The Department of Veterans Affairs (VA) recently decided to review the controls on their system regulating businesses claiming veteran status in order to get preference on VA contracts. Their investigation uncovered more than 75% of those businesses claiming veteran status were doing so fraudulently.
This translates to at least 1,400 businesses that have been fraudulently accepting contracts, according to the VA. Those businesses accepted $500 million worth of work that was earmarked specifically for businesses owned by veterans.
The program setting aside these contracts for veterans was designed to help veterans start their own businesses and give them the opportunity to grow by being able to bid on contracts against limited competition. To be eligible for the set-asides, however, these businesses must have a veteran or a service-disabled veteran personally responsible for running the company's daily operations.
The VA investigation discovered although many businesses had veterans within their ranks, the day-to-day operations were not being run by that veteran. That situation disqualifies those businesses for the veteran set-aside preference.
If the VA does not take proactive steps to remedy this situation, those fraudulent businesses could take substantial profits in contracts from eligible veterans. The businesses the VA found ineligible during their investigation were found to be either making outright fraudulent claims about being veteran-owned, or failed to meet VA standards because of a technical problem.
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