Criticizes Rampant Fraud and Abuse in Veterans Small Business Program at Committee Hearing
Today, former sheriff Brad Ellsworth expressed disappointment with government contracting officials at the House Small Business Subcommittee on Contracting and Technology: Improving Contracting Opportunities and Preventing Fraud for Service-Disabled Veteran- Owned Small Businesses about what is being done to prevent waste and abuse in the program.
"This program was designed to help small businesses owned by service-disabled veterans--not fraudulent contractors exploiting veterans to get a government contract," said Brad. "It's despicable that this fraud has gone on this long and criminal operations trying to make a quick buck have reaped the rewards. We need to crack down on these companies and make sure real service-disabled veterans, who have struggled to start and maintain a small business in these tough economic times receive the benefits."
Congress established an annual goal of providing not less than 3% of all federal contracts to small firms owned by Service-Disabled Veterans. To qualify, a firm must be directly owned by one or more service-disabled veteran and the veteran must be in charge of management and daily business operations of the enterprise. Veterans are far more likely to hire other veterans, meaning more opportunities for veterans returning from Iraq and Afghanistan and potential growth for small businesses currently owned by veterans.
In October 2009, GAO discovered that ineffective fraud detection and enforcement allowed at least 10 firms selected for investigation who were not solely owned and operated by service-disabled veterans to receive over $100 million contracts and $300 million in other contracts.
The GAO has recently presented a three-point plan to prevent fraud in the program. Brad will continue to work closely with veterans groups and small business owners to ensure these measures are implemented and the fraud stops:
1) Before Awarding a Contract: Design controls to verify that a firm seeking Service-Disabled Veterans status is in fact eligible for the program, without solely relying on self-reported data.
2) During the Contract Period: Regularly monitor a contractor's compliance with industry-size standards and requirements to subcontract with other Service-Disabled Veterans small businesses.
3) Once Fraud is Found: Aggressively investigate and prosecute firms abusing the program. At the very least, ensure fraudulent firms are suspended and their current contracts terminated. This process is more costly, but important in fraud prevention.