Small Business:

The National Veterans Business Development Corporation Faces Challenges in Planning for and Achieving Financial Self-sufficiency

GAO-04-893: Published: Aug 30, 2004. Publicly Released: Sep 29, 2004.

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William B. Shear
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The National Veterans Business Development Corporation (The Veterans Corporation) was created under Pub. L. No. 106-50 to provide veterans with small business and entrepreneurship assistance. The Act authorized, and Congress has appropriated to the corporation, $12 million in funding over 4 years, ending September 30, 2004. The Act also required that The Veterans Corporation implement a plan to raise private funds and become a self-sustaining corporation. GAO evaluated the corporation's: (1) efforts in providing small business assistance to veterans; (2) internal controls, including strategic planning; and (3) progress in becoming financially self-sufficient.

Since GAO's April 2003 report (GAO-03-434), The Veterans Corporation has continued to expand programs and refocus services in its efforts to provide small business assistance to veterans while achieving financial self-sufficiency. The centerpiece of The Veterans Corporation's efforts remains its Veterans Entrepreneurial Training program, which offers classroom instruction to veterans on how to successfully start and expand their own businesses. It also has expanded or added several services primarily in the areas of finance, accounting, and contracting. However, The Veterans Corporation reported that it continues to face ongoing challenges to fulfilling its mission. These problems stem from its responsibility for the Professional Certification Advisory Board, difficulties in identifying the veteran-owned business population, and conflicting views about its legal status as a private versus public entity. Additionally, The Veterans Corporation lacked important internal or operational controls. Specifically, its strategic plan and annual report to Congress lacked measurable goals and outcome-oriented measures. Without outcome-oriented measures, such as the number of new veteran-owned businesses or the amount of revenue generated for veteran-owned businesses, it was difficult to determine what the impact of the programs on veterans has been. In the same vein, without meaningful performance measures, The Veterans Corporation has been unable to provide Congress with significant data on its progress or the outcomes of its efforts. Finally, The Veterans Corporation faces a number of challenges in achieving self-sufficiency. Dramatically lower-than-expected revenues have resulted in the corporation revising its currently estimated date for achieving self-sufficiency from fiscal year 2004 to fiscal year 2009. Its self-sufficiency strategy is heavily dependent on its ability to develop a database of veteran-owned businesses and successfully marketing its services to these businesses. However, the plan did not discuss how The Veterans Corporation will identify this population or contain meaningful information on key assumptions underlying revenue projections. As such, it would be difficult for Congress and other stakeholders to judge the feasibility or reasonability of the corporation's estimates and projections.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Veterans Corporation (TVC) has revised its strategic plan for fiscal years 2008-2012. The 2008-2012 strategic plan contains metrics for its six corporate goals. For example, the strategic plan states specific dollar funding targets for its public/private fund raising initiatives. As another example, TVC identified the minimum number of states (at least 10) that it planned to provide veterans with classes under its education and training corporate objective. TVC identified a mix of quantitative and qualitative metrics for the other four corporate goals that appeared to be measurable and outcome oriented.

    Recommendation: The Chairman of the Board of Directors for The Veterans Corporation and its staff should, to help guide programs and measure their effectiveness, develop measurable, outcome-oriented goals and objectives that take into account the increasing availability of outcome data over time.

    Agency Affected: National Veterans Business Development Corporation

  2. Status: Closed - Implemented

    Comments: The Veterans Corporation has moved away from the individual voucher program, which was used to support the former veteran entrepreneurial program, to a new veteran educational initiative, which focuses on providing grants to the eight regional hubs, and then allowing the regional hubs to manage these grants and to establish the appropriate pricing mechanism to support their educational programs for veterans. The veterans no longer receive any vouchers under the new veteran educational initiative.

    Recommendation: The Chairman of the Board of Directors for The Veterans Corporation and its staff should, to potentially reduce overall expenses and aid in efforts to achieve self-sufficiency, analyze the extent to which The Veterans Corporation could reduce or eliminate the amount of the voucher given to graduates of its VET program without undermining demand for the program.

    Agency Affected: National Veterans Business Development Corporation

  3. Status: Closed - Implemented

    Comments: In its fiscal year 2007 annual report, The Veterans Corporation's (TVC) stated that it has told Hill staff since the fall of 2005 that it doubts that TVC can ever become "self sufficient." TVC's 2007 annual report noted that "TVC has told Congress bluntly that it has to decide whether it wants to fund TVC's important efforts, or whether they want TVC to cease operations and close up shop." Given the statements in the annual 2007 report, it appears that The Veterans Corporation has informed Congress about its status regarding its progress toward self-sufficiency.

    Recommendation: The Chairman of the Board of Directors for The Veterans Corporation and its staff should, to improve congressional oversight, include in its annual report to Congress comprehensive information and data relating to progress in achieving financial self-sufficiency, and key assumptions underlying self-sufficiency revenue projections.

    Agency Affected: National Veterans Business Development Corporation


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