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Lawmakers set goal to hire more disabled-veteran-owned businesses

By Dan Shaw

The afternoon sun crosses the horizon Nov. 4 as Scott Flaugher, owner of Veterans Electric LLC, Colgate, wires a control panel on the grounds of The Legend at Merrill Hills in the town of Waukesha. Wisconsin lawmakers have introduced a pair of bills that would set a goal of having 1 percent of state construction and other expenditures go to businesses owned by disabled veterans. (Staff photo by Kevin Harnack)

Veterans Electric LLC owner Scott Flaugher wires a control panel on the grounds of The Legend at Merrill Hills in Waukesha on Nov. 4. Wisconsin lawmakers have introduced a pair of bills that would set a goal of having 1 percent of state construction and other expenditures go to businesses owned by disabled veterans. (Staff photo by Kevin Harnack)

Scott Flaugher attributes the majority of his business to his status as the disabled-veteran owner of an electrical contracting company.

But when Veterans Electric LLC, Colgate, wins contracts through government policies that direct project money toward companies owned by disabled veterans, almost all come from the federal government and next to none from the state of Wisconsin. The cause of that discrepancy, Flaugher said, lies in the federal government’s letting only disabled-veteran-owned businesses bid for certain jobs, often veterans homes and similar projects.

Wisconsin, on the other hand, merely has a provision calling on agencies to “make efforts to ensure a portion” of their spending benefits those companies.

To give Flaugher and others like him a better chance of winning state contracts, lawmakers have introduced companion bills that would set a goal of having 1 percent of construction and other expenditures go to disabled-veteran-owned businesses. The legislation would impose no penalties on departments that fail to hit the target but would give state officials a benchmark by which to measure their performance.

“Obviously, it really doesn’t have any teeth in it,” Flaugher said. “But, as I say, if we were going to be treated equally, like other socially disadvantaged businesses, we could maybe get someone on state projects to utilize us.”

Flaugher, who served in the first Gulf War and was injured while trying to put out an aircraft fire, said many of the difficulties he faces are similar to those confronting any other owner of a small business. But his additional disadvantage, he said, comes from spending 10 years in a line of work that poorly prepared him for a job in the private sector.

“We are individuals that were set up for military careers, then suddenly found ourselves starting over in life and starting our own businesses,” he said. “And with all the risks of being an entrepreneur, it’s so difficult to compete period.”

Seeking similar advantages

Since 1983, Wisconsin law has set a goal of having 5 percent of state spending go to companies owned by minorities. The state was just shy of hitting that target in fiscal year 2012, and Flaugher and others want a goal for disabled veterans to produce a similar outcome.

But the justifications for establishing preferences for ex-service members are seldom the same as those given for policies meant to help minorities and other groups that often are perceived to be at a disadvantage. At the federal level, for instance, the Small Business Act, which established spending goals for woman-owned businesses, was intended to assist those who “are subjected to discrimination in entrepreneurial endeavors due to their gender.”

READ OUR RELATED EDITORIAL: Disabled vets deserve more than bill offers

The 1999 federal law for veteran-owned companies, in contrast, talks of the goals as being something owed to those who have served the country.

“The United States has done too little to assist veterans,” according to the law, “particularly service-disabled veterans, in playing a greater role in the economy of the United States by forming and expanding small business enterprises.”

Of the causes of discrimination against veterans, the most commonly cited is the fear that someone who is suffering from post-traumatic stress disorder will be mentally unstable on the job site. Others include the concern that those who serve in the National Guard are difficult to employ because they might be sent overseas at any time.

But as the U.S. steadily withdraws troops from the Middle East, such deployments have become less common. In general, prejudice against veterans has decreased since the 1960s and ’70s, when many in the public looked unfavorably on those returning from Vietnam.

And at no time in U.S. history have ex-service members been victims of unfair discrimination to the same extent as those in minority groups, said Pam Ploor, a Milwaukee-based attorney at Quarles & Brady LLC who has worked on various lawsuits alleging discrimination and cases concerning construction law. For one, she said, those who have served in the armed forces never have been subjected to prohibitions such as the Jim Crow laws that kept black people in southern states from voting or exercising other constitutional rights.

For another, Ploor said, despite joining the armed forces in ever-greater numbers in recent decades, women still make up a small percentage of those who serve in uniform. In that example, she said, a set-aside for disabled veterans who own businesses often is the equivalent of a set-aside for men.

vetslaw3Case law, Ploor said, has established the legal foundations for affirmative action, and justifications other than discrimination raise the possibility of court challenges. But whatever the reasons are, she said, this much is certain: Few politicians are willing to disagree.

“There is such support for the military now,” Ploor said. “I think it’s very popular for legislators to help veterans and disabled veterans.”

Preferences as payback

Flaugher said he is loath to say that society owes him anything for his time spent in uniform.

Government officials, though, often portray preferential policies as something veterans deserve in return for their military service.

On Nov. 8, Gov. Scott Walker signed two bills, Assembly Bill 201 and Senate Bill 178, that, respectively, give veterans an advantage in registering for classes at state universities and technical colleges and that let veterans buy hunting, fishing and trapping permits at in-state prices, regardless of where they live. According to a press release attributed to Walker, the first of the two will ensure veterans “have the necessary resources available to succeed when they return home and are looking for a job.”

Wisconsin has been selected as one of six states to test out a system that makes it easier for veterans to obtain licensing or credentials to enter law enforcement, truck driving, nursing or other careers and, through the state G.I. Bill, also helps pay the tuition of veterans who attend public universities and colleges.

Perhaps most pertinent to business owners is a program called VETtransfer, which provides grants of as much as $20,000 to help ex-service members start companies.

The benefits offered through VETtransfer and the G.I. Bill probably are the biggest reason the state should set goals for spending on businesses owned by disabled veterans, Greg Nagel, president of Elm Grove-based Nagel Architects, said after a hearing Nov. 7 on Assembly Bill 466, one version of the legislation setting the 1 percent goal. Nagel said veterans too often are encouraged to become entrepreneurs, only to find the disadvantages facing owners of small businesses make competing in the marketplace nearly impossible.

Putting people to work

Another concern often cited by proponents of the favorable policies is the high rate of unemployment among veterans. But in 2012, veterans throughout the country had an unemployment rate of 7 percent, whereas that for nonveterans was 7.5 percent, according to the Current Population Survey, which is conducted by the Census Bureau and the Bureau of Labor Statistics.

Wisconsin, though, lags behind the rest of the country in that regard. The state’s unemployment rate for the roughly 208,000 veterans who were 20 or older and in the state’s labor force in 2012 was 8.4 percent, according to the survey.

Thomas Middleton, owner of Middleton Construction Consulting, Milwaukee, and a disabled veteran, said state spending goals could help lower that figure. The reason, he said, is that most veterans who own companies are inclined to employ other ex-service members, meaning the benefits conferred by the preferential policies do not stop at companies’ top levels.

Still, the number of businesses belonging to disabled veterans in Wisconsin is fairly small. The Department of Administration, which oversees state construction projects, lists only about 20. The federal Department of Veterans Affairs, in contrast, has 45 service-disabled veteran-owned small businesses registered in Wisconsin.

Middleton said the difference in the listings probably results from the greater advantage offered by the federal set-asides.

“In theory, if you are federally certified, that should translate to the state program as well,” Middleton said. “Hopefully, there will be more.”

Middleton said his company has won state contracts, but he attributed that to his 20 years of experience in southeast Wisconsin’s construction industry, rather than his presence on the state’s registry.

Flaugher said he and others like him cannot wait so long. He said his disabilities from his time spent overseas are so severe, no employer would hire him as a full-time electrician. With many avenues of employment closed to him, opening his own business seemed one of the few ways he could earn a living and contribute to society.

In the absence of governmental spending goals, he said, he probably would be seeking assistance of another type.

“For someone like myself with 100 percent disability,” he said, “I would think it’s more likely I’d be on the welfare roll.”

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