Wounded Vets Lose Out to VA Red Tape

Legitimate veteran-owned businesses have lost out on government contracts because the Veteran Affairs Department's anti-fraud programs are too tough, it has been claimed.

As a result, $150 million in contracts earmarked for disabled veteran-owned small businesses — more than 700 contracts — have been reallocated to civilian-run firms. The contracts have an earning potential of more than $1 billion, News21, a reporting project among college journalists, reports.

The VA introduced stricter requirements following the agency's discovery that it had awarded millions of dollars in contracts to companies that fraudulently claimed to be owned by veterans. Now, companies must submit numerous forms, including company organizational documents and management resumes, and risk being disqualified for the smallest inaccuracy.

The VA has previously said that the work was redistributed because there weren't enough qualified veteran-owned companies. Under the government-mandated Veterans Benefit Act of 2003, each agency allocates at least three percent of contracts for small businesses run by veterans wounded in combat. The VA has set aside the highest percentage of contracts from among the government agencies, in multiple fields.

In turn, veterans' advocacy groups have shifted their focus from contract fraud itself to the piles of red tape now facing legitimate veterans who seek VA contracts.

"Unfortunately, the complaints from the veteran community have now shifted from contract awards going to misrepresented firms to the onerous and unpredictable verification process itself," said Scott Denniston, executive director of the National Veterans Small Business Coalition, during congressional testimony last year.

"We understand the need . . .  to ensure only eligible veterans receive the benefits of the Veterans First contracting program, but we strongly disagree with VA's punishing legitimate veteran small-business owners.

"It does not appear to us that VA had anyone involved in writing the rules who understands how small businesses operate in the digital age," added Denniston.

In 2011, a Georgia man was charged with fraud for misrepresenting his company. Also, the owner of a construction company, David Gorski of Massachusetts, fraudulently earned more than $159 million in VA contracts over a period of a few years. He was disqualified and indicted last year because he had never served in the Armed forces.