Veterans’ Verification System Still in Need of Improvement

Published: January 16, 2013


The Veterans Affairs’ vendor verification system has long been scrutinized by government officials, as well as vendors. Most recently, GAO found that the verification process for service-disabled and other veteran-owned small businesses continues to face challenges in verifying firms in an efficient, timely, and consistent manner.

VA is required to give contracting preference to service-disabled and other veteran-owned small businesses, which requires verifying company ownership and control.  Since 1997, Congress mandated agencies award 23% of federal contracts to small disadvantaged business, including 3% to service-disabled veteran-owned businesses (SDVOBs) and veteran-owned businesses (VOBs).  VA is the only agency that verifies veteran status and ownership prior to contract award.  All other agencies rely on self-policing.  However, some veteran-owned businesses contend that the process is fraught with in consistencies, slowness and incompetence.


In 2010, VA removed over 8,000 business from its veteran-owned contractor database after more stringent verification rules went into effect as a result of a 2009 GAO report on potential fraud in the system.  When the new regulations went into effect, firms registered in the VetBiz database but not verified were required to submit documents, or be removed from the database.  Some veterans believe the new rules are burdensome and an intrusion into the way they do business. 


The current head of VA’s Office of Small Disadvantaged Business Utilization (OSDBU), Tom Leny, said in a June article, “We have re-engineered the process… We put in quality control checks in the process to make sure we get accurate and complete examinations and evaluations.” 


In August, GAO found there were 6,079 SDVOBs and VOBs listed in VetBiz, but only a portion of these had been verified using the more thorough processes, continuing to leave the program open to fraud.


GAO’s newest report, finds that improvements to the verification process have been made over the last two years, however the strategic plan recently developed by VA, does not have performance measures to assess whether the desired outcomes are being achieved.  GAO further found that the data system does not have adequate workflow and reporting mechanisms, which hinders VA’s ability to operate and oversee the program.


John Gingrich, VA’s Chief of Staff, wrote in response to GAO that the OSDBU is planning a new system, the Next Generation Verification Case Management System, to be built in two phases. The first phase will consist of a prototype and the second phase will encompass a production system using an increment-based contracting approach.  No time was given for either phase, but a strategic plan will be submitted to VA’s secretary in March.


There’s been talk of expanding the verification programs government-wide, however according to GAO, the verification process would need to improve and operational and policy issues would need to be addressed prior to expansion.