Audited SDVOSB

DOD To Audit Service-Disabled Veteran-Owned Small Businesses Due To SBA Changes

DOD recently announced it will audit registered contractors that are Service-Disabled Veteran-Owned Small Businesses (SDVOSB) for set-aside and sole-source contracts.

The audit comes six years after IG concluded DOD lacked adequate controls to ensure the integrity of the SDVOSB set-aside program. The decision to finally audit the program suggests issues related to eligibility of SDVOSB companies will be a greater point of emphasis for enforcement proceedings.

Companies found ineligible through the audit process may not merely get their hand slapped. An adverse decision could result in a suspension of work, contract termination, disbarment or even legal action under the False Claims Act.

Rule changes at the Small Business Administration (SBA) brought about the recent push for an audit. The changes included the elimination of a self-certification framework used for non-VA procurements. There is also a standardization underway between SBA and VA.

According to the National Law Review:

SDVOSB contractors holding DoD contracts should expect inquiries from OIG officials. These inquiries may range from requests for interviews and voluntary submissions of information relevant to the audit, to requests for proof that the contractor is an eligible SDVOSB. To establish proof, OIG officials may request to visit SDVOSB facilities to determine whether a service-disabled veteran actually owns or controls the company and manages its daily business operations. Similarly, SDVOSB joint ventures could be asked to demonstrate that the SDVOSB is the managing venture, employs the project manager, receives at least 51% of the profits, and will retain the final contract records.

Although the scope and effect of the OIG’s audit will become more clear over the coming weeks and months, SDVOSB contractors should prepare themselves for scrutiny of their eligibility status. All SDVOSB contractors would be wise to review their eligibility status—particularly under the newly effective SBA rules—and, if necessary, take steps to address and clarify any issues that could arise during an eligibility review. And SDVOSBs receiving direct inquiries from the OIG regarding their eligibility for DoD awards should ensure that they fully understand the posture of any government review, the standards being applied, and how responsive information would be used. Even if the current round of audits ostensibly focuses on DoD procedures, there is good reason to be cautious whenever OIG auditors come calling.

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  1. VA official pleads guilty to bribery, fraud, and obstruction charges
    Andrew Emett / NationofChange / News Report – October 29, 2018

    “From 2015 through 2017, James King used his position as a Vocational Rehabilitation and Employment (VR&E) program counselor at the VA to demand bribes from the owners of at least three separate schools in exchange for funds using the veterans’ federal benefits.”

    Full Article At: “”

    1. “Caught wasting more than $2 million in federal funds from the U.S. Department of Veterans Affairs (VA) in exchange for bribes, a former VA official pleaded guilty Friday to one count of honest services and money/property wire fraud, one count of bribery, and one count of falsifying records to obstruct an administrative investigation. The former VA official is the fourth person to plead guilty as part of this investigation.

      From 2015 through 2017, James King used his position as a Vocational Rehabilitation and Employment (VR&E) program counselor at the VA to demand bribes from the owners of at least three separate schools in exchange for funds using the veterans’ federal benefits. The VR&E program is a VA program that provides disabled U.S. military veterans with education and employment-related services. VR&E program counselors advise veterans under their supervision which schools to attend and facilitate payments to those schools for veterans’ tuition and necessary supplies.

      Between August 2015 and December 2017, King received more than $155,000 in bribes from Albert Poawui, the owner of Atius Technology Institute, a privately owned, non-accredited school specializing in information technology courses. In exchange for the illicit bribes, King facilitated over $2 million in payments to Atius. Joining the conspiracy in October 2016, Sombo Kanneh, the financial manager of Atius Technology Institute, also personally hand-delivered cash bribes to King.

      In September 2016, King facilitated the first tuition payment to Eelon Training Academy, a privately owned, non-accredited school purporting to specialize in digital media courses. Shortly afterwards, King told Michelle Stevens, the owner of Eelon, to give him seven percent of the federal funds. Stevens made two cash payments of $1,500 to King in exchange for Eelon receiving $83,000 from the VA.

      King similarly accepted cash payments from the owner of a third school, purporting to specialize in physical security classes, in exchange for the same official acts. The third school received more than $340,000 from the VA with King abusing his position as a VR&E program counselor.”

  2. 10/29/2018

    Dear Benjamin Krause,

    There are a lot of gears in this massive machine [VA hospitals]; some are heating up [The Denver VA Hospital], and other gears [Phoenix VA] spin freely at a one star rating, and other gears get clogged up [Cleveland VA]. The “new and always improved” Management has not noticed anything wrong—they are assuming this is the way to run the machine.

    But if Management was really on their toes they would Audit the whole organization/suppliers/
    Venders/primes and their subcontractors/ and the Unions.

    This would give the Management a view at what they are working with.

    But one must remember Senator Warren has not received any information from the VA or the OIG for two [2] years on the death of Veteran William R. Nutter, Jr. at the Bedford VA.

    You think there is going to be an open viewing of this audit?


    Don Karg

  3. Yes they SHOULD audit the Veterans Owned Businesses. I just watched on the news where we have a so-called disabled Vet who applies for the Veteran contracts and when he receives them he then doles them out to NON Vets and takes a cut of the money of the contract as a kick back. people like this should be strung up by their short hairs! And whats worse is he is running for a seat in Congress in Virginia. If I had my way he would be banned from EVER getting another VA Contract or a contract for Disabled Vets, and he would have his pension shut off and he would be required to pay it all back to the VA. He is a sorry assed bastard! And no before we even start, he is running as a Democrat

    1. I could not agree more, Dan. The guy in the link that I posted actually thought that he had made great sacrifices for this nation by incurring injuries playing football in a military prep school. ‘A cross that I will have to painfully bear . . .’

      Ridiculous thinking to say the least.

  4. I have known Disabled vets over the years Whom may have passed away and the wife took over the Business how do they favor or deal with those kinds of situations? The Company/Trust is still in that Vets name kinda of an unusual situation.

  5. The VA builds a hospital over budget by a $1,000,000,000 and they come up with “Let’s audit the Disabled Vets small businesses, let’s shift the heat over that way…”. You know, I never really heard of many contractors or VA management catching any heat over that fiasco, just a bunch of excuses.

  6. If you are going to do business with the federal government for set-aside or sole-source contracts, it behooves you to have all your ducks in a row. Cheaters can only go so long before they eventually are caught.

    Unfortunately, most times when they are caught – – – our legal system coddles and protects them, rather than administering appropriate punishment for the crime. And we call the United States a civilized nation?

    I have spent time in countries most Americans would term shitholes that had a much more civilized social structure than the United States. Hopefully, I will soon be able to get back to that side of the globe . . .

    And cheaters will use any ‘reason’ to tip the balance in their favor with zero shame whatsoever. An Oldie but a Goodie.


  7. Here is an article on a state legislator now running for Governor that is known for his rent a Vet scheme. It is explained in the article.

    As for anyone who takes offense over the article not censoring the fact that he was a Democrat. Piss Off, I didn’t write the article and I didn’t vote the criminal into office.


    “Dem Gubernatorial Candidate Won’t Explain Past Assault Arrest”
    By Luke Rosiak, Daily Caller News Foundation, 8:44 PM 10/28/2018

    “While working as a state legislator and lawyer, Smith also used his status as a disabled veteran to open a business that received millions of dollars in federal contracts reserved for veterans.

    In government records, Smith said it was a two-person firm, but it got contracts to park cars, conduct data analysis, mop floors and manufacturer pharmaceuticals. Smith has acknowledged that his company used his status to win veteran contracts, then pass the work off to non-veteran-owned firms.

    After TheDCNF reported on the company’s business model, the Department of Veterans Affairs conducted a surprise inspection, and banned the company from receiving contracts reserved for veterans.

    The law forbids veterans from subcontracting most of the work to circumvent these rules — known as a “rent-a-vet” scheme — and people have gone to prison for violating them. Smith was previously banned in 2013, but was reinstated after appeal.

    He appeared to attempt to find legal loopholes, saying that after the VA banned him in 2013 for the practice, he began “leasing” another company’s employees, which he said made it as if they were his own employees. A contracting law expert said, “That’s not compliance. That’s evasion.””

    Full Article with more detail at: “”

  8. DoD should Audit the VA. If so not only would they find waste, but the results most likely would be an embarassment. Or maybe not due to a lack of integrity abd no heart. 100% TruDat.

    1. ^^^^^^WHAT ANutterVet SAYS, TruDat!!!! (But remember that another person’s wasgte could be another’s treasure…)

      AUDIT THE ENTIRE FINANCIALS OF: VA, AFGE, and ALL VSO Groups and all associated service contracts and they will locate enough heaping amounts of nepotism to coat the entire full moon this trick or treating season.

    2. Might help for the DoD, the FED to the Pentagon to audit and investigate their own too. That’ll never happen.



      Plenty of old time reports about fraud and abuse going on and seemingly a lot stays out of local or mainstream news. Especially if politicians or mighty cliques are involved. To pretending to be vet owned businesses and far from being vets in reality or using a vets name to play front man…. dead or alive. Up there with the stolen valor issues.

      Nothing going to stop those businesses or contractors from changing their business names and playing some other kind of tricks to stay in business or slide in the doors ways in other sneaky business fashion. Common practices.

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