In an effort to prevent fraud involving government contracts intended for veteran-owned businesses, the Department of Veterans Affairs (VA) created a stringent application system that unintentionally resulted in veterans still not getting work.

News21 found that more than $1 billion in government contracts meant for small businesses owned by disabled veterans had been reclassified by the VA over the last decade, resulting in nearly $150 million worth of work going to non-veteran companies.

The reclassification came about after VA officials realized it had awarded millions of dollars in contracts to businesses that fraudulently claimed to be owned by veterans.

Now, in order to receive a contract from the VA, ex-soldiers with a small business must submit a volume of paperwork, ranging from company organizational documents to the resumes of all the key personnel.

Advocates for veteran-owned businesses have complained to Congress about the unfairness that continues to prevent former military personnel from receiving contracts.

“Unfortunately, the complaints from the veteran community have now shifted from contract awards going to misrepresented firms to the onerous and unpredictable verification process itself,” Scott Denniston, executive director of the National Veterans Small Business Coalition, told a congressional panel last year, according to News21. “We understand the need … to ensure only eligible veterans receive the benefits of the ‘Veterans First’ contracting program but we strongly disagree with VA’s punishing legitimate veteran small-business owners. It does not appear to us that VA had anyone involved in writing the rules who understands how small businesses operate in the digital age.”

Another concern for vets was that the smallest mistake on application paperwork could result in their disqualification. But the VA has now begun a program that allows the applicant to correct minor errors before the agency makes its final determination.

All federal agencies are required to set aside at least 3% of their contracts for service-disabled veteran-owned small businesses, per the Veterans Benefit Act of 2003 (pdf). The VA, though, sets aside more than any other agency—it reserves nearly 20% of its contracts for veterans who have started their own enterprise. The VA contracts range from information technology to construction to janitorial work.

-Noel Brinkerhoff

To Learn More:

Veterans Face Stricter Rules for Government Contracts (by Steven Rich, News21)

VA Leases Land Meant for Disabled Vets to Oil Company and Other Private Businesses (by David Wallechinsky and Noel Brinkerhoff, AllGov)

Major Fraud in Disabled Vets Small Business Program (by Noel Brinkerhoff, AllGov)