Washington Report

Updates from Capitol Hill

GAO Finds Millions in Contract Fraud

WashReportFraudThe House Committee on Small Business convened a hearing on fraud, waste, abuse and mismanagement of programs under its jurisdiction on Thursday. The House has adopted a requirement for all committees to do so on a quarterly basis.

“These hearings are an important tool for reassuring progress and gathering information. In the past, they have been enormously useful not just for spotting SBA’s problem areas, but also for solving them,” said Rep. Nydia Velazquez (D-New York), who chairs the panel.

Gregory Kutz, speaking on behalf of the Government Accountability Office, submitted a report that found that the Service-Disabled Veteran-Owned Small Business Program (SDVOSB) is vulnerable to fraud and abuse, which could cause veterans to lose contracting opportunities to ineligible firms. The program was created to provide government-wide sole-source contracts to honor the service and sacrifice of veterans with service-related disabilities.

Ten case-study firms that were ineligible to participate in the program received approximately $100 million in contracts through fraud or abuse. The GAO’s investigation also found that the government doesn’t have effective fraud-prevention controls for the program in place.

“The culture of the SBA is that we will not be the agency of fraud, waste, abuse and mismanagement,” said SBA administrator Karen Mills. “We have an aggressive, new attitude towards this; it is explicitly one of our priorities.”
Rep. Sam Graves of Missouri, the committee’s ranking Republican, said, “I am outraged that fraud in this federal program, intended to benefit our brave soldiers, means that fewer opportunities are available to our service-disabled veterans.” He vowed to take “aggressive legislative action” if the SBA and Veterans Administration don’t move quickly to prevent the abuses.

To view excerpts from the hearing, click here.

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