Legal Meets Practical

For many contractors denied inclusion to the Department of Veterans Affairs’ (VA’s) VetBiz Vendor Information Pages (VIP) (the VetBiz Program), the second chance offered by the request for reconsideration process appears attractive. It is another bite at the apple. However, denial letters do not mention two things:  1) the high scrutiny at this level of review; and 2) the incredibly long wait time for requests for reconsideration. Combined with little guidance from the Center for Veterans Enterprises (CVE) on how to effect a successful request for reconsideration, contractors find difficulty in taking true advantage of this “second chance.”

Many Denied Inclusion to the VetBiz Program Are Not Actually Ineligible

As many who have run the gauntlet for verification know, the devil is in the details. As Mr. Thomas Leney, the Executive Director of Small and Veteran Business Programs communicated in a memorandum on the Vetbiz website (http://www.vetbiz.gov/), 90% (ninety percent) of initial denials are attributed to a misunderstanding of 38 CFR Part 74, which is the section of the Code of Federal Regulations (CFR) that enumerates the eligibility requirements. This statistic strongly suggests that a large number of applicants denied are denied not because of ineligibility in the true sense of the word, but because of problems in their applications such as drafting issues in their corporate documents.

The CVE Offers Little Guidance for Effecting a Successful Request for Reconsideration

For contractors who have been denied inclusion in the VetBiz Program, an available route of action is filing a request for reconsideration. This option is set forth at 38 CFR 74.13. However, the regulation itself provides little guidance as to how to effect a successful request for reconsideration. It states only: “An applicant may request that the Director, CVE, reconsider his or her decision to deny an application by filing a request for reconsideration with CVE within 30 days of receipt of CVE’s denial decision.” This language is mirrored in denial letters, which state that applicants must provide official documentation substantiating each claim made in the request.

Requests for Reconsideration Are Met With Scrutiny

When the contractor files a request for reconsideration, the request is treated differently than an initial application. As the VA stated in an August 2012 GAO report (GAO 12-697), “it then enters a completely separate queue and since such firms are designated higher risk than an initial application, they receive a new, comprehensive examination of all documentation and a review by VA’s Office of General Counsel in many cases.” This is a strengthened level of review compared with the level of review previously applied, which may be reflected by the fact that of the request for consideration received between November 2011 and September 2012, 52% of requests for reconsideration were denied. (This statistic is contained in a recent Government Accountability Office report, which examined the Vetbiz process and released many statistics, including: success rates for initial verifications, requests for reconsideration, and reverification. The report may be accessed at: http://www.gao.gov/assets/660/651281.pdf).

Also, in deciding upon the request for reconsideration, the VA may deny the application on grounds other than those cited in the initial denial letter. This means that a contractor may fix one problem, and the VA may find another. This essentially requires the contractor to conduct a complete review of its application…and all within the 30 days provided to file a request for reconsideration.

Request for Reconsideration Wait Times Exceed 180 Days

The other element not mentioned in a denial letter is the wait times. The current wait time to process a VetBiz request for reconsideration, as stated by the VA, is “in excess of 180 days.” (This is despite the regulation providing 60 days as an estimate). This means that a contractor will still be waiting after the date by which it could have filed an entirely new application (See 38 CFR 74.14 – contractors are permitted to reapply after six months). Then, if a contractor files this request and is denied on the same grounds, a mandatory six month waiting period will be imposed. If the contractor is denied on different grounds, the contractor may file another request for reconsideration and sit in the processing line for another period of time “in excess of 180 days.”

The Need for Process Improvement of this “Second Chance”

While important that the VA has checks in place to exclude ineligible contractors, the system currently defeats its own purpose. Contractors are denied because they don’t understand the eligibility requirements and because the application process is extremely difficult to navigate. This denial causes an extremely long subsequent wait period, regardless of whether contractors opt to file a request for reconsideration or wait to reapply.

This is a situation where process improvement is desperately needed. Luckily, the VA has issued several publications meant to help contractors understand what they need to do to get verified (See vapInitialVerificationApplicationGuide  – an excellent resource). Also, as of late, the VA has been responsive to critcisms and suggestions. However, more guidance should be provided relating to VetBiz requests for reconsiderations to ensure that they are not merely wasted time. Contractors do not understand that a “quick fix” after a denial might work against them.

If the VA affords veterans a second chance, it should be a true second chance, and these veteans should be given the tools by the VA to take advantage of it. After all, the name of the program is “Veterans First” – it should function to help those it is meant to serve.

Did you find this article informative? If so, sign up for my weekly blog on veterans issues and updates at: https://legalmeetspractical.com. Make sure to click the link sent to your email to activate your subscription! Also, my frequently-updated FAQs webpage on the VetBiz program may be accessed here (based on my practical knowledge of the VetBiz process as a certified VA VetBiz counselor).

According to recent Congressional testimony, headway is being made towards minimizing wait times for inclusion in the VA’s VetBiz Vendor Information Pages (VIP) database (VetBiz). Unfortunately, this headway does little to benefit businesses waiting to reapply or on a decision for reconsideration.

Listing in VetBiz is mandatory in order for veteran-owned businesses and service-disabled veteran-owned small business (SDVOSBs) to receive set-asides from the VA. However, businesses seeking to be included in VetBiz have often found themselves excluded, many times after waiting months to receive decisions on their applications. In fact, in 2011 60% of all initial applications to the VetBiz program were denied.

Veteran contractors and advocates have complained long and loud regarding the delays and issues with VetBiz. After all, its purpose is to benefit eligible veteran-owned businesses. This purpose is undermined if eligible contractors are not listed.

On August 2, 2012, Mr. Thomas Leney, the executive director of the Office of Small and Disadvantaged Business Utilization, appeared before Congress and testified relating to the VetBiz verification process. This testimony followed up on a prior hearing on November 30, 2011, and again, it addressed a question all veteran contractors want answered: is there an improvement in VetBiz application processing times?

The short answer is “yes.”  Mr. Leney on November 30, 2011 had testified that the average application processing time was 75 days. During the more recent August 2, 2012 hearing, Mr. Leney stated that a July 2011 processing time of 130 days had been “improved upon” but declined to say whether the 75-day forecast was still accurate.

For veteran contractors who have been denied, however, the answer is “not really.” For veteran contractors requesting reconsideration, wait times are much longer than 75 days, or even 130 days. When Mr. Leney appeared before Congress on August 2, 2012, he relayed that requests for reconsideration are currently taking 200 days to process. (If this number remains accurate, this means that a business will still be waiting for a decision after the date on which it would have been eligible to reapply). This is despite the fact that under regulation, requests for reconsideration will be processed within sixty days. Luckily for the VA, key conditional language (“when practicable”) makes it okay for the VA to take 200 days instead.

The complication for firms requesting reconsideration is that the CVE will not limit its re-evaluation to prior problematic parts of the business’ application. Rather, the regulations provide that upon a motion for reconsideration, the Director of the CVE may either approve the application, deny the application on the same grounds, or deny the application on different grounds. (38 CFR 74.13). If the application is denied on the same grounds, a six-month waiting period applies until the applicant can reapply to VetBiz. If the application is denied on different grounds, the applicant may again request reconsideration. (38 CFR 74.13(c)).

For those firms that choose to reapply, a six month waiting period applies. Thus, even if the actual processing time is relatively fast, the contractor must also add the six months onto the total waiting time.

The takeaway here is that while the CVE has improved upon its processing time for applications, firms that have been denied inclusion do not reap the benefits. This is clear by simply doing the math, which is based on the conditional factors of VA wait times and the assumption that a reapplication or motion for reconsideration will be successful. Know that a change in wait times, or another denial, will alter these estimates:

• If a firm is denied and waits to reapply, it will take approximately nine and a half months for them to be included in VetBiz upon a successful reapplication (including the six month wait period, plus the three and a half months of processing time).
• If a firm is denied and requests reconsideration, it will take approximately eight months for them to be included in VetBiz upon a successful motion for reconsideration (including the one month the business has to make the request, plus the current seven-month wait time).

In short, only initial applicants are truly benefited by the improvement in wait times. With the 200-day processing estimate for motions for reconsiderations, and the six-month penalty period applied for reapplications, these contractors still find themselves waiting for considerable periods of time to be included in VetBiz. Thus, the message is clear: make sure that your application is airtight the first time around. And if it’s too late for that, sit back and wait.

Did you find this article informative? If so, sign up for my weekly blog on veterans issues and updates at: https://legalmeetspractical.com. Make sure to click the link sent to your email to activate your subscription! Also, my frequently-updated webpage on VetBiz verification FAQs may be accessed here. (created based on my practical experience as a certified VA VetBiz counselor).

How many disability compensation claims could the Department of Veterans Affairs (VA) pay out with $700,000? How many veterans could avoid foreclosure on their homes, prevent bankruptcy proceedings, and pay grocery and medical bills? These were the first thoughts that crossed my mind when I read the VA’s Office of Inspector General’s report (the Report) on the $700,000 wasted at two VA training conferences held in Orlando in 2011.

The September 28, 2012 Report follows an administrative investigation prompted by  allegations of wasteful expenditures relating to the two VA conferences. You may have heard about this on the news – the VA received a lot of flak, particularly for the $50,000 spent on a parody of General George S. Patton (video not publicly available). It also didn’t help that the public was already hopping mad over the allegations of waste at a 2010 General Services Administration (GSA) conference in Las Vegas. These latter allegations forced GSA Chief, Martha Johnson, to step down.

The September 28, 2012 Report’s conclusions are hardly surprising. It found that while the conferences were held to fulfill valid training needs, the “VA’s processes and oversight were too weak, ineffective, and in some instances, nonexistent.” In fact, the VA could not even provide sufficient accounting to reconstruct the costs of the conferences – the total cost is estimated at $6.1 million, but the Report noted that it could not gain reasonable assurance that the figure reflected a complete accounting for the conferences. Also, some of the costs weren’t sufficiently documented, which made it difficult to clearly justify them, show their necessity, or prove reasonableness in price.

Waste, insufficient oversight, and poor planning weren’t the extent of the Report’s observations. It also concluded that during the pre-selection of hotels for the conferences, VA employees accepted “illicit gifts” from hotels and hotel employees. These included meals, lodging, room upgrades, transportation (including one helicopter ride), spa treatments, and gift baskets. These tokens were considered in the Report as “illicit” gifts from federal government contractors, as these hotels and their representatives may have used these gifts to attempt to secure future contracts from the VA (ie, to sway the VA to use these hotels for future conferences).

As a result of the Report’s findings, John Sepulveda, the Assistant Secretary for the VA Human Resources Department who oversaw the conferences, stepped down. Other members of VA leadership may soon follow, as the Report lists many of the key figures by name. (In particular, the Report notes the names of those who received gifts from the hotels). Accordingly, the Report assigns individual accountability to the persons responsible for the waste and abuse that occurred at these conferences.

While the VA (and the taxpayers) will not recover the monies wasted at the conferences, as noted by George Opfer, the VA Inspector General, “as VA moves forward, this report should serve as lessons learned that all VA management officials and staff share responsibility and accountability for meeting program objectives in an economical manner and reflect proper fiscal stewardship of taxpayer funds.”

In light of this firm hand taken by the VA Inspector General, as well as the public backlash, let’s hope that the waste and abuse at these conferences are not repeated. The money would be better spent elsewhere – such as on our veterans returning from Iraq and Afghanistan.

The Report may be accessed at: http://www.va.gov/oig/pubs/VAOIG-12-02525-291R.pdf.

Did you find this article informative? If so, sign up for my weekly blog on veterans issues and updates at: https://legalmeetspractical.com. Make sure to click the link sent to your email to activate your subscription!