Bill would jail crooks who wrongly get set-aside contracts

A few fake firms nabbed $100 million in set-aside contracts for veterans through fraud and abuse, report states.

Service-disabled veterans may get some added protection from bilkers who win government set-aside contracts by misrepresenting themselves as veteran-owned businesses.

Officers of a company that misrepresented itself as a service-disabled, veteran-owned small business could be punished by as much as $5,000 in fines, two years in prison, or both, according to legislation that was introduced Nov. 19.

“It is absolutely unacceptable that some businesses have been allowed to fraudulently and shamefully profit at the expense of our veterans,” said Rep. Glenn Nye (D-Va.). Nye introduced the bill with several supporters, including Rep. Nydia Velázquez, chairwoman of the Small Business Committee.

The Government Accountability Office on Nov. 19 told the Small Business Committee that numerous companies not actually owned by service-disabled veterans have stolen those veterans’ set-aside contracts. GAO had received more than 100 allegations of fraudulent companies, and in a case study of fraud and abuse of just 10 firms, GAO found those firms nabbed roughly $100 million in contracts that were set aside for veterans.

Nye’s bill would require the Small Business Administration to create an Office of Service Disabled Veteran-Owned Small Business Procurement. The office would establish a database of businesses owned by service-disabled veterans and develop the program’s eligibility criteria. The bill would require SBA to assign a veterans procurement specialist in each of its regional offices and would allow veterans to protest to SBA the award of a service-disabled veteran set-aside contract.

Nye, chairman of the Small Business Committee’s Contracting and Technology Subcommittee, said he plans to hold more hearings on this fraud before the year’s end.

SBA Administrator Karen Mills told the committee that SBA was planning to work with the Veterans Affairs Department to monitor the program.

In October, SBA officials said the government is a percentage point above the goal of awarding 3 percent of dollars to service-disabled veterans this fiscal year as agencies award contracts with more money from the economic stimulus law.

“However, on the basis of this report and today’s testimony, I am deeply concerned that those promising numbers could come with a very large asterisk,” Nye said.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

Reader comments

Thu, Apr 22, 2010 James Holland Indialantic, FL

My Company IS a SDVOSB and I work directly with the ELITE SDVOSB Organization of Florida and the SBA Washington DC Office of the Veterans Procurement assisting other VETERANS who are having difficulties with Contracting Officers and Agencies getting SDV Set-A-Sides. Along Comes these SLICK THIEVES who have an in with these Agencies and Contracting Officers and Buyers and they get taken care of leaving us REAL Service Disabled Veteran Owned Companies' holding an empty bag - we are cheated. And we are legitimate companies. I work and assist more Veterans helping them at the detriment of my own Company because i want them to succeed. I am an OLD Retired Army NCO with 150% disability getting paid for 90% due to the magic arithmetic of the VA. I served my Country for 23 Years, several of which was in direct Combat in which I received Injuries and most of these Disabled Veterans did also. Some obtained their disabilities in LINE-OF-DUTY but a large percentage of us obtained ours in COMBAT. Then there are those who participated in Atomic Tests (as I also did) and others who participated unknowingly in Chemical tests, finding out after the fact with extreme health issues. Soldiering is a hard occupation and a dangerous one. Sometimes you even lose your life and some of us were lucky and survived, thank you very much. But, the cheats and stolen valor must be treated as a felony and brought to a halt. I have had Contracts that I bid on and one I PROTESTED using my VA ID CARD challenging the other part through DLA-DSCC to show a copy of his Service Connectd ID. He was un able so to do - DLA-DSCC "CANCELLED the CONTRACT AND THE ORDER" rather than issue it to me. It was wired from the start and SBA knew it and could do nothing about it for the Contracting Officer claimed the Project ceased to exist.SBA nad I both have that documented.

Thu, Apr 22, 2010

I believe that whether you are woman owned, SDV owned or minority (of any kind owned) you should at least know the business you are contracting for. I had a SDV want to team with us. He would charge us 5% for being the front and 25k to start. I asked him about his disability. He is a jogger and his knee went out. On top of that he knew absolutely nothing about IT. I have personal knowledge of several woman owned business's where the husband owns 49% and the wife owns 51%. She doesn't work. The point of these programs is to help these groups of people become viable in the commercial space by becoming large enough to do so. How are set asides to people who know nothing of a subject helping that. Teach to fish, stop giving out fish. BTW - I am a 100% woman owned business. My company does better in the commercial market because we cannot compete against the big fake set aside companies.

Tue, Mar 2, 2010 Robert

I for on agree with the Representatives bill to create a separate office for the Service Disabled Veteran Procurements. With that said, I will also say that it should be headed by a veteran and not some political appointee. We as veterans have long since had to settle at the hands of people that have no clue of what it is to sacrifice. When you look at the companies that stole the 100million dollars in contracts from veteran companies; you see a reflection of the sentiment that society has in regard the ones that have fought bleed and died. They love you while you’re dying, but if you make it back then you become nothing more than a token to be used on the special day and a burden that is soon forgotten. This blatant disregard for people that have afforded the opportunity for free trade and capitalism in this great country has to be stopped. A county that fails to provide for the ones that sacrificed is a country without honor. America has to wakeup and say enough, it starts in Washington, make it happen Representative Nye.

Mon, Nov 30, 2009 C. Young

Hey Mr Nye while you're at it, check into those businesses that claim to be women owned or that have small disadvantaged status! Not only are women owned businesses not benefitting from the set aside goals already in place, then they get more business stolen away by companies claiming to have a women owner. All this while the SBA continuosly delays PL106-554.

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