(Washington, DC — SDVOSB News Services, July 25, 2011) The VA office of the Inspector General (OIG) released today “Audit of Veteran Owned and Service Disabled Veteran-Owned Small Business Programs.” The 50-page report revealed that at least 1400 VOSB and SDVOSB contracts valued at $500 million have been awarded to fraudulent companies annually. The VA will award $2.5 billion to ineligible business over the next five years.
In addition, 76% of the 42 companies randomly selected by the OIG were either ineligible to participate in the programs or ineligible for the awarded contracts. The thirty-two companies the OIG found to be ineligible were awarded $46.5 million in contracts including $26.7 in Re- covery Act contracts, according to the report.
Congress required the Small Business Administration in 1999 to establish programs to help vet- erans and service disabled veterans make the transition from active duty to civilian business owner. The SBA was tasked with increasing business opportunities for SDVOSB by creating a set-aside program for this small business group.
Certification of SDVOSB was mandated in October 2010 by the Small Business Verification Act. The VA, however, is the only federal agency that requires verification, and the Center for Veterans Enterprise (CVE) maintains that responsibility, which will reportedly be complete in August 2011.
According to the report, many of the businesses were ineligible because the veterans owners subcontracted more work to non-veteran owned SDVOSB than allowed under federal regula- tions or SDVOSB did not really control or own the business. This practice, known as ‘rent-a- vet,’ is widespread in VA’s procurement system.
Inadequate oversight of contracting officers responsible for determining eligibility contributed to fraud. The VA’s Office of Acquisition, Logistics and Construction, Jan Frye, Director, is re- sponsible for contracting policy and training acquisition staff.
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