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.

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