VA not doing enough to verify service-disabled veteran owned firms

GAO highlights a need for tighter controls to fix the contracting program.

By Taeja Smith
Special to Federal News Radio

The Government Accountability Office continues to find vulnerabilities that could lead to fraud and abuse in the Department of Veteran Affairs’ service-disabled veteran-owned small business (SDVOSB) program.

GAO issued nine reports since 2009 focusing on the SDVOSB program’s vulnerability and the agency’s actions.

“VA has taken some positive action to enhance its fraud prevention efforts by establishing processes in response to six of 13 recommendations, ” GAO stated in its report released Wednesday.

One of those recommendations includes VA making unannounced visits to high-risk firms.

The 59-page report found VA made inconsistent statements regarding its progress in verifying firms listed on the Vetbiz website.

“In one communication, VA stated that as of February 2011, all new verifications would use the 2010 act process going forward. However, as of April 1, 2012, 3,717 of the 6,178 SDVOSB firms (60 percent) listed as eligible in VetBiz had not been verified under the 2010 Act process,” auditors stated. “VA has also begun action on some remaining recommendations, such as providing fraud awareness training and removing contracts from ineligible firms, though these procedures need to be finalized.”

The 2010 Veterans Small Business Verification Act did not require a deadline for VA to verify SDBOSBs, and required a less-stringent process “in many cases insufficient to establish control and ownership.” The law lets businesses self-certify as being SDVOSBs with little supporting data.

Since the Small Business Administration relies solely on firm’s self- certification, and no commitment is mandated to create a verification process, “five new cases of potentially ineligible firms received $190 million in SDVOSB contract obligations,” GAO stated

One firm, for example, was deemed ineligible by the VA, but continued its self-certification and received about $860,000 from the General Services Administration and the Department of Interior. Furthermore, the Department of Defense Office of Inspector General found that DoD provided $340 million to firms that “potentially misstated their SDVOSB status” in 2012.

GAO recommended Congress expand VA’s SDVOSB eligibility verification process governmentwide.

GAO stated “until VA demonstrates that its process is successful in reducing its own SDVOSB program’s vulnerability to fraud and abuse” this expansion should be held off.

Improvement of the governmentwide SDVOSB fraud prevention control is not imminent as it continues to remain a self-certification program.

GAO also recommended executive action in three areas to ensure that all firms on Vetbiz are utilizing the verification process called for by the 2010 law:

  • Firms listed in VetBiz establish a reliable beginning point for its verification status.
  • Establishing procedures to maintain the accuracy of the status of each firm in VetBiz.
  • Expeditiously verify all current VetBiz firms and new applicants under the 2010 Act.

Taeja Smith interns with Federal News Radio.


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