Nothing bothers veteran business owners doing work for the federal government more than the idea of fraudulent companies taking that work away. That’s why there are service-disabled veteran-owned small business (SDVOSB) status protests, as well as – more sensationally – fraud tips lodged with the Department of Veterans’ Affairs (VA) Office of Inspector General (OIG) hotline.
With status protests, a company that loses an award to another company on an SDVOSB set-aside protests on the ground that the awardee isn’t actually an SDVOSB. It could be that a non-veteran runs the business, or the veteran doesn’t have the right ownership percentage (51% or more), or the “veteran” isn’t a veteran at all. If the protest is sustained by the Small Business Administration, the agency will yank the award from the awardee and give it to the next in line.
VA OIG tips, however, are more – dramatic, shall we say. These are tips made to a hotline because a veteran business owner suspects that someone is defrauding the Veterans First Contracting Program (which is the means by which the VA awards set-aside contracts to veteran-owned businesses).
As LMP recently learned via a Freedom of Information Act request to the VA, from January 1, 2013 through August 1, 2015, there have been 124 complaints made to the VA alleging fraud under the Veterans First Contracting Program. There have, however, only been three firms prosecuted for fraud. And only seven have been debarred (which is when a firm is banned from federal government contracting because of the finding of a serious lack of integrity, such as by the commission of a fraud or the serious default under a contract).
What does this mean? This means that of the 124 fraud tips the VA OIG has received over the last two and a half years, only 2% has resulted in a prosecution, and 6% has resulted in a debarment.
And this is assuming that of the prosecuted or debarred firms, their punishment resulted from a fraud tip. In the FOIA request, I requested the total number of firms prosecuted or debarred; I didn’t restrict that number to those businesses exposed by fraud tips. Some of these prosecuted or debarred firms may have been reported by contracting officers or other government officials. Accordingly, the “success” rate of VA OIG fraud tips is even lower, perhaps substantially so.
The point here is that while the VA OIG hotline serves an important purpose, it’s not the fraud alarm veteran business owners want it to be. Three firms prosecuted, and seven debarred: with the well-publicized stories of the fraud that exist in the Veterans First Contracting Program, that number seems incredibly low. But as long as claims are made in good faith, and investigated as they should be by the VA OIG, the hotline serves its purpose.
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Does this mean they are not investigating the tips or that the tips are bogus?
I have been told that they at least look into every single tip so it means there isn’t enough substance to go after (punish by prosecuting or debarring) the businesses that have been reported.
So unless you send them private eye level reporting they can’t do anything about it? Still sounds like they should be able to work more with the reports they’re given.