Less Fraud Means More Money for Veteran-Owned Businesses

Thanks to a new VA rule, less fraud in set-aside contracts means more money available to deserving veteran-owned businesses. The Department of Veterans Affairs requires businesses claiming they’re veteran-owned to prove such claims with documentation. Otherwise, they will not be considered for set-aside contracts.

In the past, companies self-certified the information they submitted to the VA. But now the new rule, which is a provision applied from the 2010 Veterans Benefits Act, means VA officials will verify companies’ documentation as part of the VetBiz application process. Any business that claims it is owned by veterans, service-disabled veterans or surviving spouses fall under the new rule.

The Government Accountability Office audited 10 companies. Thereafter the GAO reported in November 2009 that these 10 companies earned $100 million in contracts through fraudulent or abusive acts. By enacting the provision earlier this month, the VA hopes to crack down on such abuse.

“VA is committed to doing business with, as well as supporting and protecting, veteran-owned small businesses,” said Erick Shinseki, secretary of the VA. “Although the verification process may initially be a challenge to some small business owners and to VA, it’s a necessary step to eliminate misrepresentation by firms trying to receive contracts that should go to service-disabled and other veteran-owned vendors.”

To keep track of qualified veteran-owned businesses, the VA uses VetBiz.gov. VA officials can refer to the database when considering set-aside contracts or sole-source contracts, which have no cap. Via snail mail and e-mail, the VA notified more than 13,000 businesses from VetBiz to tell them they have to submit ownership paperwork among other documents. The companies have 90 days to submit the documents. Other companies can be listed in the database and considered for set-aside contracts. All they need to do is apply and prove their ownership status.

Each year, firms owned by veterans and service-disabled veterans must get verified to remain in the VetBiz database. Companies that falsify claims of ownership face exclusion from doing business with the federal government for up to five years.

Being a part of the VetBiz program benefitted companies in 2009. About 35 percent of the VA’s contract dollars went to small companies in 2009. Of that, about 20 percent went to veteran-owned small companies. By early February, the VA plans to go public with more information at VetBiz.gov to let applicants know how to submit documents electronically. Until then, firms can apply with information on a CD-ROM.

Photo thanks to Alex Osterwalder under creative common license on Flickr.

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