Veteran small-business bill would mandate use of fraud-prevention site

 A means to root out fraudulent companies that are posing as service-disabled veteran-owned firms may rest on the House’s doorstep, a federal official said Feb. 7.

The Small Business Contracting Fraud Prevention Act (S. 633) includes a provision that would require federal agencies to certify a company’s status before awarding it a sole-source contract or a small-business set-aside contract. Agencies would have to search the Veterans Affairs Department’s VetBiz database before awarding a contract.

The database’s purpose is just that: To supply up-to-date information to VA contracting officers on companies’ ownership status to verify they're really owned by veterans or service-disabled veterans. VA’s Center of Veterans Enterprise verifies companies seeking the veteran status.

Testifying today, Richard Hillman, managing director of forensic audits and investigative services at the Government Accountability Office, said that the bill’s provision on required certification checks would give procurement policy-makers the authority to require more proof of a company’s status than a self-certification in the Central Contractor Registry. Currently, companies now must self-certify their status and ownership.

Hillman was testifying about fraudulent service-disabled veteran-owned small businesses before the House Oversight and Government Reform Committee’s Technology, Information Policy, Intergovernmental Relations and Procurement Reform Subcommittee.

Officials at the Small Business Administration, VA and the Office of Federal Procurement Policy have already considered requiring more certification, Hillman said. However, they concluded that current law does not give them the authority to require agencies to search VetBiz for certifications before awarding a contract.

The Senate passed the legislation by unanimous consent in September, and it now awaits consideration by the House Small Business Committee.

Still, the bill includes a number of other provisions that concern the committee chairman, Rep. Sam Graves (R-Mo.). 

In an interview last year, he said the bill also gives VA the authority to decide if a company is a service-disabled veteran-owned small business, and it would change the definition of a service-disabled veteran-owned small business that differs from the Small Business Act.

"I have no problem with the VA determining who is a service disadvantaged veteran, but only the Small Business Administration should be able to determine who is a small business, otherwise we risk having conflicting decisions from the two agencies," Grave said in a 2011 interview with Veterans Today's publication VetLikeMe.

The legislation would apply False Claims Act penalties for companies that incorrectly identify themselves, and it has provisions regarding the Historically Underutilized Business Zone and 8(a) Business Development programs.

A aide said the committee has looked closely at the legislation, but it has concerns with some unintended consequences of the bill.

The committee is checking the other options that are out there.

“The committee is considering legislation later this month that will address small business fraud issues within the federal procurement process, and we are continuing to work with other committees on ways to address the specific issues within the service-disabled veteran-owned small business programs," the aide said.