VA exceeds contracting goals for veteran-owned businesses, GAO says

The Veterans Affairs Department exceeded its goals in the contracts awarded to small businesses owned by veterans during the last three years, but needs to work harder to verify that it is only awarding the work to eligible veterans, according to preliminary data in a new report from the Government Accountability Office.

For example, in fiscal 2009, the VA awarded 20 percent of its contracts to veteran-owned small businesses, which was twice the goal of 10 percent, William Shear, the GAO’s director of financial markets and community investment, testified at a hearing held by the House Veterans Affairs Committee's Economic Opportunity Subcommittee April 29.

The VA’s total contracts include 16.7 percent that went to service-disabled veterans, more than twice the goal of 7 percent, Shear said.

Under a 2006 law, the VA must give priority to veterans and service-disabled veterans when awarding contracts, allowing for the use of set-asides and sole-source contracts. The department also must maintain a verified database of eligible veteran-owned firms, and that is where the GAO found some shortcomings.

The VA has made limited progress with verifying the status of veteran-owned businesses in the database, Shear said. To date, VA has verified about 2,900 businesses, about 14 percent of the total number of businesses in the database.

Although the verification program calls for site visits, there is a huge backlog for conducting those visits and the visits conducted to date are showing a trend of deception, Shear said.

“Although site visit reports indicate a high rate of misrepresentation, VA has not developed guidance for referring cases of misrepresentation for enforcement action,” Shear said. Businesses that misrepresent their status are subject to debarment.

Other weaknesses GAO identified in VA’s verification program were files missing required information and explanations of how staff members determined that control and ownership requirements had been met.

Shear said the GAO has not made any recommendations yet and is still collecting and analyzing data on the program.

VA officials said they hired a contractor to review the verification program and plan to implement the contractor’s recommendations for improvement.