On December 16^th, 2009, the Subcommittee on Oversight and Investigations of the House Committee on Veterans Affairs conducted a hearing on “Acquisition Deficiencies at the U. S. Department of Veterans Affairs”. NaVOBA as well as the Task Force on Veteran Entrepreneurship (VETFORCE) testified as to the problems facing veteran-owned small businesses in working with VA as well as some of the issues surrounding the Center for Veterans Enterprise verification process.

The majority of the hearing focused on the U.S. Government Accountability Office (GAO) report titled: Service-Disabled Veteran-Owned Small Business Program; Case Studies Show Fraud and Abuse Allowed Ineligible Firms to Obtain Millions of Dollars in Contracts (www.navoba.com/gaoreport).  The report identified 10 firms which received approximately $100 million from SDVOSB contracts through fraud or abuse of the program or both.

Examples included contracts awarded to firms whose owners were not service-disabled veterans, a federal employee who set up a SDVOSB while still employed by the Air Force and a number of pass-through arrangements where large businesses received the benefits intended for SDVOSBs. The GAO recommended Congress consider providing VA authority and resources to expand its SDVOSB eligibility process government wide.  GAO also recommended that SBA and VA explore the feasibility of government wide use of the VA VetBiz verified database for SDVOSB contractors.  NaVOBA supports the GAO recommendations.

PL 109-461 provides VA the authority to only contract with verified SDVOSBs under the Veterans First Contracting Program.  Unfortunately there is no requirement for other federal agencies and large prime contractors to use only verified SDVOSBs. As evidenced by the GAOs findings, abuses will continue until such time as there is not only government-wide verification, but also penalties for abusing the program. 

NaVOBA is aware of several instances in which NaVOBA members and legitimate SDVOSBs have lost contracts to firms with questionable ownership and control.  Expecting contracting officers to review ownership and control of SDVOSBs prior to award is an unreasonable burden to place on over worked contracting officers.  The other issue is a firm may qualify as a legitimate SDVOSB based on ownership and control and still pass the work of a contract to a large business or some other entity that does not qualify for the SDVOSB program.

We all have a responsibility, when we find such abuse to bring it to the attention of the contracting officers, small business specialists, CVE and SBA personnel. We all have a vested interested interest in making this program work!

Full Download! To read Scott’s testimony from the hearing visit www.navoba.com/house1218

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