The Pentagon’s Office of Small Business Programs (OSBP) awarded a total of $876.8 million in contracts to companies that should not have received them. In a Feb. 20 report, the Defense Department’s inspector general (IG) stated that the contracts should have gone to small businesses that are owned and operated by veterans with service-connected disabilities.
The IG determined that the small-business programs office awarded 27 such contracts to 16 contractors at a value of $827.8 million that did not meet the necessary criteria. The discrepancy occurred because the office relied upon these companies to self-certify, and did not have the controls in place to verify the accuracy of the process.
Additionally, the IG found that Defense Department contracting personnel failed to verify compliance with another six contracts, which were awarded to three companies at a value of $164.7 million. Again, the IG attributed the discrepancy to the lack of procedures to track compliance.
Three of 29 ineligible contractors did not always update their status once it was determined they were ineligible, the IG found. The report recommended that the OSBP take the following steps:
* Coordinate a review process of the ineligible contractors within agencies of the Defense Department, individual services, Department of Veterans Affairs, and if necessary, the Small Business Administration (SBA).
* Require prospective contractors to submit documentation that proves they meet the criteria for contracts intended for small businesses owned and controlled by disabled veterans.
* Implement procedures that enable DoD employees who handle such contracts to ensure that contractors are eligible.
* Take steps to ensure that contractors update their eligibility status after the SBA determines they are ineligible.
* Ensure that all DoD employees are aware of protest results and procedures, and are aware of their responsibilities in such instances.
The IG noted that the OSBP acting director disagrees with the report’s findings, without providing specific reasons or addressing the recommendations.
Small Business Administration Veterans Services