Fraud in veteran contracting program exposed

WASHINGTON, D.C.
November 20, 2009 12:03am

There is widespread fraud in a multi-billion dollar program intended to help service-disabled veterans compete for government projects, according to a report from the Government Accountability Office.

Investigators say the Small Business Administration's lack of fraud-prevention controls has left the Service-Disabled Veteran-Owned Small Business (SDVOSB) program vulnerable to abuse.

"When you consider the sacrifices our service-disabled veteran entrepreneurs have made, the findings of this report are nothing short of appalling," says Rep. Nydia Velázquez, D-N.Y., chairwoman of the House Small Business Committee.

In its investigation, the GAO highlighted ten firms awarded government contracts intended for service-disabled veteran firms. The results of the audit found that all ten should not have qualified for the program, yet still collected $100 million in SDVOSB contracts and $300 million in other federal contracts. The GAO report suggests not only that fraud was occurring, but that the SBA lacks safeguards to root out and deter these abuses.

"The GAO's findings suggest that these incidents of fraud are not isolated incidents, but that there is widespread abuse and little is being done to protect businesses owned by veterans," says Ms. Velázquez.

Committee members are demanding that the SBA do a better job of policing for abuse.

In addition, Rep. Glenn Nye, D-Va., chairman of the Contracting and Technology Subcommittee, says he is introducing legislation to help put an end to fraud in the initiative. His bill would institute fines and criminal penalties. It would also require SBA to dedicate more resources to overseeing the contracts and to reaching out to legitimate veteran-owned businesses in order to encourage their participation.