Major Fraud in Disabled Vets Small Business Program

Wednesday, November 25, 2009

Soldiers returning home from war with disabilities are entitled to special access to government contracts if they want to start their own business after leaving the military. But getting these contracts can be difficult if the government bungles the awarding and gives them instead to individuals who aren’t veterans or to companies that use disabled ex-soldiers as fronts, says a new report from the Government Accountability Office (GAO).

The GAO audit discovered the tip of what may be massive fraud going on in the Service-Disabled Veteran-Owned Small Business (SDVOSB) program. Auditors found examples of SDVOSB contracts going to company owners who weren’t service-disabled veterans, or to big companies using veteran-owned businesses as “pass-throughs.” Other cases of fraud involved government employees being “actively involved” in the schemes.
It’s no wonder so much fraud is taking place when neither the Small Business Administration nor the Department of Veterans Affairs maintains lists of individuals who are valid service-disabled veterans to check against before awarding contracts.
Some lawmakers in Congress were upset upon learning the news from the GAO. “Imagine being a veteran who is injured in Iraq or Afghanistan, yet despite your injuries you still manage to launch your own business. Then imagine finding out that you are losing out on contracts designated for veterans because a big company found out how to get around the rules,” Representative Nydia Velazquez (D-NY) told Government Executive. “What kind of message does that send to veterans in this country? We’ve got to stop it.”
-Noel Brinkerhoff
The Center for Veterans Enterprise Web Portal (Department of Veteran Affairs)


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