VOSB | The Contracting Education Academy

June 29, 2015 By AMK

VA says questionable spending was ‘improper accounting,’ not fraud

A senior Veterans Affairs Department official denied allegations last Tuesday that the agency committed fraud by making billions of dollars in purchases outside the federal rules or by making it appear to Congress like it was meeting its veteran-owned small business contracting mission.

Thomas J. Leney, executive director of the VA’s Office of Small and Disadvantaged Business Utilization, conceded that the agency spent more than $3 billion in purchases outside the normal contracting process, but insisted that in most cases the buys were made to meet the needs of veteran patients.

He was responding to questioning from Rep. Mike Coffman, R-Colorado, who described the agency’s purchases, failure to follow acquisition law and fudging the numbers on small business contracts as fraud.

“I am not prepared to say that this is an issue of fraud,” Leney replied. “This is an issue of improper accounting.”

Keep reading this article at: http://www.military.com/daily-news/2015/06/24/va-says-questionable-spending-was-improper-accounting-not-fraud.html

June 26, 2015 By AMK

VA cheated small businesses out of millions of dollars in contracts, whistleblower alleges

Small businesses, including veteran-owned businesses, have been cheated out of millions of dollars in federal contracts because the Department of Veterans Affairs failed to follow contracting laws.

That’s the conclusion of members of Congress who have been investigating VA’s purchasing practices. The VA has been spending more than $6 billion a year on medical supplies without following contracting rules, such as a requirement to set aside purchases below $150,000 for small businesses, according to Jan Frye, the VA’s assistant secretary for acquisitions and logistics. Frye brought these issues to the VA’s top management, then turned whistleblower when he wasn’t satisfied with management’s reaction. Now he’s been a star witness at three congressional hearings on the matter.

Keep reading this article at: http://www.bizjournals.com/atlanta/news/news-wire/2015/06/24/va-cheated-small-businesses-out-of-millions-of.html

December 3, 2012 By AMK

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.

August 8, 2011 By AMK

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

A senior Veterans Affairs Department official denied allegations last Tuesday that the agency committed fraud by making billions of dollars in purchases outside the federal rules or by making it appear to Congress like it was meeting its veteran-owned small business contracting mission.

Small businesses, including veteran-owned businesses, have been cheated out of millions of dollars in federal contracts because the Department of Veterans Affairs failed to follow contracting laws.

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