UPDATE: If you read my prior blog on the Jan Frye memorandum (detailing the VA’s “mockery” of spending rules resulting in $6 billion being spent improperly on an annual basis) and would like to read his memorandum, access it HERE.
Tomorrow I’m headed to Norfolk, Virginia to speak at the National Veteran Small Business Coalition’s (NVSBC) annual conference, which is designed with the same mission my company has: to help veteran-owned small businesses grow. While I’ve already blogged on this conference, a recent Department of Justice press release illustrates how important continuing education is for federal contractors.
You know why? Because if you violate the federal government’s rules, you could end up in jail. And who wants to wear orange for the next ten to twenty?
A June 3, 2015 Department of Justice press release illustrates this principle. Basically, this memorandum details an alleged “pass-through scheme” where one brother used another brother’s service-disabled veteran status in order to pursue service-disabled veteran-owned (SDVOSB) set-aside contracts.
The Puerto Rico indictment alleges that the service-disabled veteran was employed as a full-time U.S. Postal Service Carrier, and he was not in charge of the day to day operations of the SDVOSB. He was simply a figurehead or “rent-a-vet,” who was being used for his service-disabled veteran status to obtain contracts for his brother’s company. Per the indictment, as a result of the scheme the company unlawfully received set-aside and/or sole-source SDVOSB contracts from the VA, including contracts involving American Recovery and Reinvestment Act funds.
If convicted (and keep in mind that these are simply allegations; these individuals are innocent until proven guilty), the brothers face a term of 20 years in prison as to each wire fraud charge and up to ten years in prison for the charges of major fraud against the United States. Additionally, they face fines of up to $250,000 and up to three years of supervised release as to each count.
It’s true that some people set out to defraud the federal government. There are pass-through schemes, and fraud, and general unsavory activities. Then, however, there are the folks who don’t know any better. They think, “hey, my cousin/brother/father/dentist is a veteran; why not set up a company in his name and go after set-aside contracts?”
If those people do their homework – by going to a conference, inquiring on LinkedIn, contacting their local Procurement Technical Assistance Center (PTAC) – that plan will get shot down pretty fast. Or maybe they’ll find a way to ensure they meet the SDVOSB eligibility requirements. (For example, a veteran business owner can have a business listed in the VetBiz database while working full-time elsewhere. It all depends on the circumstances whether that veteran business owner still “controls” the SDVOSB and meets its “full-time” requirements). While this might not be the case here – or these folks could be completely innocent – the fact of the matter is this does happen. People get in trouble because they don’t understand how big a deal it is to certify eligibility for set-aside awards.
When you do business with the federal government, you’re held to a higher standard. If you’re certifying yourself as meeting the requirements for self-aside contacts, you’re putting yourself out there. Protect yourself by doing your homework! Otherwise you might find yourself wearing orange.
*Did you find this article informative? If so, sign up for Sarah Schauerte’s legal blog on veteran business issues at: https://legalmeetspractical.com.
Great Edition of the Blog! You get better all the time!
Scott