Governor's progress lags on Illinois contracts for veteran-owned businesses
CHICAGO — Surrounded by flags, lawmakers and Veterans of Foreign Wars members, Gov. Pat Quinn signed a bill two years ago that called for Illinois to award 3 percent of state government contracts to businesses owned by veterans.
The program, however, is off to a slow start. So far, only about 50 businesses have been certified as veteran-owned, a number bolstered by a recent surge of approvals following scrutiny and criticism. In the last budget, only $32 million in work went to such businesses out of a state pie of $13 billion or so — less than 0.25 percent.
Even those pulling for the program to succeed say the Quinn administration should be "highly embarrassed."
"Where have they been for two years?" asked Ed Bedore, the senior member of the state's Procurement Policy Board that reviews the state's contracts. "I think it's plain incompetence. That program should be humming."
State Veterans' Affairs officials attribute the lack of progress to difficulty in cutting through red tape. Separate state and federal programs for veteran-owned businesses meant applicants filled out cumbersome but similar forms for both. A change in state law was needed to ensure that businesses would not lose their designations as women- or minority-owned businesses when they signed up for the veterans program. One of the biggest issues, though, was that not many businesses knew the state program existed.
"The problem is not that we're not moving on the state side," said Erica Borggren, director of the Illinois Department of Veterans' Affairs. "It's that there have been barriers — some overcome, some that we need some help on — that have kept those numbers from growing."
The problems with the program represent a setback for a Democratic governor who has made veterans' matters a signature issue. Quinn peppers his speeches with praise for veterans, visits injured soldiers in Germany over holidays, supports tax breaks for returning armed services members and quietly attends funerals of Illinois men and women killed in action.
To that end, in August 2011 Quinn appeared in Tinley Park to sign a law that sets a goal of giving 3 percent of state contracts to small businesses owned by veterans, including disabled servicemen, a move designed to help make such firms more competitive when bidding.
"Our duty is to come together and work together to help our veteran-owned businesses and our veterans who want to create their own job by starting their own business," Quinn said. "We want to make sure our state, when it procures goods and services, is always looking for the opportunity to help a veteran-owned business."
The Department of Central Management Services is the lead agency in the program and handles the certification of the veteran-owned businesses — a process that started picking up about the time Bedore and others on the review board started pressing for answers.
Borggren, of Veterans' Affairs, acknowledged there are "way more" veteran-owned businesses in Illinois than those certified. She also conceded the two years it has taken to get the program to this point means "we're looking at a timeline that isn't what we'd all prefer."
The state has put in place a "massive outreach campaign" through multiple events and thousands of letters, emails and newsletters in coordination with Central Management Services, she said, but the program has hit barriers along the way.
One barrier was addressed in a separate law Quinn signed in August. Before the change, Borggren said, minority- or women-owned businesses often found themselves having to give up one designation if they wanted to become a member of the veteran-owned business category. Now, such businesses can have multiple designations, clearing one roadblock to building up a bigger list of certified veteran-owned businesses, she said.
To cut more red tape, the state has worked out a process with the U.S. Department of Veterans Affairs so that a veteran-owned business filling out paperwork for one program is automatically signed up for both, she said.
Such changes have helped boost the total number of certified businesses by about a dozen in recent weeks, she said.
Other hurdles may be tougher to address, however.
Borggren said her agency hears from small businesses that it is often hard to do business with Illinois because its big backlog of unpaid bills means it takes a long time for the state to pay vendors, a problem partly due to the state having to devote significant money to making public-worker pension payments.
Over the years, contracting programs designed to boost certain groups, such as minorities and women, have been exploited. Often, the documented abuses have shown white businessmen installing a minority or woman as a figurehead in hopes of gaming the system.
That type of illegal activity has not been detected in the veteran-owned program, said Anjali Julka, spokeswoman for Central Management Services. The veterans' program requires businesses to be based in Illinois. They must be at least 51 percent owned by veterans. The businesses primarily targeted have an annual gross sales of $75 million or less, though bigger companies could qualify if they have numerous suppliers and subcontractors headed by veterans.
There's no penalty if the state fails to award 3 percent of contracts to veteran-owned businesses — it's merely a goal. But the idea is to increase the number of veteran businesses that can compete for such work, Julka said.
Since the program's inception, the state's purchasing agency has received 79 applications — 31 of which have come in only since July — and 51 have been certified. State officials note that the U.S. Department of Veterans Affairs has 137 veteran-owned businesses certified in Illinois.
Rep. Linda Chapa LaVia, a former Army officer and House sponsor of the law, called the small number of business certified by the state a mere "drop in the bucket" of the potential business owners eligible for the program.
"I'm highly upset about that," said Chapa LaVia, an Aurora Democrat who contended Quinn should be "highly embarrassed."
Last month, 95 veteran-owned businesses showed up for state-sponsored meetings about the prospects of firms getting business during the construction of a $70 million veterans home in Chicago, officials said.
It's unclear how many contracts and how much money would have to be distributed to meet the 3 percent goal for veteran-owned firms. The number of all contracts in the state, for example, is more than 4,000 that are worth more than $13 billion over the course of a year.
But Julka said the actual figure should be based on the availability of veteran-owned firms, making the exact slice of veteran-contracted business difficult to calculate. It'll be difficult for the state to hit its goal because not every state contract will attract a veteran-owned firm and there might not be any of those companies available for a specific contract.
Malcolm Weems resigned as head of Central Management Services effective Friday, leaving questions about the program to Julka. She said Weems' decision to leave was unrelated to the veterans program. Weems quit to "pursue an opportunity in the private sector after serving the state for nearly eight years," Julka said.
The procurement oversight board also is miffed that the administrative rules to address how the finer points of the law will be implemented have yet to be approved more than two years after the governor signed the bill into law. Julka said it took time to collect input from various agencies and address concerns raised by purchasing officers throughout state government.
Last month, the procurement panel's Bedore chided Quinn for letting the program fall "flat on its face." Bedore, a longtime budget aide to both Daley mayors, is an appointee of House Speaker Michael Madigan, D-Chicago.
Michelle Jackson, a deputy general counsel for Central Management Services' business enterprise program, defended the agency's efforts, and maintained it is "working on" increasing the number of certified businesses owned by veterans, according to meeting minutes.
Another board member, former Republican Rep. Bill Black of Danville, acknowledged that launching a state program can be difficult, but "so was the job the veterans did in Iraq, Afghanistan and wherever they are sent in harm's way."
Simply put, Black said later, the program is "not doing what it's designed to do."