The Department of Veterans Affairs (VA) is seeking to find an appropriate balance between preventing fraud in it's contracting programs and providing a process that would make it easier for more VOSBs (Veteran-Owned Small Businesses) to become verified.
The VA verification program has been the subject of audits by the GAO (Government Accountability Office) and the VA's Office of Inspector General. Both have found that fraud exists and continues to exist in the verification program.
To help prevent fraud, the VA has issued proposed amendments to its regulations governing the verification program. The proposed regulations are quite voluminous but if you are a VOSB needing verification, it is important reading. The proposed rules;
- Clarify the eligibility requirements for businesses to obtain "verified" status
- Adds and revises some definitions,
- Reorders requirements
- Redefines the definition of "control", and
- Explains the examination procedure and review process.
The definition of "ownership and control" is where most of the fraud occurs. A small business concern must be owned and controlled by one or more eligible veterans, service-disabled veterans or surviving spouses. Control means the strategic policy, long-term decision-making authority, and the management of daily business operations for the VOSB. Control is not the same as ownership. Individuals managing the concern must have managerial experience of the extent and complexity needed to run the concern. A veteran need no have the technical expertise or possess a required license to be found to control an applicant or participant if he or she can demonstrate that he or she has ultimate managerial and supervisory control over those who possess the required licenses or technical expertise.
Regular readers of this blog will be aware that many fraud cases involving the VOSB program are the result of a non-veteran firm using the credentials of a VOSB in order to secure a contract. Whether these new rules will reduce fraud in the program remains to be seen.