The Veterans Affairs Department is disputing the recent national news reports alleging that the agency had reclassified more than $1 billion in set-aside contracts meant for service-disabled veterans over the last 10 years. When such contracts are reclassified, contractors who are not disabled veterans become eligible to do the work.

The actual value of those reclassified contracts was just $20 million, the VA told Set-Aside Alert.

The $1 billion figure is “not correct,” the VA said in an emailed statement released by VA spokeswoman Genevieve Billia.

“One billion dollars is grossly overstated. Our research indicates that there were approximately 242 actions worth a total of $20 million combined, for the VA, over the last 10 years,” the VA indicated.

The allegations of $1 billion in reclassified work were prominently displayed in articles published by the Washington Post, NBC News and other major national news outlets in late August and early September. The articles portrayed the reclassifications as contributing to difficulties for veteran-owned companies seeking to sell to the VA. NBC News got more than 100 “likes” on Facebook for its story.

The report originated from News21, a student journalism news service that operates at Arizona State University. Through sharing agreements, News21 stories are redistributed by major publications.

“More than $1 billion in government contracts meant for small businesses owned by disabled veterans have been reclassified over the last 10 years by the Department of Veterans Affairs so that the work—and almost $150 million to date—could be given to non-veteran companies, a News21 analysis shows,” NBC News reported on Aug. 31.

The stories also asserted that the reclassifications occurred partly as a result of a fraud crackdown that has made it more difficult for veteran business owners to obtain government work.

“VA crackdown on fraud among applicants for business contracts squeezing out some vets,” the WashingtonPost headline read. “”VA’s fraud crackdown becomes a burden for legit veteran-owned businesses,” NBC News wrote.

However, the alleged squeeze on veteran contracting at the VA may be much weaker than those headlines suggest.

According to official government figures, overall VA contracting with service-disabled veterans has been reaching historic highs in recent years and was higher than any other federal agency last year.

The VA awarded 20.05% of all its contracts to firms owned by service-disabled veterans in fiscal 2010, 18.22% in fiscal 2011 and 19.24% in fiscal 2012, according to Small Business Administration Procurement Scorecards for those years.

The VA’s purchases from such firms totaled $3.4 billion last year.

Overall, government-wide contracting with service-disabled veteran-owned small businesses (SDVOSBs) has been peaking as well, reaching the goal of 3% of all awards going to SDVOSBs in fiscal 2012 for the first time in at least seven years.

For the federal government on the whole, the VA estimates that over the last 10 years, there have been 2,148 set-aside contracts for service-disabled veterans that were reclassified and subsequently not awarded to a service-disabled veteran-owned small businesses (SDVOSBs). Those contracts totaled $346 million, the VA told Set-Aside Alert.

The VA also is disputing several of News21’s explanations for the alleged $1 billion in reclassifications.

News21, NBC News and others asserted that the VA’s “more stringent enforcement” of anti-fraud measures is partially the reason for the large number of reclassifications.

The VA is disputing that explanation, saying that its own data shows that the rate of reclassifications has fallen in recent years.

The VA said its own data shows that the number of reclassification actions of SDVOSB set-asides, as a percentage of the number of total awards to SDVOSBs, has fallen in recent years, from a height of about 7.1% reclassified in fiscal 2007 to only .9% reclassified in fiscal 2013.

Overall, that percentage was zero in fiscal 2005 and 2006, 7.1% in fiscal 2007, 4.8% in fiscal 2008, 3.8% in fiscal 2009, 1.4% in fiscal 2010, 1.7% in fiscal 2011, .7% in fiscal 2012 and .9% in fiscal 2013, the VA said.

“More stringent enforcement is not a reason, and the increasing award data over the last 10 years shows that,” the VA told Set-Aside Alert.

News21 also claimed that the alleged $1 billion in reclassifications at the VA was partly as a result of a lack of available small businesses owned by service-disabled veterans.

But the VA was skeptical of that explanation.

“It is highly unlikely that it would be the lack of eligible SDVOSBs, as the solicitations probably would not have been set aside if the contracting officer did not feel that there were two or more SDVOSBs that would submit proposals,” the VA told Set-Aside Alert.

Steven Rich, the News21 reporter who wrote the story and is now investigative database editor at the Washington Post, did not respond to a request for comment. Jacqueline Petchel, executive editor of News 21, referred questions to Rich.

The VA said its own research was based on data from the Federal Procurement Data System and from USASpending.gov.

More information: News21 report: http://goo.gl/XiGl4M
Washington Post report: http://goo.gl/JbGbCZ
NBC News report: http://goo.gl/g6IwY7