The Service-Disabled Veteran-Owned Small Business program reported $6.5 billion in government-wide sole-source, set-aside, and other awards, but GAO has said the program is vulnerable to fraud and abuse, which could result in legitimate service-disabled veterans’ firms losing contracts to ineligible firms.
GAO investigated 10 firms that received about $100 million in SDVOSB sole-source and set-aside contracts through fraud, abuse of the program, or both.
It said contracts for Hurricane Katrina trailer maintenance were awarded to a firm whose owner was not a service-disabled veteran, and that SDVOSB companies were used as pass-throughs for large, sometimes multinational corporations.
According to GAO-10-306T, the VA is developing a certification processes for SDVOSB firms, but currently the certification will only be used for contracting by VA.
VA officials told GAO that the certification process could include reviews of documents, validation of the owner’s service-disabled veteran status, and potential site visits to SDVOSB firms.
But to be effective, the process would need to include preventive controls, detection and monitoring of validated firms, and investigations and prosecutions of those found to be abusing the program, GAO said.