Vietnam Veterans of America has thrown support behind a congressional effort to loosen a rule that governs service-disabled veteran-owned businesses working for the Veterans Affairs Department.

“Congress may need to move to synchronize the standards of control between VA and [the Small Business Administration],” said Rick Weidman, VVA’s executive director for policy and government affairs, in an interview with Federal News Radio.

Weidman criticized a VA rule requiring that service-disabled veterans competing for SDVOSB contracts unconditionally control decision-making within their companies. He said SBA regulations allow more flexibility.

“Literally every day I get emails on both sides of this issue,” he said. “And the two sides being people begging for help to throw the frauds out because they’re stealing the business, and letters from veterans who are saying, ‘look, you know me Rick. You know my business. And [VA is] saying that I’m not qualified.'”

Rep. Bill Johnson (R-Ohio), chairman of the Veterans Affairs Subcommittee on Oversight and Investigations, is crafting legislation to force VA to loosen its rule. Johnson said he favors SBA’s process, although he did not say exactly how the bill would change the steps VA uses to verify SDVOSB program eligibility.

The unconditional control requirement creates a “bright line” and removes subjectivity from the process examiners use to decide whether a business qualifies for the service-disabled veteran set-aside program, said Thomas Leney, executive director of VA’s Office of Small and Disadvantaged Business Utilization, during in a recent subcommittee hearing.

“We have improved our quality control and become more aggressive in referring firms that we suspect are misrepresenting their status,” said Leney in written testimony. “In fiscal 2011 we referred 25 firms to the Office of Inspector General for investigation as possible misrepresentation. So far in fiscal 2012, we have referred 59 firms.”

VA is the only federal agency required by law to verify the status of service-disabled veteran-owned businesses. The department conducts audits of businesses through its Center for Veterans Enterprise (CVE).

But some lawmakers and veterans groups believe VA is keeping legitimately qualified veterans from receiving contracts, saying no investor in his or her right mind would give the majority owner carte blanche control over the investment.

“You can take almost anything and absolutize it and make a muck of it. And that’s really what the VA has done … in a way that makes no sense in terms of business,” Weidman said.

He said statutory change is the only way to address the concerns.

“If we can ever make CVE work properly, then VET-Force and Vietnam Veterans of America and virtually all the other veterans organizations and military service organizations would be in favor of making it a governmentwide standard, if you will, but not at this point because it’s driving our people out of business who are legitimate,” he said.

VA is considering the possibility of improving its SDVOSB processes and is accepting suggestions for change, said agency spokeswoman Josephine Schuda.

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Lawmakers say VA contracting rule squeezing out vet-owned firms

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

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