Legal Meets Practical

Most service-disabled veteran-owned small business (SDVOSB) owners know they need not be listed in the Department of Veterans Affairs’ (VA’s) VetBiz database in order to compete for non-VA contracts. Rather, they must only meet the Small Business Administration’s (SBA’s) SDVOSB program eligibility requirements.

But what do business owners do when a federal agency makes a mistake? What happens when a federal agency finds an SDVOSB ineligible for a set-aside because it isn’t listed in VetBiz? It is not permitted to do that, and the contractor has a recourse. That recourse, however, must be sought in the appropriate forum. This was illustrated in a recent  decision issued by the Small Business Administration Office of Hearing and Appeals (SBA OHA). 347 Construction Group, SBA No. Vet-232 (February 22, 2013).

In 347, the protestor was notified by the U.S. Department of the Air Force that it was excluded from competition for a solicitation simply because it was not registered in VetBiz. The protest of this decision ultimately made its way to the SBA OHA.

The SBA OHA didn’t disagree with the protestor’s contention that the Air Force acted improperly, citing to the well-established case law that SBA regulations do not require a business to be registered in VetBiz in order to be eligible for the SBA’s SDVOSB program. The problem was the protestor brought this argument in the wrong forum. As noted by the SBA OHA, it will only entertain an SDVOSB status protest directed against a procurement’s apparently successful offeror. In this case, however, 347 was requesting its own eligibility to be reviewed, not that of the awardee.

Because the protestor’s bid protest grounds related to the conduct of the procurement (ie, improper exclusion of an offeror), the proper forum was the Government Accountability Office (GAO). The SBA OHA noted several recent similar decisions decided by the GAO, such as a case where the GAO determined a protestor ineligible for a VA contract because it was not listed in VetBiz, and another case where the GAO held that an agency acted improperly by determining a protestor ineligible for the SBA’s SDVOSB program without referring the issue to SBA.

The lesson presented in 347 is clear: knowing why you’re fighting is only the first step. The second step is knowing where your battle is supposed to be!

As every veteran knows, the Department of Veterans Affairs (VA) disability compensation backlog has reached alarming numbers. According to a March 2013 report by the Center for Investigative Reporting, there are nearly 900,000 claims pending at the VA. That number is expected to soon top one million.

On March 20, members of the Iraq and Afghanistan Veterans of America presented a petition to White House Chief of Staff Denis McDonough, calling for President Obama to “keep the promise we made to the millions of veterans who have served and sacrificed to defend our nation” by ending the benefit backlog. The petition, which includes support from a bipartisan coalition of members of Congress, now has more than 36,000 signatures.

Other means of action are urged. Rep. Jeff Miller, R-Fla., chairman of the House Veterans’ Affairs Committee, also urges the removal of Allison Hickey, the VA’s under secretary of benefits. Miller is frustrated with Hickey, in part because she cannot project where the backlog will stand in 12 months, yet simultaneously promises that no veterans will be waiting 125 days or more for their benefits by 2015. This promise is also dubious in light of the fact that the current wait time for veterans filing an initial claim  is between 316 and 327 days.

This petition reflects the urgent need for real, substantive action to be taken as it relates to our nation’s veterans. While waiting for their disability compensation to be issued, many veterans face foreclosures or bankruptcy. By the time their claim is granted, they may be homeless or facing serious financial issues that could have been avoided with an expeditious resolution of a claim. Meanwhile, the VA faces absolutely no penalty for taking years to resolve a meritorious claim. If a claim is erroneously denied, even if the error is egregious or the wait time excessive, the VA is not expected to pay any type of penalty or interest for the period of time the veteran was without his benefits.

Interesting, isn’t it? That certainly isn’t the case when the situation is reversed : if a veteran forgets to pay all his taxes owed one year, when the Government eventually discovers the error, he’ll be socked with an additional amount owed.

For years, veteran organizations have loudly and forcefully complained about the backlog. Whether this recent effort will gain traction in the Obama administration is yet to be seen, but the reality is clear – the backlog is creating devastating effects on our veterans.  For more information about the efforts of the Iraq and Afghanistan Veterans of America and to voice your support of their cause, visit their website here.

On Friday, March 15, the General Services Administration (GSA) reported a security vulnerability in the System for Award Management (SAM). For a period of time not specified, registered SAM users with entity administrator rights and delegated entity registration rights had the ability to view any entity’s registration information, including both public and non-public data at all sensitivity levels. This vulnerability was discovered on March 8th, and on March 10th the GSA implemented a software patch to close the exposure. It later sent out a mass email to all SAM registrants.

As noted in the email release, this exposed data contained identifying information, including: names; taxpayer identification numbers (TINs) including Federal Employer Identification Numbers (FEINs) and social security numbers; marketing partner information numbers; and bank account information. The GSA has not, however, specified for how long this information was viewable.

Registrants using their social security numbers instead of a TIN were identified as being at a greater risk for potential identity theft. These registrants include sole proprietorships and solo member limited liability companies. These registrants were advised to monitor their bank accounts, and to immediately contact their financial institutions if they noted any discrepancies. They were also given free access to credit monitoring services.

This security vulnerability is worrying for a number of reasons. Thousands of SAM registrants were affected by the vulnerability, and yet they were not alerted until seven days after it was discovered. Also, while the issue was reported to the GSA on March 8th, it was not resolved for two days. Last, while registered SAM users are aware of the incident, there is no way they can know whether their information was compromised. Rather, they must monitor their credit and banking information to make sure that they do not become victims of identity theft.

Who knew that agreeing to do business with the federal government included consent to be exposed to identity theft?

SAM users can access the GSA’s System for Award Management Security Vulnerability FAQ webpage here. If you would like additional background or have questions, the FAQ webpage provides a contact number that is in service from 8:00 AM to 8:00 PM beginning March 18.

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As individuals working for or dealing with the Department of Veterans Affairs (VA) know, the VA is exempt from the sequestration that took effect on March 1 of this year. This does not mean, however, that the VA does not feel the effects of sequestration. A hit to the Department of Defense (DoD) results in collateral damage to the VA and the veterans it supports.

What is sequestration? 

“Sequestration” is a process of automatic, largely across-the-board spending reductions under which budgetary resources are permanently canceled to enforce certain budget policy goals. It was included as an enforcement tool in the Budget Control Act of 2011 (BCA). It can also occur under the Statutory Pay-As-You-Go Act of 2010.

On March 1, 2013, sequestration occurred because a Joint Select Committee on Deficit Reduction failed to develop legislation to reduce the deficit by at least $1.2 trillion. Under the BCA, Congress was supposed to adopt this legislation by January 12, 2013. Because it did not, this triggered a series of automatic spending reductions. This included sequestration of mandatory spending for fiscal year (FY) 2013 through FY 2021, a one-year sequestration of discretionary spending for FY 2013, and lower discretionary spending limits for FY 2014 through FY 2021.

What departments and programs are exempt? 

Since sequestration occurred, the exemptions and special rules of Sections 255 and 256 of the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA, as amended in 1985) apply. Most exempt programs are mandatory, and include Social Security and Medicaid; refundable tax credits to individuals; and low-income programs such as the Children’s Health Insurance Program, Supplemental Nutrition Assistance Program, Temporary Assistance for Needy Families, and Supplemental Security Income. Some discretionary programs also are exempt, including all programs administered by the VA.

A look at VA exemptions 

Under the letter of the law, the VA and its medical care programs are exempt from sequestration. This was not, however, initially clear, which resulted in concern within the VA and veteran community. Section 255 of the BBEDCA specifically excludes from sequestration all programs administered by the VA, which includes veterans’ medical care. This conflicts with Section 256(e) of the BBEDCA, which allows a maximum 2% reduction in budget authority for VA medical care for any fiscal year. To clarify the issue, on April 23, 2012, the Office of Management and Budget (OMB) issued a letter stating that “all programs administered by the VA, including Veterans’ Medicare Care, are exempt from sequestration under Section 255(b).” (Access the letter here).

The Collateral Effects on Veterans 

Despite the exemption from sequestration, both the VA and the veterans it serves will feel the effects of sequestration. This is due to the fact that support received from other agencies will lessen due to the resource strain within these agencies. This applies to the DoD in particular, which works in collaboration with the VA to meet many objectives. (About 800,000 civilian defense employees face one-day-a-week furloughs and a 20 percent dent to their paychecks, which are set to start next month). Programs operated by the VA in conjunction with other agencies will also be affected.

In addition to the direct impact on VA departments and programs, veterans will also see a reduction in services or resources due to a ripple effect from the DoD. This includes the following:

• The Department of Labor’s VETS job-training program –  This was being revamped and has been touted by the Obama administration as a key weapon in reducing high unemployment among post- 9/11 era veterans, and it is subject to cuts.

• Department of Labor’s employment and transition assistance programs – Acting Labor Secretary Seth Harris said last month that about 55,000 veterans and 44,000 service members would not receive employment and other transition assistance to help them find civilian jobs because of sequestration. Labor officials now say the exact number s are unknown but will amount to “tens of thousands.” In addition cuts to the Jobs for Veterans state grants program will mean an estimated 33,000 fewer veterans will be served.

• Homeless veteran programs – A program using Housing and Urban Development (HUD) vouchers that is credited with reducing the number of homeless veterans by 17 percent since 2009 may be harmed. According to Sandra Henriquez, the assistant secretary for public housing, while the vouchers are exempt, administrative funding is being cut, which HUD fears will have a “serious effect” on the number of local housing authorities willing to accept the vouchers because they would have to make up the deficit.

• Mental Health Counselor Availability – The number of DoD mental health counselors assisting service members returning from combat zones with issues such as post-traumatic stress disorder may be cut, Gen. Raymond Odierno, the Army chief of staff, told Congress last month.

Time will show how sequestration affects the VA and the veterans it serves. For now, however, one point is clear: the VA may have dodged a bullet, but it will suffer from the collateral damage caused by cuts to the DoD and other agencies.