Disabled veterans' firms get a boost from California

Recent changes encourage awarding more contracts to such companies.

By Cyndia Zwahlen

February 22, 2010

With thousands of service members returning home to California after serving in Iraq and Afghanistan, a new push is underway to help disabled veterans get more work -- especially those who own or are launching small businesses.

"These guys coming back need a start," said Robert Brown, a disabled veteran who owns a business in San Clemente and is president of the California Disabled Veterans Business Alliance.

U.S. veterans -- particularly disabled ones -- are eligible for a wide variety of government benefits for medical care, housing and education. In California, efforts to award more state contracts to small businesses owned by service-disabled veterans have been getting more attention recently.

"The idea here is to help them succeed and make a successful transition from the military to civilian life -- to productive, taxpaying employers who can hire people," said J.P. Tremblay, deputy secretary for legislation and communications at the California Department of Veterans Affairs. Many veteran-owned businesses hire other former service members, he noted.

Although the overall number of California veterans has declined from 2.3 million to just less than 2.1 million in the last few years, the state's number of combat veterans has increased. And a higher proportion of them are disabled -- because medical technology has improved the odds of surviving severe injuries, Tremblay said.

In all, there are 243,443 veterans in California receiving monthly disability compensation, according to the U.S. Department of Veterans Affairs. And 1,119 businesses owned by disabled veterans are registered with the state.

California has long had a goal to award at least 3% of its contract dollars to businesses owned by disabled veterans. It has not yet met that goal, advocates said, but it may be close. The figure is expected to be about 2.97% for fiscal year 2009.

Activists are hopeful about the year ahead. Financial incentives have been on the books since 2006 to boost state agencies' use of businesses owned by disabled veterans.

Now, two recent developments are expected to help disabled-veteran business owners tap into more of the roughly $9 billion California spends each year on contracting and purchasing.

One new law took effect Jan. 1. It requires proof from companies that win state contracts that they made good on their promises to use disabled-veteran-owned businesses as subcontractors. If they can't, they face penalties of up to $25,000.

The other legal change, approved last summer, eliminated a controversial provision of state law that critics said allowed the contractors to get around a requirement that they use businesses owned by disabled veterans.

Called the "good-faith effort" provision, it let companies submit a form saying they had tried in good faith to hire firms owned by disabled veterans, even if they didn't succeed.

The elimination of the good-faith-effort provision was good news for Americal Contractors Corp., a painting company based in Pomona. The change took effect July 28. Within a week, co-owner Doug Nye said, Americal got its first state contract.

Now the firm has $556,000 in contracts on the books and an additional $270,000 out to bid, said Nye, a Vietnam War veteran and former real estate broker who started Americal in 2008.

"It has turned our business around," Nye said. He said the new revenue would allow Americal to double its workforce to 70 painters by the end of the year.

Not every disabled-veteran-owned business is expected to benefit so quickly, but activists are optimistic about the changes. "All the pieces are now working together," said Richard Dryden, executive director of the California Disabled Veterans Business Alliance in Sacramento.