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NVBDC White Paper

Archives, Certification Issues, Diversity News, NVBDC News, Veteran News

 

The History and Business Case for the 
National Veteran Business Development Council (NVBDC)

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Acknowledgements:
Initiated and released by the Education Committee of the NVBDC, this document was developed with support from across the organization and in direct collaboration with the following:

Key Contributors:
Primary Author: Dr. James N. Phillips Jr., PMP, CFCM, Fellow
Contributors: Ingrid Watkins, Scott A. Vowels, Annette Stevenson, Link Howard III, Brenda Smith, Robert Middleton, John Bourbeau, Keith King

Technical Reviewers:
Major General (ret) Bruce MacDonald
John Oleson

The NVBDC Team recognizes the efforts of our contributors and reviewers in helping to ensure delivery of an accurate and comprehensive technical resource to support the broader Supplier Diversity Community.

Feedback
Please send comments or suggestions about this document to the NVBDC Team at support@nvbdc.org

Legal Notice:
The information contained in this document represents the current view of NVBDC on the issues discussed as of the date of publication. Because NVBDC must respond to changing market conditions the NVBDC cannot guarantee the accuracy of any information presented after the date of publication. NVBDC MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS DOCUMENT OTHER THAN IT IS THE TRUTH AS KNOWN TO THE AUTHORS.

This White Paper is for informational purposes only.

INTRODUCTION 

National Veteran Business Development Council (NVBDC) was established in 2013 to address the growing need to identify and certify both service disabled and veteran owned businesses (SD/VOBs) in the government and commercial (corporate) marketplace. The NVBDC administers a rigorous certification process designed to withstand the scrutiny of governmental and corporate entities seeking to utilize certified SD/VOBs.  The NVBDC adopted these rigorous standards to align with supplier diversity industry best practices.  Supplier Diversity practitioners sought to do business with SD/VOBs but required assurance that the companies were owned and operated by SD/VOBs.  NVBDC sought to create a credible certifying agency to address this gap and to meet the needs of corporations by defining the governance for certification standards for SD/VOBs.
Identifying and aligning with the needs of governmental and corporate entities, aided the NVBDC to define its mission which is to promote the value proposition of including SD/VOBs in diversity and inclusion procurement practices and policies.

Why should SD/VOB seek NVBDC Certification?

An NVBDC certification provides the opportunities for the SD/VOB and assurance to the supplier diversity professional and organizational buyer. It opens access to supplier diversity managers who have asked for a reliable means of assessing the status of a business. A NVBDC certification is reliable, repeatable and rigorous which means it can withstand external scrutiny.  An NVBDC certification is repeatable in that it has a process which it follows to ensure that the outcome meets the rigorous standards of NVBDC and its corporate partners. Finally, the NVBDC certification is rigorous like that of hospital accreditations or university accreditations. Why is that? The process is rigorous because the public, including veterans and supplier diversity managers need to know that who they are partnering with meets the legal requirements to conduct business. A NVBDC SD/VOB certification is accepted by the Billion Dollar Roundtable (BDR) members as its only certification to meet their veteran owned business “audit standards” to qualify for inclusion in diversity spend.    

What are the advantages of the NVBDC certification for SD/VOB partners?

The NVBDC value proposition for the SD/VOB is to provide a certification that will be recognized and accepted by industry so that a SD/VOB may access diversity spend opportunities. The NVBDC provides certification that creates access to States, Federal Agencies, major corporations and Billion Dollar Roundtable members, to aid and incentivize the SD/VOB to pursue the certification. The NVBDC offers on going opportunities for the SD/VOBs to participate and meet with the NVBDC sponsors and educational partners. The NVBDC continues to expand corporate sponsorship, partnering with new major corporations on a continual basis.

What is the value proposition of NVBDC sponsorship for corporate supplier diversity professionals?

NVBDC certification provides the assurance to corporate partners that the veteran suppliers that they intend to contract with have gone through a rigorous vetting process.  Corporate partners will be provided access to a database of certified SD/VOBs.  The NVBDC will participate in and co-sponsor networking and educational events with our corporate partners.  The organization commits to launching a strong outreach campaign to grow its sponsorship to ensure success in finding the best qualified SD/VOBs.   In addition to strategic and target sourcing, the NVBDC strives to develop a best-in-class supplier development and training program to assure our corporate partners have access to a contract-ready pool of SD/VOBs.  The Education and Training Committee (ETC) is charged with collaborating with our corporate partners to create capability and capacity building training and programs to add value, scalability and sustainability to their program efforts.

Accordingly, the ETC was established to provide education, training, and development for both external and internal stakeholders of the NVBDC.  Internally, the ETC assists the NVBDC in training its auditors, assists in marketing, and consults the board on relevant best practices.   Externally, the education and training committee provides both the SD/VOB and supplier diversity managers with a certification system that is reliable and repeatable. Also, through its partnerships with certified SD/VOBs and its major corporate partners it provides supplier diversity managers a database of pre-vetted SD/VOBs from which they can source.

THE RISE OF THE VETERAN OWNED SMALL BUSINESS

Prior to 1999 there was no formal recognition or requirement of any veteran owned small business (VOSB) or service disabled veteran owned small businesses (SDVOSB) by the US Small Business Administration (SBA). 

In August 1999, the US Congress formally established two additional socioeconomic categories in Public Law (PL) 106-50, “Veterans Entrepreneurship and Small Business Development Act of 1999”.  This law provided formal recognition to the VOSB and SDVOSB categories and established formal contract spend goals for the US Federal Government which was to be managed and reported to the US Small Business Administration.

In December 2006, the US Congress passed Public Law 109-461, “Veterans Benefits, Health Care, and Information Technology Act of 2006”, also referred to as Veterans First. In this legislation it placed VOSB and SDVOSB’s higher in the level of consideration when contracting with the Department of Veterans Affairs (VA) and charged VA with creating a VOSB/SDVOSB verification program. Regrettably, the legislation only applied to the VA and not to the other executive agencies of the Executive Departments of the U.S. Federal Government. After PL 109–461 was passed, the veteran small business community felt there had been clarity brought to federal contracting veteran and service disabled owned small businesses, however such was not the case.

The Government Accountability Office (GAO) is an oversight office of the federal government that focuses on compliance with the laws enacted by Congress, especially those laws related to the spending of taxpayer dollars. The GAO serves as a non-judicial remedy to important questions or disputes related to an active contract. These questions or disputes are often referred to as protests.

In March 2012 a GAO protest was made by Aldevra which challenge a practice the VA engaged in. Aldevra asserted in the protest that the VA improperly failed to comply with an applicable statute and regulation to determine if this procurement should be set aside for SDVOSB concerns, which the GAO agreed. Unfortunately, the VA did not agree with GAO and continued its practice.

Later, in May 2012, Kingdomware Technologies, Inc. protested to GAO asserting that the VA failed to comply with the requirements of the Veterans Benefits, Health Care, and Information Technology Act of 2006, 38 U.S.C. §§ 8127-8128 (2006) (the VA Act), and its implementing regulations, regarding setting aside procurements for SDVOSB (or veteran-owned small business (VOSB)) concerns. And again, VA did not agree with GAO and continued its practice.

In July 2016, the US Supreme Court of the United States (SCOTUS) heard the case in KINGDOMEWARE TECHOLOLOGIES, INC V. UNITED STATES and Affirmed Kingdomware’s and Aldevra’s position that PL 109-461 did in fact required VA to set aside procurements for VOSB and SDVOSB’s.  This was a major affirmation to what the SD/VOB Community was asserting as the intent of the legislation. The NVBDC filed an amicus curiae brief before the Supreme Court in support of Kingdomware Technologies. The Supreme Court ruled 8-0 in favor of Kingdomware in its unanimous decision.
In parallel to this the United States has been in a steady state of conflict/war since 2001, and arguably earlier. The result is the creation of many new veterans and service disabled veterans and with new veterans came new veteran and service disabled veteran owned businesses.

CURRENT STATISTICS

According to a 2016 Federal Procurement Data System Report, the government spends billions of dollars each year with veteran businesses:

  • For SDVOSB 200,217 transactions for $16.3 Billion equating to 3.9782%
  • For VOSB 450,313 transactions for $21.9 Billion equating to 5.25%
  • For Small Businesses 19,678,817 transactions for $410.6 Billion equating to 24.3407%
  • According to the US Census, in 2012 there were 2,521,682 Veterans Owned firms.
  • According to the Department of Veteran Affairs as registered with the VA’s VIP system there are 10232 SDVOSBs and 3067 VOSB’s (Total 13,839) registered as of March 23, 2018.
  • According to a search of SAM.gov in its Dynamic Small Business Search there are 14,842 small businesses self certifying as VOSB/SDVOSB as of March 23, 2018.
  • According to the US Small Business Administration’s Office of Advocacy’s 2012 survey they reported the following:
      • SD/VOB had receipts of 1.14 trillion
      • Employed 5.03 million people
      • Annual payroll of $195 billion.
      • 2.5 Million Businesses reporting were SD/VOBs
      • SD/VOBs represented 9% of all US Firms
      • A Survey of Business Owners found 10.3% of all respondents were Veterans
      • And in the same Survey of Business Owners, if found that of the 10.3% of the respondents that identified themselves as SD/VOBs, 7.3% identified themselves as having service-connected disabilities.

HISTORY OF THE NATIONAL VETERAN BUSINESS DEVELOPMENT COUNCIL

The Founder of the National Veteran Business Development Council (NVBDC) is Mr. Keith King.  King served in the US Army 1969-1971 and is an honorably discharged, in-country Vietnam Veteran.  Mr. King started an advertising firm Keith King & Associates in October 1998.  During that time Mr. King’s veteran associates in Washington D.C. were working on legislation that would create the classification of Service Disabled and Veteran Owned Businesses for contracting opportunities within the Federal Government. In August 1999, PL 106-50 was passed establishing Veterans as a recognized business entity much the same as women and minorities. The calls from his associates in D.C. started shortly after the bill was signed into law saying that Mr. King was “one of the few Service Disabled Veteran business owners they knew of and they wanted him to start bidding on Federal contracts”. The decision by Mr. King to pursue Federal contracts changed his entire business and eventually lead to the creation of the NVBDC.

In late 2012 and after years of successfully completing Federal and State contracts, Mr. King was disappointed in the fact that he had not been awarded any contracts with corporations.  Knowing that under Federal law if a corporation had a contract with the Federal government that they could be required to submit a sub-contracting plan that included Minority, Women and Veteran owned businesses, he wanted to know why in most cases Veteran owned businesses were not being included.

Mr. King was advised to contact the supplier diversity managers at the corporations to find the answer to his concerns.  Being in Michigan, he reached out to the “Detroit 3” (GM, Ford, Chrysler) and Kellogg’s each of whom had a long successful history of supplier diversity programs.  Their answer was direct and simple – they would not contract with Veteran owned businesses until “you veterans create a certification program that meets our corporate standards”.  Not knowing what that really meant, Mr. King was directed to the Michigan Minority Supplier Development Council (MMSDC) and the Great Lakes Women Business Enterprise National Council (WBENC).  Both organizations were willing to teach Mr. King and his team their certification methods.

As 2013 began, Mr. King made the decision to suspend operations of his company, Keith King and Associates, and focus on the development of a certification program for veteran owned businesses.  He also began to recruit his Officers: Brigadier General (ret) Richard Miller, Richard White, Joe Sternburg and Guido Capaldi were the first to join him.  Being good military men, they immediately began to write the Standard Operating Procedures (SOP) based on what they were learning from the Women and Minority groups.

They filed with the IRS to apply for their 501(c)3 non-profit status.  The business plan was written.  By-laws were created.   A lawyer was hired. They secured their business name and website address.  The National Veteran Business Development Council (NVBDC) was taking shape. The search then began to find veteran business owners who would be willing to submit their documentation to the NVBDC to become certified at stringent, corporate best practice standards.

In April 2014, NVBDC completed their Certification process testing in conjunction with representatives from GM, Ford, Chrysler, Kellogg’s, WBENC, NMSDC, VetBizCentral (VBOC), the Service Corps of Retired Executives (SCORE), and the Department of Veterans Affairs. Receiving their collective approval, NVBDC launched its certification program while it worked on completing its on-line certification program- released nationally in June 2015.   A few weeks after their successful beta-test NVBDC received their official notice from the IRS that their 501(c)3 status was granted.  The NVBDC was officially born and became operational In April 2014.

INTRODUCTORY QUESTIONS

What is a Veteran?  Veteran for the purposes of this white paper is defined as a person honorably discharged from the United States military, Coast Guard, National Guard, or any of the reserve components of the above based on specific service requirements as defined in Title 38, section 4211.
What is the criteria for SD/VOB certification?  A SD/VOB is a business owned, (51% ownership or greater) by a Veteran who has met the definition of a veteran.  The following represents the criteria that NVBDC uses in determining ownership:

  • Ownership:  Fifty-one percent ownership by a Veteran or Veterans. The applicant must share in all risk and profits commensurate with their ownership interest.
  • Control and Management:  Proof of active management of the business. Veteran must possess the power to direct or cause to direct the management and policies of the business.
  • Contribution of Expertise and Capital: Contribution of capital and/or expertise by Veteran owner(s) to acquire their ownership interest shall be real and substantial and be in proportion of the interest acquired.
  • Independence:  The Veteran owner(s) shall have the ability to perform in their area of specialty/expertise without substantial reliance on non-Veteran-owned businesses.

What are the challenges faced by SD/VOBs?

  • Visibility of all the Veteran Owned Business (VOB), includes Service Disabled.  As the statistics above show there is a disparity between those businesses that self-report the US Census Bureau (2,521,682) and those businesses that are listed in SAM.gov and CVE.gov (14,300 averaged). Since registration with SAM.gov is necessary for business with the US Federal Government that would suggest there are OVER 2.5 million SD/VOBs that don’t do business with or are registered with the federal government.
  • Recognition and Acceptance of the Certification by government entities and business/industry. Currently there is only one verification that is mandated by law and only applies to the Department of Veterans Affairs and that is the CVE program at VIP.gov.  Since it only applies to the Department of Veterans Affairs other federal agencies do not have to (many do not) use the VA verification. The CVE program clearly does not meet Corporate best practice standards.  This would suggest there is a need for an independent third-party certification body to certify veteran business status. This would apply to not only other federal agencies but to major federal prime contractors, and to business to business contracting and purchasing.
  • Understanding the opportunities. Veteran owned businesses offer goods and services that benefit companies that buy from them, unfortunately, these same businesses are unaware of opportunities that they may have to leverage their veteran status with the diversity spend requirements of companies.

Why should a SD/VOB pursue third-party certification?

The benefit of being a certified veteran owned business is twofold. First it provides the veteran owned business with access to opportunities that are available only to CERTIFIED veteran owned businesses to participate in diversity spend opportunities. Secondly, it enables connection to supplier diversity managers who have asked for a reliable means of assessing the true status of a SD/VOB business. NVBDC certification is reliable, repeatable, and rigorous which means it can withstand external scrutiny.

Who is the Billion Dollar Roundtable?

The Billion Dollar Roundtable (BDR) is a nonprofit organization whose mission is to drive supplier diversity excellence through best practice sharing and thought leadership.  The BDR currently represents twenty-seven major corporation partners that spend over $1 Billion per year with Women, Minority and now Service Disabled and Veteran owned businesses. Due to the support of many of their members and the advocacy of the NVBDC, the BDR members have incorporated the NVBDC certification for their diversity spend. These corporations have a strong interest in the veteran owned business community and have made the NVBDC certification their only acceptable SD/VOB certification for Primes, as well as their Tier I and Tier II suppliers.

 

References

https://www.sba.gov/sites/default/files/files/pl106-50.pdf
https://www.va.gov/ogc/docs/PL109-461.pdf
https://www.gao.gov/products/B-406205
https://www.gao.gov/products/B-406507
https://www.supremecourt.gov/opinions/15pdf/14-916_6j37.pdf
https://www.census.gov/quickfacts/fact/table/US/PST045217

BuyVeteran.com magazine, Spring 2018, edition, page 10.