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IG says Pentagon awarded $876 million in contracts meant for disabled vets to ineligible companies

Small businesses owned or run by disabled veterans may have been cheated out of hundreds of millions of dollars in Defense Department contracts by unscrupulous firms who were ineligible for the awards.

This information is contained in an Inspector General’s report released to the public on Feb. 20, 2020.

The IG’s audit found that the DoD “awarded $876.8 million in contracts to ineligible contractors and did not implement procedures to ensure compliance with the Service-Disabled Veteran-Owned Small Business (SDVOSB) subcontracting requirements after the contracts were awarded.”

At least 16 of the 29 contractors reviewed in the report who received business from the DoD on the basis that they met the disabled veteran requirements were found to be ineligible, the IG’s office said.

Unless the DoD conducts better oversight, “service-disabled veterans may be in jeopardy of not receiving contract awards intended for them, and the DoD will be at risk of misreporting the amounts for SDVOSB participation,” the 29-page report states.

Keep reading this article at: https://www.military.com/daily-news/2020/02/20/pentagon-awarded-876m-contracts-meant-disabled-vets-ineligible-companies-ig.html

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VA doesn’t waste time in implementing Supreme Court decision

The Veterans Affairs Department acted unusually quickly to comply with the U.S. Supreme Court’s “rule of two” decision in the Kingdomware case.

VA-LogoSo much so that it both surprised observers and had them wondering if VA was acting too hastily.

VA issued new acquisition regulations July 25, just more than a month after the decision, which found VA’s interpretation of a law requiring the agency to set-aside all procurements if at least two veteran-owned small businesses are qualified was flawed. The nation’s highest court reversed the lower court’s decision on June 16 by an 8-0 vote, finding VA must use the “rule of two” for supply schedule contracts even if it has met its statutory contracting goals.

Keep reading this article at: http://federalnewsradio.com/reporters-notebook-jason-miller/2016/08/va-doesnt-waste-time-implementing-supreme-court-decision/

See the VA’s new rules here.

See the VA’s “decision tree” for following the Rule of Two here.

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Court rules VA can ignore set-asides for veteran-owned businesses on GSA Schedule buys

The Department of Veterans Affairs takes the position that it is not obligated to consider veteran-owned businesses on goods and services it buys through GSA’s Federal Supply Schedule, and now the VA has a court decision that backs its stance.

On November 27, 2012, the U.S. Court of Federal Claims ruled that the VA has discretion to procure goods and services from GSA’s Federal Supply Schedule without first considering a set-aside acquisition for service-disabled veteran-owned small businesses (SDVOSBs) or veteran-owned small businesses (VOSBs).

The ruling is a departure from several recent U.S. Government Accountability Office decisions.  The GAO has consistently ruled that the VA must comply with the Veterans Benefits, Health Care, and Information Technology Act of 2006 before conducting a GSA Schedule buy. The 2006 Act created the “Veterans First” contracting program that gives priority to SDVOSBs and VOSBs in VA acquisitions.  The VA has maintained that the GAO’s interpretation of the 2006 Act was wrong and instructed its contracting officers to not apply the “Veterans First” principles to Schedule contracting.

The Kingdomware case represents the first time a court has ruled on the question of whether the GSA Schedule program is influenced by the terms of the “Veterans First” program.

In siding with the VA’s position, the Kingdomware decision found that the 2006 Act “is at best ambiguous as to whether it mandates a preference for SDVOSBs and VOSBs for all VA procurements.”   The Federal Claims Court ruled:

  • The [VA] Secretary’s discretion to set contracting goals for SDVOSBs and VOSBs under the [“Veterans First” Act] contradicts plaintiff’s interpretation of the statute as creating a mandatory SDVOSB and VOSB set-aside procedure for each and every procurement . . . the goal-setting nature of the statute clouds the clarity plaintiff would attribute to the phrase “shall award” . . . and renders the [“Veterans First”] ambiguous as to its application to other procurement vehicles, such as the FSS [GSA’s Federal Supply Schedule].

The bottom line of the Kingdomware decision is that the VA did not act arbitrarily and capriciously when it used GSA Schedule contracts without first determining the appropriateness of a set-aside for SDVOSBs or VOSBs.

The full decision can be downloaded here: Kingdomware Technologies, Inc. v. United States.

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General Dynamics, others join protest of VA’s $12B T4 contract

Three additional protests have been filed with congressional auditors against the Veterans Affairs Department’s $12 billion Transformation Twenty-One Total Technology procurement program.

That brings the total to 15 protests filed with the Government Accountability Office against the T4 contract, of which 11 protests have been denied, dismissed or withdrawn.

The three new protests were filed Aug. 8 by IBM Corp., General Dynamics Information Technology Inc., and Standard Communications Inc.

IBM previously had filed a protest with GAO on Aug. 2.

The Aug. 2 IBM protest and the three new protests are currently listed as “open” by GAO, within decisions due by November. The GAO attorney in charge of the four cases is Paul Jordan.

A fourth company, D&S Consultants, has filed protests because the VA excludedit from the competitive range, but GAO denied the protest. GAO said that D&S could not show that the labor rates the government estimated for the contract were unreasonable. VA said that D&S labor rates were too low to give the agency any confidence that the work could be performed.

D&S has now filed suit in the Court of Federal Claims., according to Federal News Radio.

The T4 program is considered one of the largest IT contract vehicles in government, and selected companies will work on integrating VA systems and modernizing the department’s IT infrastructure.

The VA was expected to award 15 contractors the opportunity to bid for task orders valued at up to $12 billion over five years under the program.

As of July 5, 14 of the contracts had been awarded, and the 15th was being held until resolution of a protest.

Seven of the T4 awards were to be made to veteran-owned and service-disabled veteran-owned businesses.

Under the law, federal agencies must suspend activity on a particular contract if a protest is filed against that contract within 10 days of an award, but there are exceptions that allow work to continue.

While the VA initially suspended T4 contracting activity after IBM’s Aug. 2 protest, the VA subsequently decided it had an “urgent and compelling” need to continue with the contract instead of waiting for GAO to resolve the protests, VA spokeswoman Jo Schuda wrote in an e-mail, according to an Aug. 11 article by Federal News Radio.

Schuda also said in the article that VA has been awarding noncompetitive contracts to the T4 winners, which the agency is allowed to do.

Schuda did not respond to a request for comment.

— About the Author: Alice Lipowicz is a staff writer covering government 2.0, homeland security and other IT policies for Washington Technology.  Published Aug. 12, 2011 at http://washingtontechnology.com/articles/2011/08/12/more-protests-va-t4-contract.aspx?s=wtdaily_150811.

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Veteran-preferred contracting programs rife with fraud, say VA OIG, GAO

Fraud pervades the Veterans Affairs Department’s contracting program for veteran-owned small businesses, a July 28 House panel was told.

The VA Office of Inspector General and the Government Accountability Office have found the program so rife with deceit that one lawmaker suggested the entire program be scrapped.

“I think if the American people really paid attention…[they] would blow this whole program up and start from scratch again. It is that bad,” Rep. Phil Roe (R-Tenn.) told the House Veterans Affairs’ subcommittee on oversight and investigations.

“Hopefully it will get better, ’cause it can’t get much worse.”

Seventy-six percent of the businesses reviewed by the VA Office of Inspector General in a recent audit were ineligible for either the program and/or the specific veteran-owned small businesses or service-disabled veteran-owned small businesses contract award, said Belinda Finn, assistant inspector general for audits and evaluations at the VA OIG. This could total $2.5 billion in contract awards to ineligible businesses over the next five years, Finn estimated.

“Thirty-eight percent of the reviewed businesses were not owned or controlled by a veteran and over half did not meet federal incurred cost and subcontracting thresholds. In many cases ineligible businesses passed through the majority of the contracts’ work requirements and funds to non-veteran-owned businesses,” added Finn.

Ineligible businesses received awards because VA’s office of small and disadvantaged business utilization was not thoroughly reviewing business documentation and performing site visits to verify the veteran-owned status, said Finn. The OIG also found that contracting officers did not always check VA’s enterprise veterans database, business size classification codes, or properly assess subcontracting and partnering agreements.

“This program is highly-vulnerable to fraud and abuse,” said Gregory Kutz, director of forensic audits and investigative service at GAO, who added that while the veteran business verification program has made some progress, it “has a ways to go.”

“We recommend that the Congress consider providing VA with the additional authority and resources necessary to expand the verification program governmentwide. Only 30 percent of service disabled veteran contracts are with the Department of Veteran Affairs. Thus, for the other 70 percent we continue to have a self certification program,” suggested Kutz.

Finn said VA’s verification system provides strong controls, but it also needs to strengthen it’s contracting practices, she said.

“I wouldn’t give up on it yet,” said Finn.

— By M. Bernhart Walker – Fierce Government – Aug. 2, 2011 at http://www.fiercegovernment.com/story/veteran-preferred-contracting-programs-rife-fraud-say-va-oig-gao/2011-08-02

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