March 20 (Bloomberg) -- Small businesses rejected from a U.S. Department of Veterans Affairs contracting program are waiting more than four months for a response to their appeals.
Lawmakers and veterans’ advocates have criticized the agency in the past year, saying it hasn’t helped small, veteran-owned companies win work through the preferential bidding program as Congress intended.
While the VA has sped up processing for first-time applicants, it is taking an average of 128 days for small firms to get final decisions on their requests for reconsideration, according to agency statistics released at a congressional hearing yesterday.
The agency has a “backlog of legitimate companies trying to get certified,” Representative Mike Coffman, a Colorado Republican, said. “While the VA’s intent may be in the right place, its regulatory actions have put many veterans at a disadvantage.”
Coffman is chairman of the House Veterans’ Affairs Subcommittee on Oversight and Investigations, which held the hearing with the House Small Business subcommittee on contracting.
The program is supposed to boost contracting opportunities for former U.S. troops, many of whom served in Iraq and Afghanistan.
Without completing the verification process, companies aren’t able to win VA work reserved for veteran-owned businesses. Thousands of small businesses have been rejected by the agency since it stepped up efforts in 2011 to prevent ineligible firms from getting work under the preferential bidding program.
The long review process has resulted in millions of dollars in lost contracts for some companies and has forced some veteran owners to fire workers as they wait for approval, said Davy Leghorn, the Washington-based assistant director of the American Legion’s economic division.
“In some cases, businesses lose already-awarded contracts, resulting in layoffs,” Leghorn testified. “The American Legion cannot stress enough how detrimental this process can be for veterans and their families.”
The VA has gotten much faster at approving initial applications from veteran-owned small businesses, said Tom Leney, director of the VA’s Office of Small and Disadvantaged Business Utilization.
It took an average of 46 days for those decisions in February, compared with more than 130 days at some points in 2011, Leney testified.
“We have overcome many of the challenges and vulnerabilities,” he told lawmakers.
The VA program has more than 5,000 veteran-owned small businesses and has helped distribute more than $3.8 billion in contracts to those firms, Leney said.
A 2010 law requires the VA to do more to ensure veterans control their companies. The stricter process followed reports of fraud in the program, including cases where veterans were “fronting,” or claiming to manage companies that were run by other people.
The Government Accountability Office, Congress’s investigative arm, criticized the VA for drafting a strategic plan for agency’s verification efforts without including details about its goals.
“One long-term objective is establishing and sustaining a ’best-in-show’ operation,” the GAO said in a report yesterday. “But VA’s strategic plan does not define such an operation or provide any criteria or associated metrics to determine what has been achieved.”
The VA’s certification is becoming increasingly important because larger contractors and other federal agencies view it as a stamp of approval as they consider veteran-owned firms for work, said Marc Goldschmitt, a Reston, Virginia-based consultant and veteran who has helped business owners with the verification process.
The result is that a snub from the program “reaches well outside the VA,” Goldschmitt said.
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