including
service-disabled veterans, in forming and expanding small businesses.
In addition to other duties, The Veterans Corporation was to establish
a network of information and assistance centers for this purpose and
raise private funds to become a self-sustaining corporation.
* The law established a government-wide goal for participation in
federal procurement for small business concerns owned and controlled by
service-disabled veterans.
* GAO has on-going work looking at VA‘s efforts to meet its contracting
goals for veteran and service-disabled veteran owned small businesses.
Background: Prior GAO Work:
GAO has reported on several issues related to entrepreneurship
assistance for veterans and service-disabled veterans.
* In a June 2000 report, GAO concluded that VA has the infrastructure
to reach veterans and SBA has the expertise and infrastructure for
operating business loan guarantee programs. GAO recommended that
Congressional committees may want to encourage greater expertise sharing
between the two agencies.[Footnote 18]
* In April 2003, in response to a mandate in P.L. 106-50, GAO described
(1) The Veterans Corporation‘s efforts to provide small business
assistance to veterans, including service-disabled veterans; (2) the
use of and controls over federal funds in providing these services; and
(3) the efforts of The Veterans Corporation to become financially self-
sufficient. GAO reported that Veterans Corporation officials said they
faced challenges in providing entrepreneurial assistance to veterans,
such as difficulty obtaining information from government sources on
transitioning military personnel and veteran businesses, as well as
limited government participation in its activities. GAO reported that
it was too soon to assess the effectiveness of The Veterans
Corporation‘s programs.[Footnote 19]
* In August 2004, GAO conducted further work and found that The
Veterans Corporation continued to face significant challenges in its
efforts to become financially self-sufficient. The report recommended
that The Veterans Corporation develop outcome-oriented goals and
objectives, analyze the extent to which it could make some program
changes to potentially reduce expenses, and provide Congress updated
information on its progress towards financial self-sufficiency.
[Footnote 20]
Background”Statutory Framework:
The Military Reservist and Veteran Small Business Reauthorization and
Opportunity Act of 2008 (P.L. 110-186) amended P.L. 106-50. The law
contains provisions for SBA, VA, DOL, DOD, and other resource partners
to improve coordination when providing entrepreneurial assistance to
veterans and service-disabled veterans. Specifically:
* The President is to establish an interagency task force, chaired by
the Administrator of SBA, to coordinate certain federal efforts to
provide small business assistance to veterans and service-disabled
veterans.
* The SBA Administrator is to ensure, subject to the level of funding
made available, that the number of Veterans Business Outreach Centers
(VBOCs) increases by at least two for both fiscal year 2008 and 2009.
* The SBA Administrator is to sponsor an independent study on gaps in
the availability of VBOCs across the country to inform decisions on
funding and on the allocation and coordination of resources.
* The Associate Administrator of SBA is to create written materials on
self-employment and veterans‘ entrepreneurship and provide them to DOL
for inclusion in the manual for DOL‘s Transition Assistance Program
(TAP) workshops for servicemembers exiting the military.
Scope and Methodology:
To assess the types of assistance that may be needed by service-disabled
veterans who want to become entrepreneurs, we:
* reviewed studies of self-employment, entrepreneurship activities,
and assistance available to veterans and service-disabled veterans,
including studies from the SBA Office of Advocacy and a Department of
Veterans Affairs task force;
* reviewed information provided from interviews with agency officials
on the types of assistance that may be needed by service-disabled
veterans and/or those who wish to become entrepreneurs, and;
* summarized documents and information from interviews with Veteran
Service Organizations (VSOs represent and advocate for the needs of
veterans) on the types of assistance that may be needed by service-
disabled veterans who are interested in starting a small business.
To identify the resources that are available to assist service-disabled
veterans who wish to become entrepreneurs, we:
* assessed the legal requirements laid out in P.L. 106-50, as amended
in P.L. 110-186;
* reviewed MOUs entered into, as required by P.L. 106-50, in an effort
to understand the extent to which federal agencies deliver the services
themselves or coordinate their resources with others; and;
* conducted interviews and analyzed documents on programs offered by the
SBA, VA, DOL, DOD, and their resource partners for service-disabled
veterans who are interested in starting a small business.
We provided agencies with statements of facts for the information
contained in these slides and have incorporated their comments as
appropriate.
We conducted our work between March 2008 and August 2008 in accordance
with generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.
Summary of Findings:
Although VSOs and others indicated that service-disabled veterans have
needs common to many entrepreneurs, they may need additional help with
gaining access to capital, building a support network, and
accommodating individual disabilities. Additionally, agencies have
difficulty identifying the needs of service-disabled veteran
entrepreneurs as a group, in part because the needs are individualized.
Multiple agencies provide federal resources to assist (1) veterans and
service-disabled veterans or (2) individuals starting small businesses,
but few resources are targeted specifically to entrepreneurial
assistance for service-disabled veterans.
Unfulfilled statutory objectives and mandates and weak coordination
have added to the difficulty veterans may face in navigating federal
entrepreneurial assistance programs.
Objective 1: Entrepreneurial Assistance Needed:
Agencies have difficulty identifying the needs of service-disabled
veteran entrepreneurs, in part because the needs are individualized.
However, VSOs and others indicated that service-disabled veterans
have needs common to many entrepreneurs but may need additional
help with:
* Gaining access to capital;
* Building a support network; and;
* Accommodating individual physical and psychological challenges.
Objective 1: Difficulty Identifying Types of Assistance Needed:
Federal agencies that provide assistance to service-disabled veteran
entrepreneurs have difficulty identifying their needs.
* Agency officials and others said that service-disabled veterans‘
small business needs are individualized based on their specific
circumstances.
* Agency officials and others noted that information on service-
disabled veterans that they assist is based on the service-disabled
veterans self-identifying, which some may be reluctant to do. As a
result, it could be difficult for the agencies to identify their needs.
* VA officials told us that they have not independently conducted
studies on entrepreneurial assistance to determine the needs of service-
disabled veterans, but used studies produced by others. The studies
contained demographic information and identified problems that service-
disabled veteran entrepreneurs said they faced when starting a small
business.
* Officials from the SBA‘s Office of Veterans Business Development said
that they provided input and some funding to the Office of Advocacy to
conduct its studies on veterans and service-disabled veterans. Office
of Advocacy officials told us that it is difficult to conduct research
focused only on service-disabled veterans because of issues related to
the relatively small size of the population, data availability, and
data sharing among agencies.
Objective 1: Types of Assistance Needed”Access to Capital:
Due to military service away from their home communities, some veterans
may have poor credit histories and few assets, which could make access
to capital more challenging.
* In 2005, GAO noted that active duty servicemembers did not receive
correspondence from creditors on time during deployments and fell
behind in payments, which could lead to negative information being
entered into their credit reports and make it more difficult or
expensive to obtain credit in the future.[Footnote 21]
* In a 2004 SBA Office of Advocacy study, service-disabled veteran
entrepreneurs reported access to financing as their most critical
problem in starting a small business.[Footnote 22]
* Consistent with these studies, VSOs and others told us that veterans
could have poor credit histories or may not have accumulated assets,
such as a home, due to their military service. As a result, veterans
may face challenges qualifying for or obtaining small business loans.
* SBA offers loan and surety bond guarantee programs and, according to
SBA officials, it is SBA‘s policy not to decline a loan or guaranty
based solely on lack of collateral. However, veterans and service-
disabled veterans may need a certain amount of collateral to qualify
for this assistance, depending on the amount of the assistance and the
collateral policies of either the program or the lenders.
Objective 1: Types of Assistance Needed”Support Network:
The transient nature and duration of prior military service could make
it difficult for service-disabled veterans to identify and take
advantage of support helpful in developing a small business.
* VSOs and others said that frequent moves, including time overseas,
or absence from their home community during active duty could result in
service-disabled veterans having a limited network in their current
community to assist them in starting a small business.
* One VSO said that because of time spent in the military, service-
disabled veterans are at a disadvantage compared to their civilian
peers in awareness and education of how to start a small business.
* Studies on veterans‘ employment needs have found that it is difficult
for veterans to translate their military experiences into requirements
for civilian licensure and certification, which could be helpful in
starting a small business.
Objective 1: Types of Assistance Needed”Accommodations For
Disabilities:
Agency officials and VSOs noted that service-disabled veteran
entrepreneurs may have individualized needs based on the type and
extent of their disabilities.
* Some disabilities could pose physical limitations and require that
service-disabled veterans have the ability to access small business
courses on-line or work from home in an effort to get a small
business started.
* Coping with the physical and psychological impact from combat or
adapting to a service-connected disability may pose special
challenges while dealing with the demands of starting or running a
small business.
Objective 2: Entrepreneurial Resources Available but Few Specifically
for Service-Disabled Veterans:
Federal resources are available to (1) veterans and service-disabled
veterans or (2) individuals starting small businesses, but few are
targeted specifically to service-disabled veterans.
* SBA, VA, DOL, and other resource partners furnish veteran
entrepreneurs with information and referrals to other federal, state,
and local resources.
* Few resources are focused specifically on service-disabled veterans
who wish to start small businesses.
Objective 2: Resources Available”SBA and its Local Partners:
SBA provides small business assistance, including business development
and loan guarantees, which is available to qualifying persons wishing
to start a small business, including veterans and service-disabled
veterans.
* SBA focuses some of its resources on veterans and service-disabled
veterans through its:
- Office of Veterans Business Development which assists veteran-owned
small businesses with increased federal contracting opportunities
contracts, and;
- Patriot Express Pilot Loan Initiative which provides SBA guaranteed
loans to qualifying veterans, service-disabled veterans, active duty,
reservists, National Guard, their spouses, and others.[Footnote 23] SBA
reported that from June 2007 to August 2008 it guaranteed 132 Patriot
Express Loans totaling about $14 million to service-disabled veterans.
* SBA delivers much of its small business development assistance
through its local resource partners.
- SBA works with resource partners to provide technical assistance to
veterans entrepreneurs. These resource partners include the Small
Business Development Centers (SBDCs) and SCORE who provide outreach and
assistance related to business plan development, entrepreneurial
education and training, and counseling to anyone with small business
interests”including service-disabled veterans.
* SBA also provides funding for five VBOCs, which offer outreach,
counseling, training, referrals, mentoring, and network building to
veterans”including service-disabled veterans” both in the nascent stage
and those with established businesses.
- Subject to funding, P.L. 110-186 called for SBA to fund at least two
additional VBOCs in fiscal year 2008 and two more in fiscal year 2009.
SBA issued a request for proposals that closed in July.
- P.L. 110-186 required the Administrator of SBA to sponsor a study on
the gaps in the availability of VBOCs across the country and report to
Congress no later than August 2008. SBA told us that they have not yet
started this study because they do not have the resources necessary to
conduct the work.
- SBA officials told us that funding for one of the existing five VBOCs
is set to expire this year and for the remaining four in 2010. To
continue to receive funding beyond the initial five year period, VBOCs
would have to re-compete for another grant.
SBA officials said that in 2007, it and its resource partners provided
counseling to approximately 153,000 veterans, of which almost 13,000
were service-disabled. The officials cautioned that the data may under-
report actual participation rates because they are based on self-
reported information, and some service-disabled veterans may not
identify themselves as such.
Objective 2: Resources Available”VA:
Two VA offices”the Center for Veterans Enterprise (CVE) and VR&E”
provide assistance to veterans, including service-disabled veterans,
who are interested in becoming entrepreneurs.
* CVE offers veterans, including service-disabled veterans, technical
assistance and coaching including assistance with federal procurement
opportunities (through its Web site, [hyperlink,
http://www.vetbiz.gov]) and referrals to other small business
resources.
- CVE does not maintain specific data on the number of service-disabled
veterans who have received assistance through its programs.
- While assistance from CVE is available to any veteran who contacts
the office, officials said that they primarily help service-disabled
veterans whose disabilities are less severe.
* The VR&E program offers a track focused on self-employment. The
program provides services to veterans with disability ratings of 10
percent or more.[Footnote 24]
- VR&E officials said the self-employment track is targeted at disabled
veterans who have limited access to traditional employment, need
flexible work schedules, or who need a more accommodating work
environment due to their disabling conditions or other life
circumstances. In 2007, relatively few veterans selected the self-
employment track.
Objective 2: Resources Available”DOL:
DOL programs are available to assist all veterans and persons with
disabilities seeking employment assistance, however, local One Stop
Centers have the discretion to offer entrepreneurial training.
* DOL provides funding for state One Stop Career Centers which employ
Disabled Veteran Outreach Program (DVOP) specialists and Local
Veteran‘s Employment Representatives (LVERs) who work with veterans and
employers to help veterans gain employment. DVOP specialists and LVERs
do not provide any direct entrepreneurial assistance but may refer an
interested veteran to other resources.
* As part of its TAP workshop for servicemembers exiting the military,
DOL includes some limited information on small business assistance. The
assistance focuses on the federal government‘s contracting goals for
service-disabled veterans. The TAP workshop also provides a brief
overview of services and programs available through SBA, and it directs
those interested to contact SBA.
* DOL also has programs and services to assist persons with physical
and psychological disabilities as they re-enter the workforce. Thus,
these programs are open to service-disabled veterans.
* DOL officials said that the agency collects data on veteran status at
its One Stop Career Centers and has recently begun collecting date on
entrepreneurial training. However they were uncertain if they could
provide useful data on the number of service-disabled veterans who
sought entrepreneurial training at the centers.
Objective 2: Few Resources Target Service-Disabled Veterans:
VR&E‘s self-employment track is the only federal program exclusively
for service-disabled veteran entrepreneurs, but vocational
rehabilitation counselors may not encourage selection of this track.
* Eligible service-disabled veterans can apply to the VR&E program
and choose to enter the self-employment track.[Footnote 25]
- While self-employment options are available to qualified veterans,
the self-employment track offers additional financial help to start a
small business to those with the most severe service-connected
disabilities and for whom self-employment is likely the only way they
will achieve vocational rehabilitation.[Footnote 26]
- Representatives from VSOs told us that restricting financial support
to the most severely disabled could discourage less severely disabled
veterans from utilizing this track and questioned whether this was
prudent.
* VR&E‘s vocational rehabilitation counselors may not encourage service-
disabled veterans to pursue self-employment.
* Counselors may not encourage self-employment because, relative to the
other tracks, the self-employment track:
- is more difficult and time intensive (e.g., business plan
development), and;
- requires counselors to engage in more frequent and longer follow-up.
* A 2004 VR&E task force found that low demand for VR&E‘s self-
employment services did not warrant acquiring in-house expertise on the
technical assistance and support necessary to assist with self-
employment.[Footnote 27]
* The task force noted that vocational rehabilitation counselors should
focus on referring those in the self-employment track to other small
business resources (such as the SBDCs and SCORE) since the counselors
are not trained business professionals.
Unfulfilled Mandates and Weak Coordination Have Made Navigating
Programs Difficult:
In assessing the legal framework to coordinate entrepreneurial
assistance, we found unfulfilled statutory mandates and weak
coordination, which have added to the difficulty veterans may face in
navigating federal programs.
* The unfulfilled statutory requirements include:
- Establishment of an interagency task force to coordinate the federal
efforts to provide small business assistance to veterans and service-
disabled veterans;
- The Veterans Corporation achieving financial self-sufficiency, and;
- Executing and achieving objectives of agency MOUs have not fully
occurred.
Unfulfilled Mandates”Task Force:
A mandated interagency task force to coordinate the federal efforts to
provide small business assistance to veterans and service-disabled
veterans has not been established.
* P.L. 110-186 mandated that the task force, to be chaired by the
Administrator of SBA, be established within 90 days of the law‘s
enactment on February 14, 2008.
* SBA officials said the delay has been caused by a need to seek
legal clarification on appointing representatives to the task force.
- SBA could not provide an expected date when the task force will
be in place.
- VA, DOL, and DOD officials whose agencies had been mandated for task
force membership (1) had not been notified about the status of the task
force and (2) did not know who would represent their agency on the task
force.
* This delay has resulted in a concomitant delay in carrying out the
task force‘s assigned duties, such as coordinating activities and
developing proposals related to:
- Improving capital access and capacity of small business concerns
owned and controlled by service-disabled veterans and small business
concerns owned and controlled by veterans through loans, surety
bonding, and franchising, and;
- increasing and improving training and counseling services provided to
small business concerns owned and controlled by veterans.
Unfulfilled Mandates”Veterans Corporation Self-Sufficiency:
The Veterans Corporation has not become financially self-sufficient as
required in P.L. 106-50.
In 2004, GAO reported that The Veterans Corporation had revised its
timeline for self-sufficiency from 2004 to 2009. In its 2007 annual
report, The Veterans Corporation reported that it does not think it
will ever become self-sufficient due to the difficulty it faces in
raising private funding.
* The Veterans Corporation‘s inability to become financially self-
supporting has hampered its ability to provide the services outlined in
P.L. 106-50, such as:
- Assisting veterans with the formation and expansion of small
businesses by working with and organizing public and private resources,
and;
- Establishing and maintaining a network of information and assistance
centers for use by veterans.
Unfulfilled Mandates”MOUs:
Agencies do not have active MOUs detailing their efforts to coordinate
entrepreneurial assistance to veterans and service-disabled veterans.
* P.L. 106-50 required that SBA, VA, DOL, and other resource partners
establish MOUs to coordinate entrepreneurial assistance to veterans,
including service-disabled veterans.
* When asked why the MOUs were not currently active:
- SBA officials told us that the MOUs were no longer necessary because
coordination across the federal agencies had been institutionalized.
- VA officials said that subsequent MOUs were drafted and signed by VA,
but not signed by SBA.
- DOL officials said they were unaware of the MOU required under P.L.
106-50.
- A SCORE official told us that requirements relating to entrepreneurial
assistance for veterans are included in its grant award notices rather
than an MOU.
* In discussing coordination among agency programs, officials at both
SBA‘s Office of Veterans Business Development and VA‘s CVE stated that
there are strained relationships between these offices leading to
inconsistent coordination.
Difficulty Navigating Programs:
While VSOs said that there is adequate entrepreneurial assistance
available, they also emphasized that it is difficult for veterans to
navigate among the various agencies and programs.
* Service-disabled veterans may not know where to go to access
entrepreneurial assistance because there is no one source of information
about all the assistance available from multiple programs.
* The entrepreneurial assistance a service-disabled veteran receives
could vary depending on the program or office from which he or she seeks
assistance. For example, a service-disabled veteran seeking assistance
from DOL may be referred to different resources than a service-disabled
veteran seeking assistance from the SBA.
* VSOs and others told us that service-disabled veterans wishing to
start a small business may be referred to many programs, which adds to
the confusion and frustration of navigating available assistance.
Such weakness in coordinating available assistance adds to difficulties
of service-disabled veterans in obtaining entrepreneurial assistance.
[End of enclosure]
Enclosure II:
Service-Disabled Veterans Face Difficulty Navigating Entrepreneurial
Assistance:
[See PDF for image]
This figure is an illustration of the assistance programs and an unsure
veteran contemplating those programs:
Small Business Administration:
* Business development;
* Loan guarantees.
Small Business Development Centers:
* Business plan development;
* Education and training.
SCORE:
* Counseling;
* Education and training.
Department of Veterans Affairs:
* Vocational rehabilitation;
* Small business technical assistance and coaching.
The Veterans Corporation:
* Small business assistance for veterans, including service-disabled
veterans.
Veterans Business Outreach Centers:
* Small business assistance for veterans, including service-disabled
veterans.
Department of Labor:
* Employment-related assistance.
Sources: GAO analysis of agency documents; Art Explosion (images).
[End of section]
Enclosure III:
Comments from the U.S. Small Business Administration:
U.S. Small Business Administration:
Washington, DC 20416:
October 7, 2008:
Mr. Jack Edwards:
Acting Director:
Financial Markets & Community Investments:
US Government Accountability Office:
Washington, DC 20548:
Dear Mr. Edwards:
The Small Business Administration (SBA) welcomes this review of the
programs and resources available to service disabled veterans. SBA is
committed to providing the highest level of service to the 150,000
veterans that utilize this agency each year through our programs,
offices and resource partners. SBA is always looking to improve and
strengthen our level of service for the men and women who have served
our country in defense of freedom and liberty.
SBA continues to serve veteran entrepreneurs by improving the products
we offer as a part of our commitment to serving our nation's veterans.
SBA recently announced five Small Business Development Centers (SBDC),
as a part of Public Law (PL) 110-186, who were awarded veteran related
grants to 1) develop a marketing campaign to promote awareness of
available services, 2) utilize technology-assisted online counseling
and distance learning, and 3) increase coordination among organizations
that assist veterans. SBA published regulatory changes in the Federal
Register to expand the Military Reservist Economic Injury Disaster Loan
(MREIDL) to allow non-collateralized loans, extend the application
deadline for reservists, and provide a pre-consideration process for
reservists who wish to apply for an MREIDL loan before they receive
their official activation notice. Additionally, SBA's Office of
Disaster Assistance will provide prioritized loan processing for
veterans.
SBA's Office of Veteran Business Development (OVBD) continues to
provide outreach to veteran service organizations like the American
Legion and Veterans of Foreign Wars to educate their membership of SBA
products for veteran entrepreneurs. OVBD provides material to the
Department of Labor's Transition Assistance Program (DOL-TAP) and is
compiling training information and resources for women veterans. SBA
and the Department of Defense (DOD) are working on a joint website
providing information on programs for veterans and Reservists regarding
small business concerns. Lastly, the Patriot Express Pilot Loan
Initiative has provided over 2,000 loans to veteran owned businesses
for over $200 million. SBA has the proven expertise and infrastructure
to provide business development assistance through counseling, training
and capital assistance and continues to review and improve these
programs.
SBA appreciates the efforts by the Government Accountability Office
(GAO) and generally agrees with the recommendations. Additionally, SBA
would like to update GAO on the current status and future plans of the
agency to meet GAO's recommendations for SBA.
Recommendation 1: Interagency Task Force:
Public Law 110-186 mandates an Interagency Task Force comprised of
members from the Department of Veterans Affairs (VA), Department of
Defense, SBA, Department of Labor (DOL), Department of the Treasury,
General Services Administration, Office of Management & Budget, and
four veteran service organizations. SBA routinely works in concert with
other federal agencies. SBA's Associate Administrator of the Office of
Veterans Business Development (OVBD) serves on several working groups
and multi-agency committees designed to meet the needs of veterans.
OVBD routinely communicates and coordinates with DOD, DOL and VA on
veteran matters. SBA is working through the specific requirements
contained in the law and continues to proceed on establishing the
Interagency Task Force.
* Coordination:
SBA routinely coordinates and participates with DOL and VA on veteran
issues. SBA will renew and strengthen the previous MOU with VA and DOL
to ensure proper coordination of veteran programs and resources.
* Clearinghouse:
SBA previously held an MOU with the Association of Small Business
Development Centers (ASBDC) to establish an information clearinghouse
of veteran related information including key personnel names,
addresses, phone numbers and e-mail addresses of federal, state, and
local government and key private sector assistance programs. After
carrying out the initial MOU, SBA has applied the lessons learned to
continue to provide information to veterans and achieve the goals of PL
106-50.
Centralized clearinghouses work if all potential clients automatically
pass through it. However, the veteran community is diverse and their
paths to entrepreneurship can happen as they exit the military or after
years in the private sector. SBA's Office of Veteran Business
Development uses multiple paths to reach potential entrepreneurs. This
includes, but is not limited to, VA Vocational Rehabilitation,
Transition Assistance Program, DOD Military One-Source, Veteran
Business Outreach Centers, Small Business Development Centers (SBDC),
and Veteran Service Organizations using SBA material and information
that refer back to SBA's website and resources.
SBA is currently establishing an information portal for veterans on our
website at [hyperlink, http://www;business.gov/veterans]. This website
will become a central hub for veteran entrepreneurship information,
including links to other government agencies and state programs and
resources. Additionally, SBA is working with ASBDC to strengthen the
collaboration we have built based on the previous MOU. SBA plans on
including language in future SBDC Program Announcements and Notice of
Awards to require each individual SBDC website to include names,
addresses, phone numbers, and e-mail addresses for all state and local
veteran resources and a link to SBA's veterans' website. Additionally,
SBA's website will provide links to local SBDC veteran resources. This
will strengthen the [hyperlink, http://www.business.gov/veterans]
website as a central veteran information portal.
Thank you for the opportunity to comment on the GAO Report. I look
forward to continuing to update you on our progress.
Sincerely,
Signed by:
William Elmore:
Associate Administrator:
Office of Veterans Business Development:
[End of enclosure]
Enclosure IV:
Comments from the Department of Veterans Affairs:
The Deputy Secretary Of Veterans Affairs:
Washington:
September 26, 2008:
Mr. Jack Edwards:
Acting Director, Financial Markets and Community Investment:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Edwards:
The Department of Veterans Affairs (VA) has reviewed the Government
Accountability Office's (GAO) draft report, "Multiple Agencies Provide
Assistance to Service-disabled Veterans or Entrepreneurs, but Specific
Needs Are Difficult to Identify and Coordination is Weak" (GAO-09-11R)
and generally agrees with GAO's conclusions and concurs with GAO's
recommendations.
GAO's draft report states that the Small Business Administration, VA
and the Association of Small Business Development Centers were required
to establish an information clearinghouse on the entrepreneurial
assistance available to service-disabled veterans. This clearinghouse
was to include information on office locations, key personnel,
telephone numbers, and email addresses; however, a single clearinghouse
was never established. We would like to point out that VA maintains an
online database that was developed to satisfy the requirements for an
electronic clearinghouse of information as required by Public Law 106-
50, The online database resides on the VetBiz.gov web portal and is
identified as the Assistance Program Pages (APP). The Department would
welcome the opportunity to offer this program as a launching platform
for the more robust information repository envisioned by the GAO
report, should this be viewed positively by our Federal agency
partners. We encourage our partners to work with us to devise an
outreach plan that will satisfy the expectations of the GAO report.
VA appreciates the opportunity to comment on your draft report.
Sincerely yours,
Signed by:
Gordon H. Mansfield:
[End of enclosure]
Footnotes:
[1] P.L. No. 106-50 §101(3), (5) (1999), 15 U.S.C. § 657b note.
[2] GAO has ongoing work mandated by P.L. 109-461 to evaluate VA's
efforts to meet its contracting goals for veteran-owned and service-
disabled, veteran-owned small businesses.
[3] See, e.g., P.L. 110-186 §§ 102, 201.
[4] In addition to the SBA Administrator, the members of the task force
are to include senior-level representatives from SBA; VA; DOL; DOD; the
Department of the Treasury; the General Services Administration; and
the Office of Management and Budget; and four representatives from a
veteran service organization or military organization or association,
that are selected by the President.
[5] P.L. 110-186 § 206.
[6] We spoke with officials from nine VSOs that represent different
groups of veterans on a variety of issues. For example, some of the
organizations represent veterans from specific wars or with specific
interests, such as veterans who served in foreign wars or veterans who
are disabled. As part of these meetings, we spoke with service-disabled
veterans who owned small businesses. Additionally, we spoke with groups
such as the Heroes to Hometown Program, which assists veterans as they
return to their communities, and the Entrepreneurship Bootcamp for
Veterans with Disabilities, which is a privately funded program that
offers disabled veterans entrepreneurial training from a consortium of
business schools.
[7] SBA resource partners include the Small Business Development
Centers (SBDC), SCORE, and the VBOCs. The SBDCs are local resource
centers that provide assistance to current and prospective small
business owners. SCORE is a nonprofit association dedicated to
educating entrepreneurs and to the education, growth, and formation of
small business nationwide. For more detailed information on each of
these resource partners, see enclosure I, slides 17 and 18.
[8] One-Stop Career Centers are funded under the Workforce Investment
Act of 1998 (Pub. L. No. 105-220, (Aug. 7, 1998)). The funding is
allocated to the states, which according to DOL, then allocates the
funding to local workforce areas.
[9] ASBDC represents the collective interest of SBDCs by promoting,
informing, supporting, and continuously improving the SBDC network.
[10] GAO, Department of Veterans Affairs: Credit Costs and Risks of
Proposed VA Small Business Loan Guarantee Program, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO/GGD-00-158] (Washington, D.C.:
June 30, 2000).
[11] GAO, Small Business: The National Veterans Business Development
Corporation's Progress in Providing Small Business Assistance to
Veterans, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-434]
(Washington, D.C.: Apr. 30, 2003).
[12] GAO, Small Business: The National Veterans Business Development
Corporation Faces Challenges in Planning for and Achieving Financial
Self-sufficiency, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-
893] (Washington, D.C.: Aug. 30, 2004).
[13] GAO, Military Personnel: More DOD Actions Needed to Address
Servicemembers' Personal Financial Management Issues, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-05-348] (Washington, D.C.: Apr.
26, 2005).
[14] GAO has ongoing work assessing this program and its capacity to
meet the future needs of service-disabled veterans.
[15] P.L. 110-186 § 102 requires that the task force be staffed by,
among others, four representatives from a veterans service organization
or association, selected by the President. SBA officials told us that
they have sought guidance from counsel regarding the appointment of
these members and the extent to which they may participate in task
force activities.
[16] SBA maintains a Web site, www.business.gov, that has a section
providing information and links to SBA and VA and contains some of the
information that was required as part of the clearinghouse. SBA
officials said that the agency plans to increase the veteran-related
content of this Web site to better serve veterans interested in
entrepreneurship. VA maintains a database on its website,
www.vetbiz.gov,that contains information on business startup,
financing, training, procurement, and business development. VA
considers the content of this database as meeting the requirement for
an electronic clearinghouse as required under P.L. 106-50.
[17] The National Veterans Business Development Corporation, Annual
Report FY 2007, (Washington, D.C.: Oct. 2007).
[18] See [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/GGD-00-158].
[19] See [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-434].
[20] See [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-893].
[21] See [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-348].
[22] See SBA Office of Advocacy, Entrepreneurship and Business
Ownership in the Veteran Population (November 2004).
[23] The Patriot Express loan program pilot was launched in June 2007.
The loans can be used for most business purposes and are available for
up to $500,000.
[24] In order to be eligible for VR&E, a veteran must have been
discharged under other than dishonorable conditions and have (1) a
service-connected disability rating of at least 20 percent and an
employment handicap, or (2) a disability rating of 10 percent and a
serious employment handicap.
[25] GAO has ongoing work looking at the VR&E program and its capacity
to meet future demand.
[26] This determination is made by the vocational rehabilitation
counselor.
[27] See Report to the Secretary of Veteran Affairs: The Vocational
Rehabilitation and Employment Program for the 21st Century Veteran.
(March 2004).
[End of section]
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