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.

The Fed 100

Save the date for 28th annual Federal 100 Awards Gala.

Featured

  • computer network

    How Einstein changes the way government does business

    The Department of Commerce is revising its confidentiality agreement for statistical data survey respondents to reflect the fact that the Department of Homeland Security could see some of that data if it is captured by the Einstein system.

  • Defense Secretary Jim Mattis. Army photo by Monica King. Jan. 26, 2017.

    Mattis mulls consolidation in IT, cyber

    In a Feb. 17 memo, Defense Secretary Jim Mattis told senior leadership to establish teams to look for duplication across the armed services in business operations, including in IT and cybersecurity.

  • Image from Shutterstock.com

    DHS vague on rules for election aid, say states

    State election officials had more questions than answers after a Department of Homeland Security presentation on the designation of election systems as critical U.S. infrastructure.

  • Org Chart Stock Art - Shutterstock

    How the hiring freeze targets millennials

    The government desperately needs younger talent to replace an aging workforce, and experts say that a freeze on hiring doesn't help.

  • Shutterstock image: healthcare digital interface.

    VA moves ahead with homegrown scheduling IT

    The Department of Veterans Affairs will test an internally developed scheduling module at primary care sites nationwide to see if it's ready to service the entire agency.

  • Shutterstock images (honglouwawa & 0beron): Bitcoin image overlay replaced with a dollar sign on a hardware circuit.

    MGT Act poised for a comeback

    After missing in the last Congress, drafters of a bill to encourage cloud adoption are looking for a new plan.

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