Contract preferences proposed for companies that hire vets

A federal task force has raised the idea of offering special privileges in government contracting to companies with a certain percentage of employees who are veterans.

The new type of business would have privileges similar to those afforded to small businesses in Historically Underutilized Business Zones, or HUBZones. HUBZones are federally designated economically depressed areas. To be eligible for set-aside contracts, HUBZone small business must have 35 percent of its total workforce living in the zone. Agencies have annual goals for awarding them contracts.


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The Interagency Task Force on Veterans Small Business Development said the government could apply that same principle for companies whose total workforce is comprised of at least 35 percent or more of veterans, including guard and reserve members.

“The creation of a new small business subcategory for firms hiring veterans would provide hiring incentives and procurement opportunities for small business,” the task force wrote in its first report. The report was released Nov. 1.

The task force is comprised of federal officials, led by the Small Business Administration’s Deputy Administrator Marie Johns, and several members from veteran advocacy groups.

The task force wants the Veterans Affairs and Defense departments, as well as SBA and the Office of Management and Budget, to further explore the idea.

The task force recommended they outline the necessary regulatory guidance and potential barriers to setting up the HUBZone-like small business designation. They recommended developing alternative models, such as tax relief, for encouraging companies to hire veterans. 

The idea would provide job opportunities, as well as assisting the government in meeting its overall 23-percent small business goal, the task force added.

Agencies have struggled to meet that 23-percent mark. Most recently, 22.7 percent of contracts were awarded to small businesses in fiscal 2010. That same year, service-disabled veteran-owned small businesses received $10.8 billion, or 2.5 percent, of federal contract awards. The annual goal is 3 percent.

The task force also pointed out that setting up the new type of small business may not be too complicated.

It “presents an opportunity for a creative change that requires additional regulatory guidance but not exhaustive new rulemaking,” officials on the task force wrote. They have been exploring the extent to which existing authority could allow for the new incentive program.

They said the Veterans Affairs Department could handle the verification process.

They’ve also been considering any broader implications of a program on existing employment assistance and training work in agencies, such as VA and DOD.

President Barack Obama signed an executive order in 2010 to establish the task force. His intent is to help veterans in the government marketplace. He also announced the new Interagency Task Force on Federal Contracting Opportunities for Small Businesses, which will take a broader look at small-business contracting.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

Reader Comments

Tue, Feb 28, 2012 Daniel DC

Kyle clearly isn't a vet. These men and women sometimes get out with all sorts of problems and no real world job training. So they might not be the best right away, but an INCENTIVE for hiring them and teaching them, giving them a chance, how can you be against that. No one says you have to hire them, it's an incentive, and a pretty decent and patriotic one.

Thu, Nov 10, 2011 I'm a Vet

This is a great idea! Many companies not owned or controlled by veterans actually hire more vets than SDVOBs or VOBs. If the overall goal is to help ensure vets have jobs, this is a great path.

Thu, Nov 10, 2011 Kyle

This s VERY lame. The USG needs to stay out of contractor staffing and leave it to the contractor to find the best person for the job, white, black, hispanic, Vet, woman, handicapped...it doesn't matter. Just let us find the best people.

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