Aug. 3 (Bloomberg) -- Neeson Levinson says the letter he received from the Department of Veteran Affairs on June 21 placed the future of his 30-employee construction company in jeopardy.
The letter denied his firm, Harbor Services Inc., eligibility to bid on VA contracts reserved for disabled veterans. His company in Mount Pleasant, South Carolina, relies on the awards for almost all its $15 million in annual revenue.
Levinson, a 17-year Navy veteran, said he placed eight phone calls to the department’s help desk to find out what was going on. He was greeted each time by an automated message saying his wait time was at least 1,000 minutes, he said. The number he remembers best: 4,116 minutes, or 2.86 days.
“It was comical, but at the same it really bothered me because my business is at stake,” Levinson, who said he’s certified as 50 percent disabled, said in a phone interview.
Levinson’s experience is an example of the problems that lawmakers and advocates say veteran business owners face navigating a new certification system meant to prevent fraud. They say the program isn’t weeding out potential abuse or helping veterans as Congress intended.
Almost 40 percent of the companies listed as owned by veterans in a VA registry haven’t met the eligibility requirements of a 2010 law, the head of the VA office that certifies businesses said during a congressional hearing yesterday.
The lack of verification puts the agency at risk of fraud, according to a Government Accountability Office report released this week. At the same time, owners seeking certification are complaining about rejections and bureaucratic delays.
“It makes no sense operationally and it’s not weeding out the real crooks,” Rick Weidman, executive director of policy and government affairs for the Vietnam Veterans of America, told lawmakers. He called the verification process the “apotheosis of bureaucracy running amok.”
As for Levinson’s calls, Jo Schuda, a VA spokeswoman, said it’s “very likely” he was given the wait time of 4,116 minutes.
“However, that was due to an IT glitch and not the actual waiting time,” Schuda said in an e-mail. “Call volume has been heavy, but not like that.”
About 2,330, or 38 percent, of the 6,150 companies in the VA’s database of veteran-owned contractors haven’t been verified as being owned, controlled and managed by veterans as required by a 2010 law, Tom Leney, agency director of the verification office, said during the joint hearing of two House of Representatives subcommittees.
The law, which followed reports of fraud in the program, requires the agency to do more to ensure small businesses receiving the bidding preference are in control of their companies and manage the day to day operations.
While the legislation doesn’t set a deadline for when all companies in the directory must be verified, VA officials have said since last September that the department had reviewed almost all companies listed.
Some of those companies in the registry had been verified under a less stringent 2006 law’s requirements, Leney said. The agency can’t remove those companies until their eligibility expires and they aren’t reverified, he said.
In addition, some firms still appear in the registry that are going through the recertification process, he said. Those companies are not eligible for awards, Leney said.
“Bottom line, the program works,” he said. “So far this year, 20 percent of VA procurements went to veteran-owned businesses. That’s real money to real veterans.”
Levinson said 97 percent of his company’s revenue comes from VA construction projects. He asked the agency to overturn his rejection on June 25 and is awaiting a response.
Without certification, he said he’ll miss the opportunity to bid on more than $35 million in VA work this month. He traveled to Washington to attend yesterday’s hearing after he was unable to get useful information from the agency’s help desk, Levinson said.
GCC Technologies LLC, a McHenry, Maryland-based consulting firm, has a VA contract to staff the help desk and works under the supervision of an agency employee, Schuda said. The technical flaw that resulted in Levinson being told he had a 4,116-minute wait time occurred in a VA automated system, she said.
The disabled veteran-owned company also has a contract to examine applications from veterans seeking bidding preference, Schuda said. GCC provides recommendations to a VA employee who then decides whether the application should be approved or denied, she said.
Vicki Moyer, GCC’s director of administration and contracts, declined to comment. The company has received VA contract awards valued at $2.36 million since October 2011, according to data compiled by Bloomberg.
More than 4,000 veteran-owned businesses, or almost two-thirds of all those that have applied, have been rejected by the VA since it stepped up efforts last year to prevent fraud, according to March data from the department.
More than 1,000 companies rejected for certification have appealed the decisions, according to the VA. The department didn’t make a more recent figure available.
“The ad hoc processes to verify and reverify businesses are not working,” Bill Johnson, an Ohio Republican who chairs the House Veterans Affairs Subcommittee on Oversight and investigations, said during the hearing. “Veteran business owners are losing patience, this subcommittee is losing patience and the American people are losing patience.”
The VA doesn’t adequately communicate with veterans to help them navigate the verification process, said Scott Denniston, executive director of the National Veteran Small Business Coalition.
“When an application is submitted, it basically goes into a black hole,” he testified.
Veterans have complained that the agency is being overly aggressive in its interpretation of the law.
One veteran, Kevin Treiber, was rejected this year because he had been paid by the Department of Health and Human Services for two weeks of relief work in Haiti. The VA said that made him ineligible as a special government employee. His rejection was overturned after Bloomberg reported on his case.
Mark Lilly, a Navy SEAL rejected three times for the contracting preference, says the VA is reviewing applications in a piecemeal process instead of identifying all potential problems at the beginning. This leads to costly delays, he said.
The agency’s rejection of veterans is drawing scrutiny from lawmakers. VA employees seem to “base decisions on a suspicion that an applicant’s documentation does not qualify, rather than clear evidence of disqualification,” Johnson and Marlin Stutzman, an Indiana Republican, said in a July 11 letter to Shinseki.
Shinseki has yet to reply to the letter, Johnson said yesterday.
Still, there are concerns that ineligible companies are winning contracts. The GAO, Congress’s investigative arm, said 134 companies that hadn’t met the 2010 law’s requirements received $90 million in VA contracts reserved for disabled veterans from Nov. 30, 2011, to April 1.
“The VA’s program still remains vulnerable to fraud and abuse,” Richard Hillman, the GAO’s managing director of forensic audits and investigative service, told the committee.
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