Both VA as well as individual VA state departments award contracts each year to qualifying Veterans who own small businesses. However, in light of a recent audit, both federal and state Veterans Affairs commissions, such as California, are in the process of cracking down on these potential contracts as many of the firms awarded this Veteran business benefit were not actually owned by Veteran or were otherwise ineligible. According to the audit, 32 out of 42 small businesses that had been awarded contracts last year should not have gotten contracts at all, costing the government approximately $47 million. The main issue is that Veteran-owned small businesses get preferential treatment in the competition for contracts at both the federal and state level. Subsequently, outside firms looking to capitalize on better contract offers, seek out Veteran-owned businesses and attempt to use them as a front.
Rich Dryden, executive director of California Disabled Veteran Business Alliance support this “clean up” of the system and notes that this benefit needs to be protected for Veterans as it offers a great opportunity for California Veterans to get involved in the community. In order to prove ownership, Veterans with small businesses must send the agency copies of tax returns, payroll ledgers, signature cards, and other bank-related documentation. In addition, the agency is increasing the number of site visits to more than 750 nationwide from fewer than 150 in the previous year. One California disabled Veteran, who applied in January to be added to the Veterans Affairs database of certified Veteran-owned small businesses, noted that he still hasn’t won a contract and was recently visited by an agency auditor for a two-hour site visit, that included verifying everything on the Veteran’s initial application to reviewing bank statements.
In spite of the recent crackdown and tougher rules associated with the Veteran business benefit, those who pass the initial investigation will have much less competition for the federal contracts. Since the crackdown started in 2010, the agency has dropped approximately 8,100 firms from its database that either didn’t qualify or didn’t respond to requests for new documentation to become eligible for a Veteran-owned business. As word continues to spread regarding the required investigations, California Veterans Affairs commissions and other state commissions are hoping that this will protect Veteran-owned small businesses from getting harassed by companies who only want to obtain federal contracts.
For more information, please see: http://www.latimes.com/business/la-fi-smallbiz-vet-fraud-20110808,0,1939716.story.
