SDV Program Plagued by Ignorance as well as Fraud Ignorance, not fraud, is to blame for some of the abuse in the service-disabled veterans contracting program, according to two federal small business officials. Tim Foreman, director of the Veterans Affairs Department’s OSDBU, and Linda Oliver, acting director of the Defense Department’s Office of Small Business Programs, said neither SDV business owners nor contracting officers fully understand the rules governing eligibility for the program. At a July 15 hearing of the House Small Business Committee’s contracting subcommittee, Foreman said many SDV business owners misunderstand the rules on ownership and control. To be eligible for the set-aside program, a service-disabled veteran must own at least 51% of the company, must exercise management control, and must work there full time. In applying for certification, “there are people that make mistakes,” Foreman testified. “I’m very hesitant to condemn everybody.” Oliver cited “ignorance” of contracting officers, especially in understanding the requirement that an SDV company perform at least 50% of the work on any prime contract. “DOD contracting officers are very knowledgeable,” she said, “but when it comes to small business, it is an area where they need to know more. We work at it all the time.” In October the Government Accountability Office identified 10 companies that were awarded $100 million in SDV contracts although some of them were ineligible for the program and others passed through virtually all of the work to large companies. A GAO official described the practice as “rent-a-vet.” (SAA, 12/4/09) The subcommittee chairman, Rep. Glenn Nye, D-VA, said none of the 10 companies has been suspended or debarred, although nine of the investigations are still in progress. “Nine months after GAO reported fraud, we’re still back at the same place, saying we need to do more” to police the program, he said. “We have to have consequences in place. I think one of the first consequences ought to be a suspension of the contract.” Nye has introduced legislation providing for criminal penalties, including prison, for those caught defrauding the SDV program. Foreman said VA has established an internal committee to examine all companies that are denied certification, to determine whether their applications were a mistake or “actual fraud.” But he added that agencies “need to get into the debarring mode” when they find fraud. Several subcommittee members said the root of many problems is that companies are allowed to self-certify their eligibility for SDV status. Rep. Roscoe Bartlett, R-MD, said self-certification is “a temptation” for those who are inclined to cheat. VA has said it won’t be able to verify all companies’ eligibility before 2012. Rep. Aaron Schock, R-IL, said agencies rely on other businesses “to cry foul” by filing protests against companies they believe are ineligible. One SDV business owner, Steven Hope of Peoria, IL, said he is reluctant to protest for fear of “retaliation” by the contracting officer.