Last year I started a series to highlight outrageous cases of waste, fraud, and abuse by the federal government. In the current environment of complete political theatre and legislative dysfunction leading to budget crises, debt ceilings, and continuous resolutions, I can probably write a book with so much material. However, I wanted to focus on a truly outrageous case of fraud and waste that is shocking, even when we succumb to the worst stereotypical fears of our government.
According to a recent inspector general report at the Department of Veterans Affairs (VA), $540 million dollars annually worth of business is being awarded to companies that fail to meet eligibility requirements for veteran owned small businesses or service-disabled veteran owned small businesses. The report stated these results were extrapolated from audit results, which assumes $540 million, and could add up to $2.5 billion over the next 5 years. The report further estimates that factoring out ineligible businesses, the VA only awarded 12 percent of its procurement dollars to actual veteran owned small businesses (VOSBs) and 10 percent to service disabled veteran owned businesses (SDVOSBs), as opposed to the 23 and 20 percent it said it did during fiscal 2010. Half a billion in estimated fraud? Give me a break.
The main culprit, not surprisingly, is the lack of accountability, according to testimony before the House Veterans Affairs' subcommittee on oversight and investigations by Belinda Finn, assistant inspector general for audits and evaluations at the VA OIG.
…Ineligible businesses received awards because VA's office of small and disadvantaged business utilization was not thoroughly reviewing business documentation and performing site visits to verify the veteran-owned status, said Finn. The OIG also found that contracting officers did not always check VA's enterprise veterans database, business size classification codes, or properly assess subcontracting and partnering agreements…
Once again the lack of resources and strain on the acquisition workforce was blamed, although this is a false argument. There is absolutely no excuse for not verifying eligibility of a firm for these types of set-aside programs, not to mention the subcontracting and partnering agreements. Where is the protection of the public’s trust?
Also of note is that only 30% of service disabled veteran contracts are with the VA, so this is a widespread issue. Obviously unethical firms and individuals are taking advantage of the lack of oversight, but there is no reason why VOSBs and SDVOSBs should be self-certifications. These programs should have formal certification processes similar to 8(a).
Although the VA has verification programs in place through its Center for Veteran Enterprise, it is woefully inadequate and cumbersome. You need your DD-214, adjudication letter from the VA (for SDVOSB), and corporate documentation showing 51% ownership and control. That is it. The current document requests are intrusive, and privacy is a risk. Explain to me how requiring 14 voided checks proves I am eligible?
Taxpayers are at risk in this program, and I hope the government, especially at the VA, understand the depths of this massive fraud being per perpetrated on taxpayers and veterans.