Over $340 million intended to fund Department of Defense (DoD) contracts intended for small businesses owned by disabled veterans may have been awarded to ineligible companies, according to a DoD Inspector General (IG) draft report released today.
DoD does not “require adequate verification of contractor status before awarding SDVOSB set-aside and sole-source contracts,” the Inspector General said today. “As a result, nonqualified firms received awards, reducing the opportunities for veterans disabled defending their country to receive DoD contracts.”
The misallocation of funds might cost hundreds of millions of dollars. “DoD awarded approximately $342.2 million in funds set aside for the Service-Disabled Veteran-Owned Small Business (SDVOSB) program to potentially ineligible contractors,” the IG announced today. DoD issued six contracts worth approximately $1.9 million to “ineligible contractors” and gave another 27 contracts — worth approximately $340.3 million — “to contractors that potentially misstated their SDVOSB status.”A
Among the 27 contracts in question, DoD awarded “12 contracts, valued at approximately $11.3 million, to 6 contractors that were [previously] denied SDVOSB eligibility.” In three of these cases, the IG has recommended DoD investigate the companies for fraud.”
The IG reported that DoD gave eight contracts, worth roughly $319 million, “even though sufficient evidence did not exist to support the contractors’ SDVOSB status.”
