VA's veteran-owned contractor verification program not ready to expand governmentwide

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Before the Veterans Affairs Department's program to verify service-disabled veteran-owned small businesses could expand governmentwide, the VA would have to address a slew of issues it faces verifying its own contractors, the Government Accountability Office says.

A 2006 law requires the VA verify the authenticity of veteran-owned small businesses it does business with, as well as give those small businesses preferential treatment in procurements. VA's total contract awards to SDVOSBs increased from $356 million in fiscal 2006 to $3.2 billion in fiscal 2011.

In a report (.pdf) released Jan. 14, auditors say that, among other issues, veteran owners don't know how VA will interpret some of its subjective requirements for inclusion into the departmental database of verified businesses, such as how the small-business owner must have good character.

VA has also relied on data systems to track applicants that it developed incrementally, "without an overarching plan or vision" and without oversight from VA's Office of Information and Technology, the report says. VA officials told auditors that they didn't think through all the elements that would be useful because they mainly wanted to put the system together quickly.

As a result, the system lacks data fields to track reasons applicants were denied, customer service inquiries and other useful information.

As of the end of September 2012, 43 percent of the applications submitted since November 2011 had been withdrawn, some that VA withdrew because applicants did not respond to requests for more information within 30 days. Another 14 percent of applications were still pending.

Auditors say VA's struggles come down to a tension between competing goals: creating opportunities for veterans and preventing fraud.

VA has already made some changes in response to the GAO's review. The verification program's employees and contractors are now subject to scheduled and spot audits, and the program hired its first training officer. It also now tracks staff productivity levels.

Changes to the verification process could create or widen differences between it and other small business contracting processes, though, GAO says. That could make it more difficult for the federal government as a whole to adopt the VA's process for verifying service-disabled veteran-owned small businesses.

For more:
- download the report, GAO-13-95 (.pdf)

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