VA said to fall behind on verifying veteran-owned businesses

Through April, the VA has verified only 14 percent of companies in, a database of companies able to get set-aside contracts.

The Veterans Affairs Department is struggling to verify the ownership of a growing number of small businesses supposedly owned by veterans, a new report says.

To date, the VA has verified roughly 2,900 businesses in its database of companies described as veteran-owned or service-disabled veteran-owned small businesses. That's about 14 percent of businesses in the database, according to a Government Accountability Office report released May 28.

In response, VA officials wrote the backlog has reached more than 5,000, but the VA has verified 3,000 companies as of May 1.

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The backlog is increasing despite a large number of business-owners lying, claiming to be veteran-owned to get special treatment. GAO has said. GAO exposed fraud in several of the Small Business Administration’s small-business programs, including the program that sets aside contracts for small companies owned by service-disabled veterans.

In 2009, GAO said at least 10 fake service-disabled veteran-owned small businesses had swindled roughly $100 million from SBA’s set-aside contracts. For example, one company wasn’t owned by a service-disabled veteran, and another subcontracted all of its work to a large foreign company, GAO said last November.

In its new report on the VA, GAO pinpointed a several specific problems with the VA’s verifications. Department officials were missing files of required information and explanations of how staff members determined that the companies were owned and controlled by veterans.

In addition, officials have an increasing backlog of site visits, as called for in the VA’s procedures. The VA has denied verification to more than 150 businesses but lacks a way to make sure contracting officers don’t award those companies contracts under veteran preferences authorities, according to the report.

The Veterans Benefits, Health Care, and Information Technology Act of 2006 requires the VA to give priority to small businesses owned by veterans when awarding contracts to small businesses. However, VA officials only finalized rules on verification procedures in February. GAO's report states that leadership vacancies and the overall number of employees are major reasons for the delays.

Meanwhile, VA officials said during a congressional hearing that they have placed a lot of pressure on the department to award contracts only to veteran-owned companies that it has verified, the report states.

GAO recommends that VA officials lay out a way to overcome the backlog of verifications and then set up procedures for barring companies that failed their verification from getting any special preferences.

VA officials agreed with the recommendations. In a letter to GAO, officials said the department is increasing its number of employees, both in overall leadership positions and in jobs to help the verification process. To avoid awarding contracts to companies that failed verifications, the VA has begun removing its Vendor Information Page from public view. By not seeing the name as an option, the contracting officers are less likely to consider the company for an award, the VA's letter states. The VA is also training contracting officers about the preference authority, according to the letter.

About the Author

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

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Reader comments

Thu, Jun 10, 2010 Adam F. Kohler Limestone, Maine

HJuman nature being what it is. We travel the path of least resistance. If it means more work, we will do it another way. When I want contracting to purchase items for me (over $3,000)I need to provide three vendors. Now the VA, some companies are more difficult to research than others. A quick look at official company files might lead someone to believe that the company is owned by at veteran or a disabled veteran. In defense of the VA is takes more time to visit a companies office sites than to just call or look at an email site. Seems to me that another agency should be verifing this information. How about the company is off the approved list until the individual claiming to be a veteran has his paperwork approved. You are off the Disable Veteran's list until you have paperwork verifiing that one or more owners are disabled vets. And each branch of the service could verify that an individual is a veteran rather than the VA.

Wed, Jun 2, 2010 CHaplain Mary Murphy Wheat Ridge Colorado

Thank you for identifying what we have ben trying to identify since the Public Law was passed in 1999; Executive Order 2003; you are a gift of gifts especially to Disabled Veterans Incarcerated learning solar energy business ownership; so, upon re-entry, they can engage their gifts in government contracts The War Widows

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