Why are O4 and above disqualified from veteran’s preferences?

The simple answer is Congress made it that way. However you are only looking at the basic veterans' preference which does not give a large advantage to a vet. This only gives you 5 additional points when competing for a job that is open to ALL CITIZENS. There are two other hiring authorities that can use for non-disabled veterans: VRA and VEOA. VRA allows for non-competitive appointment for any grade up to GS-11. Honestly, I have never seen this authority used because unless the hiring manager knows the person the chances that they would take a risk on someone like that is very slim. VEOA is more commonly used and probably your best chance at getting in the door. Essentially that authority allows for a veteran to apply to announcements that are for STATUS CANDIDATES in which case veterans' preference doesn't apply anyway. All status candidates (with a few exceptions) are equal in terms of how they are treated and have to compete for jobs. The burden is then on you to show how your experience is equivalent to specialized experience that they are asking for in the announcement. Luckily veterans do have an advantage over their civilian counterparts in this area because the Army (I can't speak for the other services) push high degrees of responsibility to much lower levels. A good example is my boss has less people and is responsible for less than I was as a Sergeant in the Army and she is a GS-15 equivalent. The key is to articulate in the resume that whatever it was that you did to meet the specialized experience was equivalent to the level they are asking for. For example, if the announcement says The definition of specialized experience is experience in supervising small teams equivalent to the next lower grade GS-11, then you would say Supervised small teams of XX amount of people at or exceeding the GS-11 level. You have to say this overtly because the HR folks may not have been in the Army and may not understand how much responsibility a Major has. Also, translating your experiences into civilian terms will also make it easier for them to figure out that you meet the qualifications and don't summarily dismiss your application as being unqualified. Here is a link for the veterans' hiring authorities that outlines the criteria: http://www.fedshirevets.gov/job/shav/index.aspx

Speaking from personal experience, look at it as a blessing. I applied for several government jobs when I got off of active duty. At the time I did not have any preference points (that changed later). As a result I simply could not compete with the applicant pool without the points. I was forced to go back to school and completely redesign my skill set. Long story short, now I make around four times what I would be making had the IRS or FBI picked me up. I have zero regrets. Honestly, outside of the military, in my opinion, government work will hold you and your earnings potential back. Use the new GI Bill and pick up some marketable skills. If you don't want to go to school, start a small business. There are numerous franchises out there or other opportunities. Your military leader skills are valued in the non-government workplace and they pay for it.

My assumption would be that based on the positions Officers have held, there is the real potential for unfair hiring practices to happen....."insider hiring" for lack of a better analogy. You could work yourself into a position with a niche and be hired to fill that very position at retirement, with the only change is going from wearing the uniform to wearing a suit & tie. I have seen that on both sides of the fence (enlisted and officer) and it just seems wrong to me.