Companies Bilked Vets Program of $100M

Companies Bilked Vets Program of $100M
November 19, 2009
Associated Press

WASHINGTON -- Companies fraudulently collected at least $100 million in federal contracts from a $4 billion government program designated for disabled military veterans who run small businesses, congressional investigators charge.

The Small Business Administration failed to check if companies were eligible for the no-bid contracts for veterans with service-related injuries, allowing, for example, a contracting employee at a military base in Tampa, Fla., to improperly funnel a $900,000 Air Force contract to his wife's firm.

Moreover, because there are few penalties for companies found ineligible, many were still being handed tens of millions of dollars in government work even after they were found to be flouting the rules, according to the report released Thursday by the Government Accountability Office.

In many cases, small business owners falsely claimed they had a service-related injury to get the federal work - such as a $7.5 million FEMA contract for Hurricane Katrina work - and were only caught when competitors protested. In other situations, the small veteran-owned businesses were legitimate but then improperly passed the work to large or foreign-based corporations.

"Fraud in this program means that honest veterans who own a small business lose out on projects to impostors who, in many cases, aren't small businesses or even veterans," said Rep. Nydia Velazquez, D-N.Y., chairwoman of the House Committee on Small Business, who requested the report.
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Companies Bilked Vets Program of 100M