Defense Dept. Allowed Dubious Contractors to Self-Verify as Disabled-Vet Owned
Wednesday, April 11, 2012
The Department of Defense has allowed companies to obtain contracts intended for disabled-veteran owned businesses by doing little more than check boxes on a form, thanks to a self-verify system that provides no accountability.
The Pentagon’s inspector general uncovered at least 137 examples of ineligible companies receiving deals that are supposed to go only to vets with disabilities who started their own business. The collective value of the improperly awarded contracts was $1.3 billion, including $342 million to contractors that were probably ineligible.
The IG also found that defense officials failed to perform the routine task of checking the Central Contractor Registration (CCR) database while reviewing bids from ineligible companies.
“Had they checked the CCR, they would’ve known that [the ineligible businesses] were not representing themselves as service-disabled veteran-owned small businesses,” Devon Hewitt, a partner at Protorae Law and a member of the American Legion’s Small Business Task Force, told Federal News Radio.
However, the “major reason” for giving out contracts to the wrong businesses had to do with the Defense Department relying on contractors to self-verify their credentials, instead of having the government make sure a company met all eligibility requirements.
The worst example noted by the IG involved the Naval Facilities Engineering Command Northwest, which awarded a $200 million deal to a company (whose identity was not revealed in the report), “even though evidence was insufficient to support its SDVOSB [Service-Disabled Veteran-Owned Small Business] status.” Only one of the company’s six partners was a service-disabled veteran. This person lived in Anchorage, Alaska, while the contractor handling the contract lived 2,266 miles away in Seattle. Thus it was reasonable to assume that the company did not meet the requirement that “a service-disabled veteran must control the day-to-day management and administration of the business operations.”
To Learn More:
DoD Awarding Vet-Owned Contracts To Ineligible Firms, IG Finds (by Jolie Lee, Federal News Radio)
Inadequate Controls Over the DoD Service-Disabled Veteran-Owned Small Business Set-Aside Program Allow Ineligible Contractors to Receive Contracts (Department of Defense Inspector General) (pdf)
Major Fraud in Disabled Vets Small Business Program (by Noel Brinkerhoff, AllGov)
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