Senators’ “First Priority:” Stop Contracting Fraud Bipartisan leaders of the Senate Small Business Committee have asked SBA to present a detailed plan for combating fraud in contracting programs. In a letter to SBA Administrator Karen Mills, committee chair Mary Landrieu, D-LA, and ranking Republican Olympia Snowe of Maine cited reports by the Government Accountability Office detailing vulnerabilities and abuse in the 8(a), HUBZone and service-disabled veterans contracting programs. “Moving forward, our first priority in the 112th Congress is to ensure that SBA is taking all the requisite steps to purge any and all fraud and abuse,” the senators wrote. “As such, we are asking you to provide a detailed plan for addressing and rectifying the vulnerabilities plaguing the 8(a), HUBZone and SDVOSB programs, specifically, how the SBA will implement the dozens of GAO recommendations…and what steps have been taken to crack down on the widespread abuses.” GAO has conducted a series of investigations of small business contracting programs since 2008. Its reports revealed numerous instances of fraud: •Last year the auditors identified $325 million in contracts that went to 8(a) companies through fraud or abuse. Several companies were found to be fronts for non-disadvantaged businesses. One 8(a) firm continued to receive set-aside contracts for two years after its owner died. (SAA, 5/14/10) Owners of two Maryland construction companies, one identified by GAO as an 8(a) front, agreed to pay $200,000 to settle false claims charges. A series of reports in the Washington Post found some Alaska Native 8(a) companies were serving as fronts for large businesses. SBA suspended one large contractor, GTSI, from federal contracting; the company was reinstated after two of its top executives resigned. An Alaska Native 8(a) firm and another small business were suspended for allegedly serving as fronts for GTSI. •In 2009 GAO identified 10 companies that received $100 million in contracts set aside for service-disabled veteran-owned businesses. GAO’s chief investigator told Congress the SDV program had “no controls and no consequences for the few that are caught cheating.” (SAA, 12/4/09) Nine months later, SBA’s investigations of the companies identified by GAO were still in progress. No suspensions have been announced. •In 2008 GAO auditors signed up four nonexistent companies for the HUBZone program, with few questions asked. A spot check of HUBZone companies found that ineligible firms had been awarded more than $100 million in contracts. (SAA, 7/25/08) SBA later said it had increased unannounced visits to HUBZone companies and tightened certification requirements.