Penalties for Misrepresentation as a Veteran-Owned Business

Floor Speech

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Mr. STUTZMAN. I thank the chairman for yielding.

Madam Speaker, I rise in strong support for H.R. 1657 that would revise the enforcement penalties for misrepresentation of a business concern as a small business concern owned and controlled by a veteran or a small business concern owned and controlled by service-disabled veterans.

Section 502 of Public Law 105-50 set a goal for all Federal agencies to spend at least three percent of their procurement funds with small businesses owned and controlled by service-disabled veterans. On October 21, 2004, President Bush reinforced the Federal Government's 3 percent goals by signing Executive Order 13360. According to the Small Business Administration, at the time of that executive order, the overall Federal procurement from service-disabled veteran-owned small businesses was about .38 percent, or about one-tenth of the goal set by statute and executive order. Even the VA was short of the goal, spending about 1.3 percent service-disabled veteran-owned small businesses.

To help VA meet the goal, section 5 of Public Law 109-461 gave some new
tools to the VA contracting staff that essentially gave service-disabled veteran-owned small businesses preference in small business set-aside contracts while not ignoring the VA's other statutory set-aside goals such as for firms qualified as HUBZone and minority-owned small businesses. As a result, SBA data for fiscal year 2009 shows that overall Federal spending with service-disabled veteran-owned small businesses was about 1.98 percent, and VA spent nearly 17 percent with service-disabled veteran-owned small businesses.

Clearly, the law was having a positive result for veteran-owned small businesses. Unfortunately, as James Earl Jones said in ``Field of Dreams'': ``If you build it, they will come.'' The ``they'' in this case are unscrupulous businesses that falsely claim veteran and disabled-veteran-owned status and the veterans who front for them.

The GAO did a review of 10 firms claiming to be service-disabled veteran-owned small businesses and found that none of them qualified as service-disabled veteran-owned small businesses. Since then, staff has continued to meet with the GAO and VA's Inspector General, and it is fair to say that there is no shortage of businesses fraudulently claiming to be veteran and/or service-disabled veteran-owned small businesses.

The original legislation merely authorized the Secretary of Veterans Affairs to debar these frauds for a period determined by the Secretary. However, given the continuing exposure of firms trying to steal contracts from legitimate veteran small businesses, I feel it necessary to provide some teeth to the law. My bill will direct the Secretary to debar these fraudulent firms and their principals for 5 years, and it would also set a schedule to speed up that action.

Madam Speaker, I note that the VA did not support the bill, citing a one-size-fits-all approach could harm firms who make an honest mistake in claiming status as a veteran or service-disabled veteran-owned small businesses. I again invite the VA to work with us to perfect a bill that will discourage frauds while protecting these contracts for valid veteran and service-disabled veteran-owned small businesses.

I believe that at a time when the economy is very difficult and veterans are looking to either start their business or go back to work, this bill will ultimately meet the need and protect those veterans and the businesses that are available to them.

I thank my distinguished ranking member, Mr. Braley, for his bipartisan support, as well as Chairman Miller and Ranking Member Filner for bringing H.R. 1657 to the House. I urge Members to support the bill.

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