5. The Director of the Veterans Assistance Service should direct that all Veterans Benefits Counselors review the SBA portion of their Handbooks.

This could be accomplished quickly and easily through a memorandum to the Veterans Benefits Counselors from the Director of the Veterans Assistance Services. 6. The SBA should request and the VA should provide sensitivity training about veterans, particularly Vietnam and disabled veterans, to SBA employees.

The Veterans Administration could use Operation Outreach staff to conduct the training. There are currently 91 Vet Centers located throughout the United States, and Vet Center personnel are trained to provide information about Vietnam veter

ans.

The Small Business Administration should request that the VA provide sensitivity training to the employees of each Regional and District Office.

7. SBA remove the “Veterans Administration Guaranteed Loan" provision from its Standard Operating Procedures manual.

The SBA's Standard Operating Procedures, Section 50, No. 10, revision 1-A, page 289, effective December 14, 1979, Appendix 2, point number 9, titled "Veterans Administration Guaranteed Loans," states that: "Loans made to veterans, a part of which are guaranteed by the Veterans Administration, are referred to as VA loans or as veterans guaranteed loans."

This section also describes the use of VA Form 41842. (Both are attached). This form was last printed in August 1959. Based upon research conducted by project staff, it appears that this provision of the SOP became inoperative due to a change in the law in 1974.

We recommend that this obsolete section of the SOPs be removed since there currently is no authority to engage in such activity.

8. A veteran receiving an SBA loan add the cost of instruction required by the SBA to the amount of the loan, rather than using VA entitlement.

The Veterans Administration has determined that it has the authority, under section 1652(b) of Title 38, to pay educational assistance allowances to eligible veterans for enrollment in and pursuit of one or more unit courses which would not otherwise constitute a "program of education," if the SBA certifies that such a course or courses are needed to assure success in a specific small business and is a condition to the making of or guaranteeing of a loan to such veterans.

Due to the fact that veterans are eligible for educational entitlement from the VA for ten years after their date of discharge, and that the Vietnam war ended in 1975, there are currently only approximately four million Vietnam era veterans still eligible for such assistance out of a total population of nine million Vietnam era veterans. Eligible veterans would only be able to use this program where it is a condition to the making of or guaranteeing of a loan. The net result of the limited number of veterans eligible, and the fact that it must be a condition to the making of or guaranteeing of a loan, severely restricts the number of veterans able to avail themselves of this opportunity. It appears that this is almost a "Catch-22" situation. Most veterans need this training to be able to organize a business prior to applying for a loan. Conversely, if veterans have been approved for the receipt of a loan, the training available would be secondary to the ongoing conduct of their businesses. This process appears to require a great deal of administrative action to obtain some training for a very limited number of veterans.

The proposed agreement described above appears to have limited value and it is our opinion that more beneficial efforts to assist veterans could be obtained by redirecting agency efforts to points 1-6 described above.

CONCLUSION

A working relationship between the agency with primary responsibility for serving veterans (the VA) and the agency with primary responsibility for assisting small businesses (the SBA), is obviously in the best interest of serving veterans. Rather than create new programs, it seems that a relationship whereby each agency utilizes its own strengths and expertise would result in improved service to the entire veteran population.

The VA should focus on outreach and the provision of information, and the SBA should concentrate on providing services to the veterans who are referred to them.

RECOMMENDATIONS

The Chapter for Community Economics is required, on page two of contract SBA4869-ADA/P-80, to submit a series of recommendations which will allow the Small Business Administration to effectively implement SBA regulations in subpart 116, the result of the passage of the Small Business Act of 1974 (P.L. 93-237). This section of the report also makes recommendations about certain SBA policies or

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practices which are not included in subpart 116 but which do affect the level of services which the Small Business Administration provides to veterans.

The recommendations are based upon: In-depth interviews with SBA policy, program and field staff; meetings and discussions with veterans' organizations; and indepth interviews with policy and program staff of federal agencies and departments other than SBA.

The recommendations are not listed in order of importance.

1. SBA develop and implement a long range plan for monitoring and reporting business loan, management assistance and other services to veterans.

2. SBA submit quarterly reports to the Senate and House Committees on Veterans' Affairs, including the participation levels of veterans in all SBA programs and services.

3. SBA Field Offices develop annual goal and timetables for providing services to veterans.

4. SBA amend the District Office monthly reporting form to include services which are provided to veterans.

5. SBA administratively designate Vietnam veterans and disabled veterans "socially disadvantaged" in order to qualify, as a group, in the 8(a) program, or, SBA designate Vietnam and disabled veterans for group eligibility in the 8(d) minicertification program.

6. Following the designation of Vietnam and disabled veterans for group 8(a) eligibility, SBA make such veterans, as a group, eligible for the 8(d) contracts, the 7(i) loan program and the 7(j) management and technical assistance program.

7. SBA develop and implement a system to link veterans who receive 7(i), 7(j) and 8(d) assistance with the procurement Automated Source System.

8. SBA take administrative action to ensure that Veterans Affairs Officers are employed exclusively to provide services to veterans, their dependents and survi

vors.

9. SBA develop goals and timetables for systematic training of Veterans Affairs Officers at the District and Regional levels.

10. SBA's Office of Advocacy develop and implement a plan to assist veteran business-owners. The plan should include the budgeting of positions for full-time veterans' affairs staff in the Office of Advocacy.

11. SBA develop and implement an innovative plan which will significantly improve veterans' participation in the Bank Certification Program.

12. SBA develop and implement a nationwide plan to promote the positive image of veteran business-owners and prospective veteran business-owners with commercial lending institutions.

13. SBA develop and implement an Executive Order Pertaining to Veterans in Business as per the recommendation of the Veterans Task Force of the White House Conference on Small Business. The key components of the Executive Order should include but not be limited to the following:

Targeting, in each fiscal year, a minimum of 25 percent of all direct loan funds and 25 percent of all guaranteed loan funds for veteran-owned businesses. Such percentages should be reflected in Regional operating plans and budgets.

Establishment of a Task Force on Veterans' Business Enterprise within the White House Veterans Coordinating Committee.

Designation, by SBA, of an Associate Administrator for Veterans Business Enter

prise.

Appointment, by SBA, of a full-time Regional Coordinator for Veterans Activities in each of the federal regions whose sole responsibility will be to supervise, monitor and coordinate SBA services to veterans. Positions should be budgeted in the Regional operating plan.

Provision for each SBA Field Office to conduct four special Pre-Business Workshops and Problem Clinics for Veterans in each fiscal year and provision for systematic follow-up assistance.

Development of an SBA and Veterans Employment Service (U.S. Department of Labor) interagency agreement to coordinate SBA job creation activities with the job placement activities of VES.

Creation and implementation of an innovative plan for a joint federal and private sector effort to bring about increased numbers of new Vietnam veteran-owned businesses and more successful Vietnam veteran-owned businesses.

14. SBA systematically review the grade levels of all Veterans Affairs Officers in District Offices and ensure that a uniform grade of GS-12 or above is maintained. 15. SBA develop and implement a comprehensive plan to improve the participation of catastrophically disabled veterans in the HAL-1 ahd HAL-2 programs.

16. SBA systematically review the loan principal-to-collateral ratio to ensure that veteran loan applications are not being denied because of excessive collateral requirements.

17. SBA develop goals, timetables and methodology to improve its hiring performance under the Veterans Readjustment Appointment program.

18. SBA develop goals, timetables and methodology to improve its performance in the Noncompetitive Appointments for Compensably Disabled Veterans program. 19. SBA improve the working relationship with the Veterans Administration by taking the following steps:

VA and SBA design and implement a media campaign to inform veterans, especially disabled and Vietnam veterans, of benefits and services provided by both agencies with respect to small business development.

VA and SBA arrange for the systematic participation of SBA Veterans Affairs Officers on local VA Civic Councils and Federal Executive Boards.

SBA and VA systematically provide comprehensive information seminars on SBA programs and services for VA Veterans Benefits Counselors in the 58 VA Regional Offices.

SBA request and VA provide, through "Operation Outreach Vet Center" personnel, sensitivity training about veterans, particularly Vietnam and disabled veterans, to SBA employees in District and Field Offices.

SBA remove the "Veterans Administration Guaranteed Loan" provision from its Standard Operating Procedures Manual (i.e., revision 1-A, page 289, effective December 14, 1979). The Veterans Administration Guaranteed Loan does not now exist.

SBA field offices develop goals, timetables and methodologies for establishing viable working relationships and substantive linkages with the VA's Operation Outreach Vet Centers.

20. SBA develop a videotape to be used as a component in future training sessions for Veterans Affairs Officers. The purpose of the videotape will be to provide an operational definition of "special consideration." The script for the proposed videotape can be found in Task IX of the Final Report of the SBA Veterans Project. 21. SBA implement the operational definition of "special consideration" as contained in Task VII of the Final Report of the SBA Veterans Project. This comprehensive definition should be included in the Veterans Affairs Handbook which the SBA has produced as a training aid.

22. SBA should enhance veterans' participation in government programs through the following initiatives. (See Task III of the Final Report of the SBA Veterans Project.):

Establish a set-aside for Vietnam and disabled veteran procurement contracts. Modify SBA Form 912 (Personal History) to include a veteran identifier section. This will allow the SBA to document and report assistance provided to veterans. Establish nationwide procurement seminars for veteran business-owners and potential veteran business-owners.

23. Improve the participation of Vietnam and disabled veterans in the SBA managed Procurement Automated Source System (PASS) by:

Reviewing the current PASS file for Vietnam veteran ownership status during the PASS program listees' yearly update. While SBA Form 1167 (10-79) does have a place for veteran status, its earlier counterpart, 1167, did not. Some offices may still be sending out earlier forms, since they were instructed to use stocks of the 12-78 edition until they ran out. Use of 12-78 should be abolished, and annual updates should check for Vietnam veteran ownership.

Inviting Vietnam veteran firms which are included in the PASS program to participate in government contracting seminars with contracting officials. Seminars could be jointly sponsored by the SBA, Federal Executive Boards and veteran organizations.

Identifying Vietnam veteran-owned business through forms on hand or on those being processed through Management Assistance (Request for Counseling Form, SBA 641 (6-75)); Management Assistance Control Record (SBA Form 1062, 1-80); Financing and Portfolio Management (Loan Inquiry Record, SBA Form 149 (5-75); and the Loan Approval Document (SBA 135 (1-73)). Veteran-owned firms should be sent PASS applications and invitations to government contracting seminars.

Notifying SBA personnel, government contractors and government contracting officers of the Vietnam veteran identifier on the PASS form. This could be accomplished by using bulletins, brochures and presentations.

24. SBA take systematic and innovative steps to improve veteran participation in the 7(j) and 7(j)(10) programs. SBA should:

Inform veterans of 7(j) and 7(j)(10) through the use of seminars, publications and direct mailings to those on the PASS list, and through contact with veterans whose names are on file in portfolio management.

Promulgate a regulation specifically to target Vietnam veterans for 7(j) assistance which would in turn direct SBA field staff to seek out Vietnam veteran-owned businesses.

25. SBA improve veteran participation in the Certificate of Competency program. SBA should:

Modify their regulations to enable a veteran-owned business to voluntarily request a Certificate of Competency in advance of a contract bid or response to a Request for Proposal. This could increase the incidence of contracting between veteran-owned business and government.

26. SBA should take the following action to improve the accessing of government bid lists by veteran-owned businesses. They should:

Disseminate government bidding information to veteran-owned businesses through mailings and information seminars. Information should be provided about Commerce Business Daily, Standards Form 129 (Bidders Mailing List Application), Bidders Mailing List Application_Supplement (DD-Form 558-1), U.S. Government Purchasing and Sales Directory, Small Business Subcontractors Directory, "Selling to the Military" (DOD), and "Doing Business with the Government" (GSA).

Revise Bidders Mailing List Application (Form 129) to reflect veteran status. Develop and implement an innovative program to systematically inform veteranowned businesses of procurement information available through Regional Procurement Centers and SBA procurement Representatives in procurement centers.

Establish a set-aside for Vietnam and disabled veterans in government procurement contracts, particularly in the Veterans Administration.

27. SBA develop and implement an outreach plan to systematically inform prospective veteran business owners of the Program Logic Automated Training Orientation (PLATO). PLATO is a program of self-instruction on "building you own busi

ness.

28. SBA develop and implement an outreach plan to inform veterans who are eligible for the 7(i) program of business counseling, management training, legal and related services available to them.

29. SBA develop a methodology to systematically inform minority veterans of the opportunties available to them under the 8(a) contracting program and the 7(j)

program.

30. SBA develop and implement a plan to systematically inform potential veteran business owners of loans available under the 7(a) program.

31. SBA inform veterans, especially Vietnam veterans, of the advantages (i.e. lower equity requirements) of applying for a guaranteed loan under the Economic Oportunity Loan (7(i)) program.

STATEMENT OF ROGER JONES, Acting Administrator, SMALL BUSINESS
ADMINISTRATION

Mr. Chairman and members of this subcommittee: I appreciate the opportunity to appear before you today to discuss with you the current status of the Small Business Administration's implementation of Public Law 93-237 as it pertains to veterans. Appearing with me is John R. Cox, Acting Associate Administrator for Field Services.

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Public Law 93-237 was enacted on January 2, 1974, and provides, in part, that the Small Business Administration shall give special consideration to veterans of the Armed Forces of the United States and their survivors or dependents.' At previous hearings before this Subcommittee, this Agency had acknowledged certain problem areas in implementing Public Law 93-237.

We also, at that time, committed the Agency to improving our outreach and delivery systems to veterans and in particular to Vietnam veterans.

We believe that a review of the progress made by the Agency since those early hearings will show that our commitment has not gone unanswered.

Through improved working relationships with national, state and local veterans groups, we have been able to reach out to more veterans with our wide selection of programs. As an example of these efforts, the National Commander of the American Legion has accepted our invitation to be a member of our National Advisory Counsel. His involvement with SBA on a national level will certainly assist in providing input on assistance to veterans. We intend to continue this outreach effort.

Our Management Assistance personnel specially designed a workshop curriculum for veterans. These workshops, 123 of them, were held in every state in the last 8

months of 1980 and allowed 5,853 veterans, 1,784 of them Vietnam veterans, to obtain a broad perspective of business entrepreneurship. This program has been extended and workshops will be held again in every state in 1981.

In addition to the above, we provided ongoing management counseling to over 20,000 veteran owned firms in fiscal year 1980 and another 6,600 in the first quarter ofiscal year 1981.

Another 11,000 veterans received one time counseling last fiscal year with an additional 3,426 being served in the first three months of this fiscal year.

Financial Assistance, through our bank guaranty program, provided in fiscal year 1980, financial support to 3,282 veteran owned businesses for appeoximately $371 million. Of the 3,282 veteran owned firms receiving assistance, 1,471 (45 percent) were owned by Vietnam veterans. Those same Vietnam veterans received $134 million which accounts for 36 percent of total loans to veterans. Veterans benefited in 13.2 percent of all guaranty loans and 12.3 percent of the dollars loaned in the last fiscal year.

This participation rate improved considerably in the first 4 months of this fiscal year. A manual tabulation by each field office shows that veterans participated in 17.9 percent of the dollars loaned under our guaranty program and 17.1 percent of the number of loans. This amounted to 1,913 loans for $257 million.

In fiscal year 1980, our limited direct loan funds assisted 761 veteran owned businesses with $42.5 million. This amounted to 11.9 percent of the total direct loans approved. During the same period, 451 Vietnam veterans were provided with $23.4 million.

In the first 4 months of this fiscal year, our field offices have reported that veterans received 13.5 percent of all direct loan outlays. Veterans participated in 12.8 percent of the direct loans approved.

We believe that the veteran is now afforded every credit consideration from SBA that is consistent with sound lending practices.

To insure that this continues, we have directed our field review personnel to sample loans declined to veterans on their periodic revieews of field offices.

The Agency has also included as eligibility criteria for all lenders participating in our Certified Lenders Program and our Preferred Lenders Program a statement that the lender must demonstrate to SBA's satisfaction that it will extend assistance to credit-worthy small business concerns owned or operated by members of groups which are on SBA's priority lists. Veterans are included on the priority list. We believe this will significantly improve veterans' participation in these programs. Veterans, through our Procurement Assistance programs are able to secure federal contracts. At the time of our last testimony before this Subcommittee in June 1980, there were 1,705 veteran owned concerns in our Procurement Automated Source System (PASS). This had increased 240 percent to 5,809 by December 31, 1980.

We believe employee awareness, which was once a major problem in delivering our services to veterans, has also shown improvement. A marked decrease in the number of inquiries and complaints into Central Office has been noted. Also, our interactions with the Veterans Administration and major veteran groups seem to indicate heightened awareness by SBA employees and a concurrent reduction of complaints.

As reported in previous testimonies, SBA entered into a contract with a consulting firm to review SBA's programs and make recommendations for improving our services to veterans.

Some of these recommendations were implemented at once, while others are under careful consideration by our various program areas.

There are a few which we feel cannot be implemented given the parameters of good personnel utilization and budget considerations.

In order to improve the visibility of this program both inside and outside of the Agency and to provide for increased staffing and independence in pursuing the goals of the program, I have requested the orderly transfer of the national coordination of veteran activities to the office of the Chief Counsel for Advocacy.

Mr. Chairman, I feel we have taken great steps toward achieving our goals since our last meeting. While we have not fully achieved all our goals, or all the goals veterans would like to see achieved, given budgetary and personnel contraints, we have delivered those services within our capacity. Notwithstanding these constraints, we shall continue to demonstrate a commitment to providing a program of assistance to our Nation's veterans.