IG: DOD errs in verifying small businesses' status

The Defense Department awarded more than $340 million to ineligible companies instead of to service-disabled veterans, according to a new report.

Throughout DOD, defense officials awarded six contracts worth approximately $1.9 million to ineligible companies and 27 contracts worth $340.3 million to contractors that potentially misstated their status as a service-disabled veteran-owned small businesses (SDVOSBs), according to a report released March 2 by the DOD inspector general.

DOD’s Office of Small Business Programs’ policy did not require adequate verification of contractor status before awarding set-aside and sole-source contracts, the report states.

In response to the IG’s report, John Caporal, deputy director of the Air Force’s small business programs, took issue with the IG's assessment of the contracts that the Air Force awarded. Caporal rebutted the IG’s statements about contracts and contractors, showing point by point that the Air Force’s contracting officers checked the companies' status in the Central Contractor Registration and followed other regulations.

In addition, he wrote on Jan. 5 that, among other things, the IG measured the Air Force’s contracting processes and procedures to the Veterans Affairs Department. That evaluation “as you know, is not applicable to other than the VA,” he wrote.

The IG also reported that DOD employees in the small-business office also incorrectly coded 137 contracts, as SDVOSBs. Those contracts were worth roughly $1.3 billion. The employees also didn’t ensure the contract reports reflected the correct socio-economic status of companies.

The IG said it’s the duty of the contracting officer to input the information correctly into the Federal Procurement Data System (FPDS), adding that human error was the most prevalent factor for the wrong codes and socio-economic statuses.

The IG recommended that managers establish a process to verify companies’ status. For the specific contracts already awarded, commanding officers should investigate whether contractors lied about their status and take necessary steps laid out in the contract.

“Doing this could put $254.7 million to better use by ensuring eligible SDVOSBs receive the intended benefits,” the IG wrote in the report.

Finally, DOD officials should also reevaluate the process for validating data going into FPDS.

About the Author

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

FCW in Print

In the latest issue: Looking back on three decades of big stories in federal IT.


  • Anne Rung -- Commerce Department Photo

    Exit interview with Anne Rung

    The government's departing top acquisition official said she leaves behind a solid foundation on which to build more effective and efficient federal IT.

  • Charles Phalen

    Administration appoints first head of NBIB

    The National Background Investigations Bureau announced the appointment of its first director as the agency prepares to take over processing government background checks.

  • Sen. James Lankford (R-Okla.)

    Senator: Rigid hiring process pushes millennials from federal work

    Sen. James Lankford (R-Okla.) said agencies are missing out on younger workers because of the government's rigidity, particularly its protracted hiring process.

  • FCW @ 30 GPS

    FCW @ 30

    Since 1987, FCW has covered it all -- the major contracts, the disruptive technologies, the picayune scandals and the many, many people who make federal IT function. Here's a look back at six of the most significant stories.

  • Shutterstock image.

    A 'minibus' appropriations package could be in the cards

    A short-term funding bill is expected by Sept. 30 to keep the federal government operating through early December, but after that the options get more complicated.

  • Defense Secretary Ash Carter speaks at the TechCrunch Disrupt conference in San Francisco

    DOD launches new tech hub in Austin

    The DOD is opening a new Defense Innovation Unit Experimental office in Austin, Texas, while Congress debates legislation that could defund DIUx.

Reader comments

Wed, Mar 7, 2012

While the goals sound noble, this is just another government-sponsored contracting screw-up. Let's give some millions to "DISABLED" Vets who are smart enough to employ the numerous contract scam artists to skim off the profits of "SMALLER Government" work forces. We have Woman-owned, disadvantaged minorities, and every other sort of social welfare awards, why not a "Poor, Under-educated" religious zealot set aside? Maybe even an under privileged terrorists set-aside?

Mon, Mar 5, 2012

The DOD IG grossly understated the numbers or the period covered was only 3 months! This proves the old saying figures do not lie but liars figure so DOD Contracting Officers definitely falsify the numbers to meet the SDVOSB Goals. All Agency Contracting Officers do it because they do not want to support the SDVOSB Program only the 8a and WOSB Programs. Wonder why?

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

More from 1105 Public Sector Media Group