House Committee Proposes Ending SDVOSB Self-Certification

By Pamela Racer, PTAC Counselor at Western Carolina University

The Small Business Administration (SBA) certifies small businesses for federal contracting set-aside/preference programs. This process helps to ensure that only qualified entities are able to take advantage from the $105 billion in government contract awards reserved for small businesses.

However, there is one exception to this rule. Service Disabled Veteran Owned Small Businesses (SDVOSB), verified by the Department of Veterans to qualify for VA contracts, are allowed to self-certify for other federal government agency awards.
There are two SDVOSB designations currently being used. The VA’s Center for Verification and Evaluation requires the business to go through a verification process, and a certification program through the SBA where the businesses can self-certify.
One can only imagine the confusion this would cause among SDVOSBs. Additionally, the long term result has been years of fraud, waste, and abuse caused by inadequate controls being applied against companies not owned or operated by Service Disabled Veterans.

One recent example of fraud and abuse is Andrew Otero and his company, A&D General Contracting. They were convicted on charges that they fraudulently obtained $11 million in federal contracts set aside for service-disabled veteran-owned businesses (SDVOSB). Otero had no military experience but formed a joint venture with another company, Action, and then falsely represented that the joint venture qualified as an SDVOSB. The evidence demonstrated that Otero had no military experience. Yet Otero (on behalf of A&D) and veteran Roger Ramsey (on behalf of Action) participated in a conspiracy to defraud the government by forming a joint venture (“the JV”) – and falsely representing that Action and the JV qualified as service-disabled veteran-owned small businesses (“SDVOSB”). Based on the false claim of SDVOSB eligibility, the conspirators fraudulently obtained approximately $11 million in federal government construction contracts with the Department of Veterans Affairs and the Army Corps of Engineers. As proven at trial, the fraudulent conspiracy involved set-aside contracts that could only be bid upon by legitimate service-disabled veteran-owned small businesses – a designation that did not apply to Otero or A&D. United States attorney Adam Braverman stated “Our nation strives to repay the debt of gratitude we owe to our veterans by setting aside some government contracts for veterans with service-related disabilities,” …and “These unscrupulous contractors abused this program through a cynical and illegal ‘rent-a-vet’ scheme. They are now being held fully accountable for robbing truly deserving vets of important economic opportunities.”

In an effort to remedy this situation, Chairman Phil Roe, M.D. (R-Tenn.) and the Chairman of the House Small Business Committee Steve Chabot (R-Ohio) are supporting new legislation to better enable the Small Business Administration (SBA) and Department of Veterans Affairs (VA) to make the unify the controls for qualification for SDVOSB status. The Verification Alignment and Service-disabled Business Adjustment (VA-SBA) Act was introduced by the House Small Business Committee’s Chairman of the Subcommittee on Investigations, Oversight, and Regulations Trent Kelly (R-Miss). House Committee on Veterans’ Affairs’ Subcommittee on Oversight and Investigations Chairman General Jack Bergman (R-Mich.) was one of the sponsors of this bill and worked closely with subcommittee Chairman Kelly on the legislation.

The VA-SBA Act would put the SBA in charge of all SDVOSB certifications, but still keep the integrity of the VA’s Veterans First program. This legislation will unify the law and ensures that SBA is able to manage all small business certifications, and allows the VA to focus on their core mission-supporting our veterans.
(Source information and additional details can be found at The House Committee on Veterans’ Affairs; Press releases November 27, 2018).

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