Category Archives: Service-Disabled Veteran-Owned Small Businesses

SDVOSB Fraud: Justice Department Indicts Construction Company Owner

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The U.S. Department of Justice has indicated David E. Gorski, an owner of Legion Construction, Inc., for alleged service-disabled veteran-owned small business fraud.  The indictment alleges that Gorski, a non-veteran, fraudulently represented that Legion was a SDVOSB to win federal SDVOSB set-aside contracts, and used genuine service-disabled veterans as figureheads in an attempt to avoid detection.

VetBizCentral, an organization providing various services to veteran entrepreneurs, has posted a full copy of the Gorski indictment on its website.  The allegations are well worth a closer look.

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GAO: VA Must Prioritize SDVOSBs for Simplified Acquisitions

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The U.S. Department of Veterans Affairs’ award of a contract to a small business under simplified acquisition procedures was improper because it appeared that a number of service-disabled veteran-owned small businesses could have filed the requirement, according to a recent GAO bid protest decision.

Unlike the ongoing Aldevra cases, in which the VA has purposefully continued making awards to non-SDVOSBs under the Federal Supply Schedule in the face of repeated GAO decisions stating that the practice is illegal, the GAO’s decision in Phoenix Environmental Design, Inc., B-407104 (Oct. 26, 2012), suggests that the VA simply did not understand how the agency’s own set-aside rules are supposed to work, at least in the context of a simplified acquisition.

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False SDVOSB Certifications Land New York Man Behind Bars

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False SDVOSB certifications have earned a New York man nearly three and a half years in prison.

In May, I brought you the story of John White’s conviction for false SDVOSB certifications, and noted that sentencing was yet to come.  Well, last week the federal judge handed down a sentence, and Mr. White is no longer a free man.

According to a U.S. Department of Justice press release, White was sentenced to 41 months in prison for defrauding the government by falsely claiming to be a service-disabled veteran.  White’s company was awarded three SDVOSB set-aside contracts and one VOSB set-aside contract as a result of the fraud.  When the government began investigating White’s company, White tried to recruit an actual service-disabled veteran to pose as the company’s majority owner.

John White will now have a few years in the Big House to consider the consequences of falsely stealing the honor of our nation’s service-disabled veterans and falsely stealing four contracts intended for those veterans.  If the DOJ has has any sense of irony, it will ship him to a federal facility where genuine SDVOSBs are on-site providing services.

SDVOSBs, VA CVE Verification, and the “Full-Time Management” Rule: Unfair to Start-Ups

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If you are a service-disabled veteran hoping to start a new SDVOSB, the VA’s Center for Veterans Enterprise has a message for you: quit your day job.

Yes, you heard that right.  Under one of the the VA’s SDVOSB eligibility rules (38 C.F.R. § 74.4(c)(3) to be precise), “one or more veterans or service-disabled veterans who manage the applicant or participant must devote full-time to the business during normal working hours of firms in the same or similar line of business.”

The VA currently interprets this so-called “full-time management” rule to essentially bar a SDVOSB from receiving verification if a service-disabled veteran manager does not work 40 hours per week for the SDVOSB.  If the veteran holds a second job, the VA CVE ordinarily denies verification, stating that the veteran cannot be working full-time for the SDVOSB if he or she is also working another job.

“Wait a second,” several service-disabled veterans have told me in surprise, “my company is brand new.  There won’t be 40 hours of work to do until I win a contract.  In the meantime, I need my current job to pay the bills.  Isn’t there a special rule for my situation?”

The answer, unfortunately, is “no.”  But there should be a special rule, because in my opinion, the full-time management requirement unfairly and needlessly penalizes SDVOSB start-ups.

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VA SDVOSB Protests: VA OSDBU Has Sole Jurisdiction

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SDVOSB protests relating to VA set-aside procurements may only be decided by the VA Office of Small and Disadvantaged Business Utilization.  In a recent decision, the SBA Office of Hearings and Appeals confirmed that the SBA currently lacks jurisdiction to decide SDVOSB protests under VA set-aside procurements.

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VA CVE: Reconsideration Decisions Will Take 90 Days, Not 60

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A decision on a request for reconsideration of a denied SDVOSB verification application will take approximately 90 days instead of 60 days, according to the VA Center for Veterans Enterprise.  In a letter emailed recently to one service-disabled veteran, who authorized me to publish an excerpt on SmallGovCon, the VA CVE stated:

The regulation, 38 CFR 74, states that CVE has 60 days, when practicable, to make a final decision associated with the request for reconsideration. Unfortunately we have received an exceptionally large number of requests for reconsideration, and currently almost 600 applications are in the reconsideration process.   As a result, it is no longer practicable to process these within 60 days.   Historically, 20% of companies receiving an initial denial are requesting reconsideration. We have shifted and added resources in an effort to speed up the process. In order to be fair to all applicants, we continue to process all requests for reconsideration on a first come, first served basis. We currently estimate that we will be able to provide a decision within 90 days of receiving the request for reconsideration, so you can expect a decision no later than [date redacted]. As soon as we can give you a better estimate of the timeframe for decision, we will do so.

It is little wonder that the VA CVE is experiencing reconsideration overload, because the VA CVE is denying 60% of initial SDVOSB verification applications.  I am sympathetic to the VA CVE’s overworked employees, but I have much more sympathy for the eligible service-disabled veterans who will suffer from the reconsideration delays.

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