How to report SDVOSB fraud?

Do you know someone who is committing Service Disabled Veteran Owned Small Businesses (SDVOSB) fraud? Are they scamming and ripping off the Department of Veterans Affairs (VA) and Small Business Administration’s (SBA) set aside contract programs for service-disabled vets? Do you want to report that to the VA or SBA and Department of Justice (DOJ) by filing a qui tam lawsuit under the False Claims Act? Do you want to receive an award of between 15% and 30% of any recovered proceeds for providing helpful information? If so, then you should immediately contact an experienced whistleblower lawyer.

The VA and SBA SDVOSB programs are for set aside contracts (like the Women-Owned Small Business Federal Contracting, 8(a) Business Development and HUBZone programs). They are intended to give preferential treatment to qualified and eligible vets and vet-owned businesses that might otherwise have trouble competing for government contracts. Like all set aside programs, the government must award a certain percent of contracting dollars to qualified bidders. In the case of service-disabled vets and vet-owned business that is 3% of all government contracts.

Service Disabled Veteran Owned Small Businesses (SDVOSB) fraud occurs in a few different ways. The most obvious is when the person claiming to be a service disabled vet is either not a vet or not service disabled or both. Another obvious fraud is when the business is not “small” according the VA and SBA definition but claims it is anyway. A more subtle form of fraud is when the person or business that is awarded an SDVOSB contract does not actually perform the work. Often the SDVOSB business is just a front or “strawman” or “pass through” for a larger organization, like a large construction company, that would not qualify as either a small business or one owned at least 51% and managed on a daily basis by a service-disabled vet.

Sometimes the company really doing the work under the contract is a sub-contractor, at least on paper, of the SDVOB. Usually, there is a secret agreement between the sham SDVOSB entity and the bigger company or its owners to funnel government contract work and profits to the non-SDVOSB company. Sometimes the two businesses even work out of the same facilities and share employees, equipment and other resources. Other times the “rent-a-vet” lives far away from the business operation he or she supposedly runs, is working full-time at some other job, or lacks the experience, expertise or licenses needed to perform the awarded SDVOSB contract. These are all signs of potential SDVOSB program fraud.

SDVOSB fraud is illegal. That is why in 2010 Congress passed the “Presumed Loss Rule,” making those responsible for getting ineligible contracts liable for the entire contract amount, without any set off for the value of the goods and services provided. Under the False Claims Act this loss amount can be trebled. Equally important SDVOSB fraud reduces available contract awards for those service-disabled vets who really need and deserve the business. This was highlighted by a GAO report in 2010 (“Case Studies Show Fraud and Abuse Allowed Ineligible Firms to Obtain Millions of Dollars in Contracts”) and a more recent DoD OIG report in 2020 (“Audit of DoD Service-Disabled Veteran-Owned Small Business Contract Awards”).

If you are aware of SDVOSB fraud and want to do something about it and receive a reward for your information (up to 30%), you should contact a qui tam False Claims Act attorney right away. It is particularly important and helpful if you have first-hand information about the fraud and players. Also, if you are currently working for either a phony SBVOSB or a company that is illegally collaborating with it on government-awarded contracts you want to make sure you, “Call before you quit.” And now is a particularly good time because judges and government attorneys are reacting favorably to strong SDVOSB False Claims Act cases and therefore the odds of success are going up.