Federal contracting officers, along with firms representing themselves as woman-owned small businesses (WOSBs) did not comply with federal regulations in 50 instances of sole-source contract awards. As a result, there is no assurance that the contracts were awarded to firms eligible to receive sole-source awards under the WOSB program administered by the Small Business Administration (SBA).
That’s the conclusion reached by the SBA’s Office of Inspector General (OIG) in a report issued on June 20, 2018.
The OIG undertook its review of SBA’s WOSB program to determine whether the sole-source provisions that Congress included in the 2015 National Defense Authorization Act (NDAA) were being effectively implemented. Congressional intent was to expand the number of federal contracts being awarded to WOSBs and streamline the process by which WOSB status could be validated. Thus, in its review, the OIG wanted to determine whether sole-source contract awards comply with program requirements, and whether firms that receive the set-asides conform to the self-certification requirements.
The OIG selected a sample of 56 contracts, worth $55.7 million, to review. The sample represented 81 percent of the sole-source contracts awarded to WOSBs between the period of Jan. 1, 2016 and Apr. 30, 2017. The OIG determined that federal regulations were not followed by federal officials or the WOSB firms themselves in connection with 50 of the 56 contracts. The 50 contracts were valued at $52.2 million. Based on its findings, the OIG determined that there “was no assurance that these contracts were awarded to firms that were eligible to receive sole-source awards” under the WOSB program.
The weaknesses noted in the OIG’s report are similar to those noted in a review conducted in 2015. Then, the OIG recommended that SBA should increase its training and outreach to both federal contracting officials and businesses regarding their responsibilities under the WOSB program.
Once again, in its latest report, the OIG makes a series of recommendations to SBA administrators to remedy the newly-identified problems. Among them:
- The SBA should prevent contracting personnel from awarding contracts to ineligible firms by implementing a certification process that includes “reviewing, analyzing, and making an affirmative decision that applicants are eligible to participate” in the WOSB program.
- SBA also should strengthen controls in FPDS-NG to preclude agencies from using ineligible NAICS codes for the WOSB program’s contracts.
Overall, the OIG is recommending that the WOSB program should be operated more in line with other certification programs operated by the SBA. In response to these recommendations, however, the SBA estimates that it will take at least another year before it implements a WOSB certification process. SBA management also states it does not have the responsibility for improving the integrity of data in FPDS-NG.
The OIG concludes that since errors are likely to continue to be made in NAICS code selection and that WOSB firms will be allowed to continue to self-certify, the program is subjected to “unnecessary risks of fraud and abuse.” In light of this condition, the OIG’s recent report offers six specific recommendations the SBA should take now to expand oversight and prevent agencies from awarding contracts to ineligible firms.
Two Washington, D.C. area government contractors have agreed to pay the government for their respective roles in defrauding the U.S. Small Business Administration (SBA) in schemes to fraudulently obtain government contracts set aside for small businesses. These two cases highlight the importance of small business compliance and the submission of accurate and complete certifications.
A self-certified woman-owned small business was ineligible for a WOSB set-aside contract because the woman owner’s husband held the company’s highest officer position and appeared to manage its day-to-day operations.
The federal government sets aside many contracts for small businesses, but not all small business set-asides are created equal.
Virginia-based contractor ADS Inc. and its subsidiaries have agreed to pay $16 million to settle allegations that they violated the False Claims Act by knowingly conspiring with and causing purported small businesses to submit false claims for payment in connection with fraudulently obtained small business contracts, the Department of Justice announced last week.
A small business joint venture’s proposal was excluded from the competition because the joint venture failed to submit a signed copy of its joint venture agreement, as required by the solicitation.
The former owner of a local construction company and a Kansas City veteran were indicted by a federal grand jury Friday, Jan. 13, 2017 for their roles in a “rent-a-vet” scheme to fraudulently obtain more than $13.8 million in federal contracts.
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