Washington, D.C., Nov 19, 2009 -

Today the Government Accountability Office (GAO) released a report that uncovered over $100 million of fraud and abuse in the Service-Disabled Veteran-Owned Small Business (SDVOSB) contracting program at the Small Business Administration (SBA).  This morning the House Small Business Committee held an oversight hearing to review the report’s findings.  Karen Mills, Administrator of the SBA, and Gregory Kutz, Managing Director of Forensic Audits and Special Investigations at the Government Accountability Office (GAO) testified before the Committee.

The SBVOSB program’s goal is to provide procurement assistance to small businesses owned by service-disabled veterans.  Legislation enacted by Congress in 1999 established a government-wide goal that at least 3 percent of the total value of all federal prime and subcontracting dollars be awarded to small businesses owned by service-disabled veterans.  Eligibility for the program lies with the Administrator of the SBA and the Department of Veterans Affairs (VA).  The law requires that at least 51 percent of the small firm be owned and controlled by one or more service-disabled veterans, and the VA to determine whether the applicant is service-disabled.

According to the GAO report, in 2008, only 1.5% of all government contract dollars were awarded to SDVOSBs, falling short of the 3% goal.  In addition, the report found over 100 allegations of fraud and abuse in the program.  Of the 10 case studies in GAO’s report, none met SDVOSB program eligibility requirements.

Committee Ranking Member Sam Graves (R-MO) 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.  If the SBA and VA do not move expeditiously to ensure that veteran small business owners benefit from SDVOSB program, then I will take aggressive legislative action.”

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To view the hearing on YouTube click here.