Vets GSA’s Mike Phipps US Senate Testimony on the Ramifications of the Supreme Court Kingdomware Decision.

Vets GSA is proud of the excellent job our own Michael Phipps did today testifying in front of the Senate Small Business Committee regarding the ramifications of the SCOTUS Kindgomware Committee. Mike laid out a great approach for the future requirements for SDVOSBs and the path to get there. Full video here Mike starts at the 1 hour mark.



Chairman Vitter, Ranking Member Shaheen and distinguished members of the Committee, thank you for this opportunity to testify on the effects the Supreme Court Ruling on Kingdomware will have on veterans’ small businesses and the federal government.

 My name is Michael Phipps. I am the Chairman of the Advisory Committee on Veteran Business Affairs, an independent advisory board administered by the Small Business Administration and a service disabled veteran business owner with over 15 years of government and commercial contracting experience. 

 My full testimony on the benefits the Supreme Court Decision is a matter of record and I will like to focus the duration of my time today on two good things to come from the Decision and some issues that remain unresolved.  

 The Kingdomware decision reaffirms that service-disabled veteran-owned small business contracting goals are neither a public relation ploy nor an end to themselves.  The goals do not exist for the agencies to gratuitously congratulate themselves and then ignore veterans once the goals are achieved.  Rather, the Court confirmed that the goals exist to provide “real opportunities” for service-disabled veterans.  The significance here is that government buyers are reminded that this reasoning applies to the Small Business Act goals as well as goals under agency-specific laws like the “VeteransFirst” contracting program at VA.

 Further, the Kingdomware decision also provides the Supreme Court’s approval for a model of “Veterans First” or “Service-Disabled Veterans-First” to exist in contract set-asides and preference programs.  Congress can now extend this model government-wide in the Small Business Act or in agency-specific legislation.

 Mandated in 2006 by public law 109-461 and, before that, by President Bush’s 2004 Executive Order 13360, the Department of Veteran Affairs was entrusted with a fiduciary responsibility to grow the veteran owned small business industrial base.  It is our belief that the federal agencies that produce veterans and service-disabled veterans should share in VA’s fiduciary responsibilities. Agencies like the DOD and DHS should have a moral imperative and a statutory mandate to enforce veteran’s preference in their purchases.  The “VeteransFirst” contracting program within VA should be legislatively extended to the aforementioned agencies requiring the same preference in set-aside authorities. 

 Now, I’d like to discuss the areas that still need to be addressed.

 The Kingdowmware decision leaves in place preexisting barriers to business development for emerging veteran-owned businesses.  Even though the Court confirmed the buyers’ discretion to use veteran set-asides for contracts below the Simplified Acquisition Threshold, they did not provide guidance on how to make buying decisions or on how to conduct market research. This leaves VOSBs and SDVOSB’s wondering how to persuade the buyers that their businesses really need that low-dollar set-aside to grow.

 Though the Kingdomware decision speaks of “opportunities” that “encourage small businesses,” it does not define exactly how contracting officers should look for such businesses and decide which ones are to be encouraged and in what way.  In the 1999 and 2003 legislation, Congress gave the SBA and other Federal agencies broad business development authority to help veterans.  Unfortunately, the SBA and the FAR Council announced in 2005 rulemaking that the government-wide SDVOSB Program was for “established” businesses and not meant to aid in business development for nascent businesses. To this end, Congress should encourage the SBA and the FAR Council to carry out their business development authority.

Additionally, the dollars being awarded to SDVOSB’s are going to a small group of companies leaving the majority of SDVOSBs out of equation. This is due to the transactional incentives being driven by the total dollar spent on SDVOSBs rather than by SDVOSB participation. 

 Lastly, while many would argue that this change would have minimal impact to current VA acquisition practices, VA might disagree. So another foreseeable consequence is that this creates a strong incentive for the agency to increase bundling aspects to their procurements to bypass the ‘rule of two.’

 In conclusion, the Kingdomware decision is a significant win for the Veteran small business community but more work needs to be done. With the support of Congress, the SBA could achieve a Service Disable Veteran Owned Business Development Program within their current authority. 

 Chairman Vitter, Ranking Member Shaheen and the distinguished members of the Committee, thank you for this opportunity to testify this morning and I look forward to your questions.