Committee Members and VA Committee Chairman Miller Statement On Small Business Contracting Fraud


Date: Nov. 14, 2013
Location: Washington, DC
Issues: Veterans

House Small Business Committee Chairman Sam Graves (R-MO), House Veterans Affairs Committee Chairman Jeff Miller (R-FL), Rep. Richard Hanna (R-NY), and Rep Mike Coffman (R-CO) today made the following statements regarding this week's Washington Post investigative special report regarding the Department of Veterans Affairs' (VA) contracting certification processes and abuses by several contractors:

"The Washington Post's investigative report alleges an appalling abuse of taxpayer money," said Chairman Graves. "The VA does a lot of good things, but determining if a firm is a small business is not one of them. I look forward to passing the Improving Opportunities for Service-Disabled Veteran-Owned Small Businesses Act of 2013, so that we can prevent these abuses. The Small Business Committee is also carefully examining these issues to determine if the Small Business Act was violated. We are preparing document requests for the relevant agencies and their response will inform our future actions."

"VA should be leading the way when it comes to compliance with federal Service-Disabled Veteran-Owned Small Business (SDVOSB) contracting rules," said Chairman Miller. "Instead, the department's actions outlined in this report serve as a shining example of what not to do. Almost as disturbing as VA's behavior are the pathetic excuses it offers for not verifying the sizes of the "small' businesses the department endorses. VA's budget has nearly tripled since 2001, so if the department lacks enough contracting officers to conduct proper due diligence, VA leaders have no one to blame but themselves. Abuse of SDVOSB rules is an ongoing concern for the committee, and we expect a full explanation from VA in the coming weeks regarding the steps it plans to take to remedy this situation."

"Each time a business that isn't small takes opportunities intended for small businesses, the procurement system is cheated of the competition, innovation, and job creation that legitimate small businesses bring to the table," said Rep. Hanna. "I intend to use my subcommittee to investigate ways to prevent fraud like that alleged in the Washington Post story, so that taxpayers can have confidence that their money is being spent wisely."

"I introduced the Improving Opportunities for Service-Disabled Veteran-Owned Small Businesses Act of 2013 exactly to address fraud like this," said Rep. Coffman. "The Washington Post report proves that the procurement system is vulnerable to manipulation, since VA admits it isn't looking at whether the firms it verifies are small businesses. As a Marine Corps combat veteran, it's embarrassing that abuses like this are taking place."

Hanna is Chairman of the Small Business Subcommittee on Contracting and Workforce. Coffman is Chairman of the Veterans' Affairs Subcommittee on Oversight and Investigations.

In July, Coffman introduced the Improving Opportunities for Service-Disabled Veteran-Owned Small Businesses Act of 2013 (HR 2882) to reform the SDVOSB procurement programs and save taxpayer money. This legislation is cosponsored by Graves, Miller, and Hannah.

Currently, the Small Business Administration (SBA) and the VA operate procurement programs for SDVOSBs, however, differences in the definitions, processes and interpretation between the agencies cause inconsistent decisions as to which firms qualify for contracts. A SDVOSB can qualify at one agency and not another for procurement preferences. This inconsistency often adds cost, confusion, and opens the door to fraud. HR 2882 transfers the VA business certification and verification process to SBA, unifies the definitions of SDVOSB and Veteran-Owned Small Business (VOSB), and adds transparency and predictability to the process by creating an appellate process by which a SDVOSB can challenge an agency decision.