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Set-Aside Programs Fall Short of Goals

Disabled Veterans Entitled to Contracts

By Dina ElBoghdady
Washington Post Staff Writer
Monday, February 28, 2005; Page E01

When retired Air Force Maj. Robert C. Sharps launched his civil construction business three years ago, he hoped to profit from a law that requires the federal government to set aside 3 percent of all contracts for firms owned by veterans, like himself, who have disabilities related to their military service.

But as of last week, Sharps said VSA Construction Services LLC in Jessup has not won a single contract even though it bids on about four a month. His firm is losing ground in an open market, he said, because contracts are not being set aside as promised.

An Elusive Target A 1999 federal law requires the government to set aside 3 percent of contracts for companies owned by veterans who have disabilities related to their military service. A look at how service-disabled veterans fared at agencies that awarded more than $1 billion in fiscal 2003.
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"As a small business, sometimes we're not as competitive as larger companies. So we lose out to cheaper bids," said Sharps, 58, a Vietnam veteran who has chronic knee and back problems. "The law is not working as it was intended."

The complaint is common among veterans groups as federal agencies struggle to meet the 3 percent goal, a target missed by a substantial margin every year since the set-aside law was enacted in 1999. The federal government annually awards $250 billion to $300 billion in contracts to private companies.

The veterans' concerns have taken on added urgency during wartime, as thousands of injured personnel confront the task of rejoining the civilian workplace. President Bush recently signed an executive order meant to speed the flow of contracts to disabled veterans, but Small Business Administration rules may get in the way, veterans groups contend.

To ensure competition, the SBA has required that agencies not award "sole source" contracts to companies owned by disabled veterans if they "have a reasonable expectation" there are other veteran-owned companies qualified to bid.

The awarding of set-aside contracts "is not automatic," said William D. Elmore, head of veterans business development at the SBA. "There is no guaranteed success in this."

"It's an opportunity . . . to compete," he said.

Veterans groups say the SBA's approach is unworkable and wants contracts awarded even without competition if the company is qualified and the price is fair.

Set-aside programs, they said, are not meant to deliver the lowest price to the government, but to help fledgling firms owned by designated classes of people get a foothold in the market and become competitive in their own right.

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