VETERAN-OWNED 

SMALL BUSINESSES

Planning and Data 

System for VA’s 

Verification Program 

Need Improvement

Report to Congressional Requesters

January 2013

GAO-13-95

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-13-95, a report to 

congressional requesters 

January 2013 

VETERAN-OWNED SMALL BUSINESSES 

Planning and Data System for VA's Verification 

Program Need Improvement

Why GAO Did This Study

VA is required to give contracting 

preference to service-disabled and 

other veteran-owned small businesses. 

It must also verify the ownership and 

control of these firms to confirm 

eligibility. Prior reports by GAO and 

VA’s Office of Inspector General 

identified weaknesses in VA’s 

processes and controls that allowed 

ineligible firms to be verified. GAO was 

asked to review the verification 

program. For this report, GAO 

assessed (1) VA’s progress in 

establishing a program for verifying 

firms’ eligibility on a timely and 

consistent basis and (2) key 

operational and policy issues that VA 

would have to address should its 

verification program be implemented 

government-wide. GAO reviewed VA’s 

policies and procedures; compared its 

initial strategic planning effort with 

previously identified leading strategic 

planning practices; interviewed VA 

officials and veterans’ organizations; 

and analyzed government-wide 

contracting databases. 

What GAO Recommends

To improve the long-term effectiveness 

of the program, VA should (1) refine 

and implement a strategic plan with 

outcome-oriented long-term goals and 

performance measures, and (2) 

integrate its efforts to modify or replace 

the program’s data system with a 

broader strategic planning effort to 

ensure that the system addresses the 

program’s short- and long-term needs.

VA concurred with both 

recommendations.

What GAO Found

The Department of Veterans Affairs (VA) has made significant changes to its 

verification processes for service-disabled and other veteran-owned small 

businesses to improve operations and address program weaknesses, but 

continues to face challenges in establishing a stable and efficient program to 

verify firms on a timely and consistent basis. Since December 2011, VA has

instituted a number of significant operational changes, including revising 

standard operating procedures and enhancing quality assurance protocols for its 

verification program. However, GAO found that VA did not have a 

comprehensive, long-term strategic plan for the program and had prioritized 

addressing immediate operational challenges, contributing to programmatic 

inefficiencies. In response to this observation, VA’s Office of Small and 

Disadvantaged Business Utilization (OSDBU) initiated action in late October 

2012 to compile a strategic planning document that encompassed the verification 

program. VA’s OSDBU appears to have partially applied key leading strategic 

planning practices in its initial planning effort. But the plan lacks performance 

measures to assess whether the desired outcomes are being achieved and has a 

short-term focus that is not typically associated with a strategic plan. VA also has 

not shared the plan with key stakeholders, including congressional staff. Further, 

the verification program’s data system has shortcomings that have hindered VA’s 

ability to operate, oversee, and monitor the program. Among other things, the 

system does not collect important data and has limited reporting and workflow 

management capabilities. VA plans to modify or replace the system, but has not 

directly tied this effort into its long-term strategic planning efforts to ensure that 

the new system meets the verification program’s long-term information needs.

Expanding VA’s verification program to support the government-wide contracting

program for service-disabled, veteran-owned small businesses would require VA 

to improve its verification process and address a number of operational and 

policy issues. GAO estimated that between about 3,600 and 16,400 currently 

self-certified firms could seek verification under an expanded program, but VA 

has experienced ongoing challenges verifying the volume of firms currently 

participating in the program. GAO’s prior and current work indicates that VA 

would need to further reduce its program’s vulnerability to fraud and abuse, 

demonstrate whether recent operational changes have improved performance, 

have in place effective methods for educating applicants, and address the 

limitations of the program’s data system in order to expand successfully. Also, 

VA has begun a process to revise the verification program’s regulations, partly in 

response to concerns about VA’s eligibility standards being too stringent. 

However, any changes to VA’s verification requirements could create or widen 

differences between the various government-wide small business contracting 

programs’ requirements and VA’s, a consideration that would likely be of even 

greater importance if VA’s verification program were expanded. Addressing these 

issues for its own program—or ultimately for a government-wide program—

requires weighing tradeoffs between reducing the burden of verification on 

eligible firms and providing reasonable assurance that contracting preferences 

reach their intended beneficiaries. View GAO-13-95. For more information, 

contact William B.Shear at (202) 512-8678 or 

shearw@gao.gov. 
Page i GAO-13-95 VA Verification Program 

Letter 1 

Background 5

VA Has Made Changes to Improve Its Verification Program, but 

Continues to Face Challenges in Its Strategic Planning Efforts 

and Information Technology Infrastructure 11

Expanding Its Verification Program Government-wide Would 

Require VA to Improve the Program and Address Policy Issues 28

Conclusions 33

Recommendations for Executive Action 35

Agency Comments and Our Evaluation 35

Appendix I Scope and Methodology 39

Appendix II Verification Program Data as of September 30, 2012 44

Appendix III Verification Program Organizational Structure, 

December 2011 and October 2012 48

Appendix IV Verification or Certification Requirements Associated with 

Federal Small Business Contracting Preference Programs 51

Appendix V Comments from the Department of Veterans Affairs 53

Appendix VI Comments from the Small Business Administration 56

Appendix VII GAO Contact and Staff Acknowledgments 57

Tables

Table 1: Selected Leading Practices in Federal Strategic Planning 41

Contents 
Page ii GAO-13-95 VA Verification Program 

Table 2: Verification or Certification Requirements Associated with 

Federal Small Business Contracting Preference Programs 52

Figures

Figure 1: VA’s Percentage of Eligible Contract Dollars Awarded to 

Veteran-Owned Small Businesses (VOSB) and ServiceDisabled Veteran-Owned Small Businesses (SDVOSB), 

Fiscal Years 2006 through 2011 6

Figure 2: Major Events Affecting VA’s Verification Program, 2006 

through June 2012 8

Figure 3: Status of Initial Applications Submitted between 

November 2011 and September 2012, as of September 30, 

2012 45

Figure 4: Status of Requests for Reconsideration Submitted 

between November 2011 and September 2012, as of 

September 30, 2012 46

Figure 5: Status of Applications for Reverification Submitted 

between November 2011 and September 2012, as of 

September 30, 2012 47

Figure 6: Verification Program Organizational Chart as of 

December 2011 49

Figure 7: Verification Program Organizational Chart as of October 

2012 50
Page iii GAO-13-95 VA Verification Program 

Abbreviations

CCR Central Contractor Registration database

CVE Center for Veterans Enterprise

FPDS-NG Federal Procurement Data System-Next Generation

FTE full-time equivalent

GPRA Government Performance and Results Act of 1993

GPRAMA GPRA Modernization Act of 2010

HUBZone historically underutilized business zone

IT information technology

OIG Office of Inspector General

OI&T Office of Information and Technology

OSDBU Office of Small and Disadvantaged Business Utilization

SAM System for Award Management

SBA Small Business Administration

SDVOSB service-disabled veteran-owned small business

SOP Standard Operating Procedures

VA Department of Veterans Affairs

VCMS Verification Case Management System

VIP Vendor Information Pages

VOSB veteran-owned small business

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Page 1 GAO-13-95 VA Verification Program 

United States Government Accountability Office 

Washington, DC 20548

January 14, 2013

Congressional Requesters

The Department of Veterans Affairs (VA) has dramatically increased its 

contracting with small businesses owned by veterans, including servicedisabled veterans, since 2006—from $616 million in obligations in fiscal

year 2006 to $3.6 billion in fiscal year 2011. VA’s success in contracting 

with veteran-owned small businesses (VOSB), including service-disabled 

veteran-owned small businesses (SDVOSB), stems from its Veterans 

First Contracting program, established in response to the Veterans 

Benefits, Health Care, and Information Technology Act of 2006 (2006 

Act).1

Sustaining its high levels of contracting with SDVOSBs and VOSBs and 

ensuring the integrity of the Veterans First program requires VA to verify a 

pool of firms eligible to receive contracts and to correctly disqualify 

ineligible firms. Yet since VA launched its verification program in 2008, we 

and VA’s Office of Inspector General (OIG) have reported on 

weaknesses, such as in VA’s efforts to define an organizational structure 

to manage the program, establish and monitor verification operations, and 

The 2006 Act requires VA to give preference in its small business 

contracting to SDVOSBs and VOSBs. It also gives the agency unique 

authority to make noncompetitive (sole-source) awards to these firms and 

to restrict competition for awards to them (set-asides). Along with 

establishing VA’s contracting preferences, the 2006 Act makes VA 

responsible for maintaining a database of SDVOSBs and other VOSBs. 

The act requires VA to verify that all firms entered in the database are 

actually owned and controlled by one or more veterans and to confirm the 

status of any owner who indicates a service-connected disability.

 

1

Pub. L. No. 109-461, § 502, 120 Stat. 3403, 3431 - 3435 (codified as amended at 38 

U.S.C. § 8127).

 
 

Page 2 GAO-13-95 VA Verification Program 

institute effective controls to prevent and detect fraud by ineligible firms.2

The government-wide SDVOSB contracting program, which is 

administered by the Small Business Administration (SBA), authorizes 

other federal agencies to award set-aside or sole-source contracts to 

firms that self-certify as SDVOSBs.

At the same time, some veteran small business owners and their 

advocates have complained that the verification process has been slow 

and burdensome and have questioned VA’s rationale for denying some 

firms’ verification applications.

3 As such, the program risks awarding 

contracts to firms that are ineligible or deliberately misrepresenting their 

SDVOSB status. We and the Department of Defense Inspector General 

have identified several instances in which agencies awarded contracts 

under the government-wide SDVOSB program to ineligible firms.4

 

2

See, for example: GAO, Service-Disabled Veteran-Owned Small Business Program: 

Additional Improvements to Fraud Prevention Controls Are Needed, GAO-12-152R 

(Washington, D.C.: Oct. 26, 2011); VA Office of Inspector General, Department of 

Veterans Affairs: Audit of Veteran-Owned and Service-Disabled Veteran-Owned Small 

Business Programs, 10-02436-234 (Washington, D.C.: July 25, 2011); Department of 

Veterans Affairs: Agency Has Exceeded Contracting Goals for Veteran-Owned Small 

Businesses, but It Faces Challenges with Its Verification Program, GAO-10-458 

(Washington, D.C.: May 28, 2010); and Service-Disabled Veteran-Owned Small Business 

Program: Case Studies Show Fraud and Abuse Allowed Ineligible Firms to Obtain Millions 

of Dollars in Contracts, GAO-10-306T (Washington, D.C.: Dec. 16, 2009).

3

The Veterans Benefits Act of 2003 authorized agencies to set contracts aside and make 

sole-source awards of up to $3 million (since adjusted for inflation to $3.5 million) and $5 

million for manufacturing (since adjusted for inflation to $6 million) for SDVOSBs (but not 

other VOSBs). However, an agency can make a sole-source award to an SDVOSB only if 

the contracting officer expects just one SDVOSB to submit a reasonable offer. Pub. L. No. 

108-183, § 308, 117 Stat. 2651, 2662 (codified at 15 U.S.C. § 657f). By contrast, VA’s 

authorities under the 2006 Act apply to SDVOSBs and VOSBs, and VA is required to set 

aside contracts for SDVOSBs or other VOSBs (unless a sole-source award is used) if the 

contracting officer expects two or more such firms to submit offers and the award can be 

made at a fair and reasonable price that offers the best value to the United States. 38 

U.S.C. § 8127(d). VA may make sole-source awards of up to $5 million, without a 

determination that only one SDVOSB or VOSB is available. 38 U.S.C. § 8127(c). 

4

See for example, GAO, Service-Disabled Veteran-Owned Small Business Program: 

Vulnerability to Fraud and Abuse Remains, GAO-12-697 (Washington, D.C.: Aug. 1, 

2012); Department of Defense Inspector General, Inadequate Controls Over the DoD

Service-Disabled Veteran-Owned Small Business Set-Aside Program Allow Ineligible 

Contractors to Receive Contracts, 2012-059 (Feb. 29, 2012); and GAO, Service-Disabled 

Veteran-Owned Small Business Program: Case Studies Show Fraud and Abuse Allowed 

Ineligible Firms to Obtain Millions of Dollars in Contracts, GAO-10-108 (Washington, D.C.: 

Oct. 23, 2009). 
 

Page 3 GAO-13-95 VA Verification Program 

Accordingly, we have previously suggested that a government-wide 

SDVOSB verification program should be considered.5

We were asked to review VA’s verification program and assess the steps

that would be necessary to implement it government-wide. Because VA 

was introducing significant changes to its procedures and operations at the 

time of our study, we determined that evaluating VA’s compliance with its 

past procedures would be of limited value and that testing the effectiveness 

of verification procedures that were still evolving would be premature. We 

focused instead on issues related to planning for and designing the 

verification program and on changes in its management and operations. 

Accordingly, in this report, we (1) describe and assess the progress that VA 

has made in establishing a program to verify the eligibility of SDVOSBs and 

VOSBs on a timely and consistent basis, and (2) describe the key 

operational and policy issues that VA would have to address should its 

verification program be implemented government-wide.

To describe and assess the progress VA has made in establishing a 

program to allow it to verify the eligibility of SDVOSBs and VOSBs on a 

timely and consistent basis, we reviewed relevant statutes, regulations, 

and procedures for the verification program, as well as planning and 

organizational documents. We compared the strategic planning document 

that the Office of Small and Disadvantaged Business Utilization (OSDBU) 

compiled in 2012 in response to our study to six leading practices that we 

had previously identified as being relevant to agencies’ initial strategic 

planning efforts.6

 

5

We also interviewed VA officials and representatives 

from three veteran service organizations and a technical assistance 

association that were participating in an outreach program VA had 

launched to assist applicant firms. To describe the key operational and 

policy issues that VA would need to address should its verification 

program be implemented government-wide, we developed rough order of 

magnitude estimates of how many more SDVOSBs—beyond those that 

VA had already verified or was in the process of verifying as of 

September 30, 2012—might seek verification if it were required 

GAO-10-108. 

6

Because VA prepared the initial strategic planning document as we were completing our 

draft report, we did not conduct a comprehensive review of the strategic plan, the 

supporting documents that VA provided, or the process that VA undertook to develop 

these documents. 
 

Page 4 GAO-13-95 VA Verification Program 

government-wide. Specifically, our estimation method relied on the 

number of SDVOSBs listed in the Central Contractor Registration (CCR) 

database that had not been verified by VA and were not in the process of 

being verified. Next, we determined whether or not these self-certified 

SDVOSBs received contracts from agencies other than VA in fiscal years 

2010 or 2011 using the Federal Procurement Data System-Next 

Generation (FPDS-NG). These estimates do not take into account the 

number of firms that would seek verification under VA’s existing program 

regardless of whether a government-wide program were adopted nor the 

number that actually would be motivated to seek verification if it were 

adopted. We assessed these data by interviewing VA officials 

knowledgeable about the VA data, reviewing documentation related to all 

of the data systems, and checking the data for illogical values or obvious 

errors and found them to be sufficiently reliable for the purpose of 

illustrating the potential scale of a government-wide verification program. 

We also reviewed our prior work on the verification program and that of 

the VA OIG. Further, because of SBA’s role administering the 

government-wide SDVOSB program, we reviewed SBA documents and 

interviewed SBA staff for their views on a potential government-wide 

verification program. However, SBA staff said that it would be 

inappropriate for them to comment on VA’s or SBA’s potential roles or 

other considerations in implementing a potential program. Appendix I 

offers a fuller description of our objectives, scope, and methodology.

We conducted this performance audit from February 2012 to January 

2013 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.
 

Page 5 GAO-13-95 VA Verification Program 

The 2006 Act requires VA to establish annual contracting goals for 

SDVOSBs and other nonservice-disabled VOSBs; the goal for SDVOSBs 

must at least match the government-wide SDVOSB contracting goal of 3 

percent of federal contract dollars.7 VA set its goals at 3 percent for 

SDVOSBs and 7 percent for all VOSBs (SDVOSBs and other VOSBs) for 

fiscal years 2006 and 2007, and subsequently has set and achieved 

increasing contracting goals for VOSBs and SDVOSBs, as shown in 

figure 1.8

 

7

Pub. L. No. 109-461, § 502 (2006). The Small Business Reauthorization Act of 1997, 

Pub. L. No. 105-135 § 603 (1997), sets a government-wide goal for small business 

participation of not less than 23 percent of the total value of all prime contract awards—

contracts that are awarded directly by an agency—for each fiscal year. This act also sets 

goals for participation by specific types of small businesses. The 3 percent goal for 

SDVOSBs was included in the Veterans Entrepreneurship and Small Business 

Development Act of 1999, Pub. L. No. 106-50 (1999). There is no government-wide 

contracting goal for VOSBs. 

 VA’s total contracting awards to VOSBs increased from $616 

million (including $356 million to SDVOSBs) in fiscal year 2006 to $3.6 

billion (including $3.2 billion to SDVOSBs) in fiscal year 2011.

8

In practice, VA sets a goal for SDVOSBs and a goal for all VOSBs that is inclusive of its 

goal for SDVOSBs as well as for nonservice-disabled VOSBs. 

Background
 

Page 6 GAO-13-95 VA Verification Program 

Figure 1: VA’s Percentage of Eligible Contract Dollars Awarded to Veteran-Owned Small Businesses (VOSB) and ServiceDisabled Veteran-Owned Small Businesses (SDVOSB), Fiscal Years 2006 through 2011

Notes: The goals and actual percentages in this figure are based on contracts awarded to selfcertified and VA-verified VOSBs and SDVOSBs registered in the Central Contractor Registration 

database, not just VA-verified VOSBs and SDVOSBs. 

a

Eligible contract dollars are the total value of all prime contract awards made in a fiscal year minus 

any awards that are covered by exclusions. Among other things, the eligible dollars exclude contracts 

performed overseas, acquisitions on behalf of foreign governments, building leases, electric utilities, 

prison industry contracts, and contracts awarded to designated nonprofit agencies that employ blind 

or severely disabled people. 

VA’s OSDBU has overall responsibility for the SDVOSB/VOSB 

verification program.9

 

9

VA’s OSDBU develops department-wide policies, programs, and practices related to 

small businesses, monitors VA’s implementation and execution of its small business 

contracting goals program, and provides outreach and liaison support to businesses 

(small and large) and other members of the public and private sectors concerning small 

business acquisition issues. 

Within OSDBU, the Center for Veterans Enterprise 

(CVE), maintains a database of eligible SDVOSBs and VOSBs and is 
 

Page 7 GAO-13-95 VA Verification Program 

responsible for verification operations, such as processing applications.10

To implement the requirements of the 2006 Act, VA began verifying 

businesses in May 2008 under interim final rules, which the agency did 

not finalize until February 2010.11

• the small business concern must be unconditionally owned and 

controlled by one or more eligible parties (veterans, service-disabled 

veterans, or surviving spouses);

(For a timeline of major events affecting 

the verification program, see fig. 2.) To be eligible for verification under 

VA’s rules

• the owners of the small business must have good character (any 

small business owner or concern that has been debarred or 

suspended is ineligible);

• the applicant cannot knowingly make false statements in the 

application process;

• the firm and its eligible owners must not have significant financial 

obligations owed to the federal government; and

• the firm must not have been found ineligible due to an SBA protest 

decision.12

 

10Other staff and offices within the OSDBU and VA, such as the Office of Small Business 

Utilization and VA’s Office of General Counsel, also support the verification program.

11The final rule for the verification program, with changes, became effective February 8, 

2010. 75 Fed. Reg. 6098 (Feb. 8, 2010). VA amended the final rule in January 2011. 

76 Fed. Reg. 3017 (Jan. 19, 2011).

1238 C.F.R §74.2. VA defines ownership as a firm having at least 51 percent unconditional 

and direct ownership by one or more eligible parties. Control is defined as both the day-today management and long-term decision-making authority for the firm. 
 

Page 8 GAO-13-95 VA Verification Program 

Figure 2: Major Events Affecting VA’s Verification Program, 2006 through June 2012

VA launched its verification process under the 2006 Act in 2008 and 

shifted to a more robust process in 2010. VA’s verification process under 

the 2006 Act (2006 process) initially consisted of (1) checking VA 

databases to confirm veteran status and, if applicable, service-disability 

status; and (2) reviewing publicly available, primarily self-reported 

information about control and ownership for all businesses that applied for 

verification. Beginning in September 2008, VA also adopted a risk-based 

approach to conducting site visits or other means, such as additional 

document reviews and telephone interviews, to further investigate 

selected high-risk businesses. VA adopted a more thorough verification 

process in 2010 (2010 process), which included reviewing and analyzing 

a standardized set of documents that each applicant is required to submit. 

VA refined the 2010 process over time so that, as of October 2012, the 

verification process consisted of four phases—initiation, examination, 

evaluation, and determination. Denied applicant firms are able to request 

a reconsideration of the denial decision.

• Initiation: CVE employees are to confirm that applicants meet 

minimum requirements for the program by, among other things, 

verifying the owners’ veteran and service-disability status and 

determining that they have submitted all of the required documents or 
 

Page 9 GAO-13-95 VA Verification Program 

adequate explanations for missing documents.13

• Examination: Contractors are to review completed applications to 

determine whether firms meet the eligibility requirements and make 

an initial recommendation for approval, denial, or additional review 

(i.e., a site visit).

Employees are also 

to check the Excluded Parties List System to ensure that the applicant 

business and all owners are not on the list.

• Evaluation: Contractors and staff are to review the initial 

recommendations to ensure that the screening has met quality 

standards and that firms have received an appropriate 

recommendation. They may decide as well that a site visit is necessary. 

Contractors are to conduct site visits if they are recommended, and 

CVE employees are to recommend approval or denial.

• Determination: CVE supervisors are to review staff recommendations 

and issue eligibility decisions. A determination letter is to be emailed 

to the applicant, and approved companies appear as verified in the 

Vendor Information Pages (VIP) database.

• Request for Reconsideration: Through an optional Request for 

Reconsideration process, denied applicants can remedy the issue(s) 

that caused their applications to be initially denied. Based on a review 

by staff from VA’s Office of General Counsel, VA may approve the 

application, deny it on the same grounds as the original decision, or 

deny it on other grounds. If VA denies a request for reconsideration 

solely on issues not raised in the initial denial, the applicant may ask 

for reconsideration as if it were an initial denial. Denied applicants can 

also request a legal review if they believe their application was denied 

in error.

VA’s database of SDVOSBs and VOSBs previously listed unverified and 

verified firms, but currently is required to list only verified firms, as a result 

of the Veterans Small Business Verification Act (2010 Act), part of the 

Veterans’ Benefits Act of 2010.14

 

13Until May 2012, the determination of a complete application was part of the Examination 

phase.

After the verification program began in 

2008, VA modified its VIP database of self-certified SDVOSBs and 

14Pub. L. No. 111-275 § 104, 124 Stat. 2864, 2867-2868 (amending 38 U.S.C. § 8127). 
 

Page 10 GAO-13-95 VA Verification Program 

VOSBs to receive verification applications and publicly display names of 

verified firms.15 Once VA approved a business, the business name 

appeared with a verified logo in VIP, but the database continued to 

display self-certified firms as well. The 2010 Act requires that no new 

applicant appear in the VIP database unless it has been verified by VA as 

owned and controlled by a veteran or service-disabled veteran. The 2010 

Act also required VA, within 60 days of enactment, to notify all unverified 

(self-certified) firms in VIP about the verification requirement and also 

required firms to apply for verification within 90 days or be removed from 

the database. VA officials reported that by September 2011, the agency 

had removed from the VIP database all firms that had self-certified so that 

the database would include only verified firms. As of October 2012, the 

database included both firms verified under the 2006 Act process and the 

2010 process.

 

15VA first launched VIP in 2003 as a searchable database of self-certified SDVOSBs and 

VOSBs, available to businesses, contracting officers, and the public through a web-based 

portal known as VetBiz. To carry out the verification program, VA modified the database to 

allow firms to electronically submit a verification application form (VA Form 0877) 

through VIP.
 

Page 11 GAO-13-95 VA Verification Program 

VA has made significant changes to its verification processes in an effort 

to improve its operations and address program weaknesses, but 

continues to face challenges in establishing a stable and efficient program 

to verify firms on a timely and consistent basis. Since December 2011, 

VA has instituted a number of significant operational changes, including 

revising standard operating procedures and enhancing quality assurance 

protocols.16 However, it has not had a comprehensive, long-term strategic 

plan for the verification program and has consistently prioritized 

addressing immediate operational challenges, contributing to 

programmatic inefficiencies. In response to our observations, VA’s 

OSDBU initiated action in late October 2012 to compile a strategic 

planning document that encompasses the verification program. OSDBU 

appears to have at least partially applied key leading strategic planning 

practices in its initial planning effort. But the plan lacked performance 

measures to assess whether the desired outcomes are being achieved 

and had a shorter-term focus than typically associated with a strategic 

plan. Furthermore, VA had not shared the plan with key stakeholders, 

such as veteran support organizations and business associations or 

congressional staff. In addition, the verification program’s information 

technology (IT) system has shortcomings that have hindered VA’s ability 

to operate, oversee, and monitor the program. VA is planning to modify or 

replace the system, but has not directly tied this effort into its long-term 

strategic planning efforts to ensure that the new system meets the 

verification program’s long-term information needs.

 

16VA hired a new CVE director in December 2011. In addition, nearly all of CVE’s senior 

staff members were hired in 2012 because of turnover and the creation of new positions. 

Rather than expecting these staff to provide detailed information about changes that 

occurred before their tenures, we focused on changes that CVE instituted after 

December 2011. 

VA Has Made Changes 

to Improve Its 

Verification Program, 

but Continues to Face 

Challenges in Its 

Strategic Planning 

Efforts and 

Information 

Technology

Infrastructure
 

Page 12 GAO-13-95 VA Verification Program 

As of September 30, 2012, the VIP database listed 6,257 firms that had 

been verified as VOSBs or SDVOSBs. Of these, VA reported that 1,733 

were verified under the initial 2006 Act process and 4,524 under the more 

rigorous 2010 process. VA’s database also listed a substantial number of 

pending cases at that time: 691 new applications for verification, 131 

firms seeking reverification to remain in VIP, and 165 requests for 

reconsideration from firms that were denied verification. 17

Despite VA’s adoption of a more robust verification process in 2010 with 

stronger fraud prevention elements, we previously reported that the 

verification program had some remaining vulnerabilities to fraud and 

abuse.

See appendix II 

for additional data on the verification program as of September 30, 2012.

18 In our August 2012 report, we found that VA had made progress 

but had not fully implemented seven of our recommendations made in 

October 2011 related to vulnerabilities in the verification process. For 

example, it had not provided regular fraud awareness training to CVE and 

VA contracting personnel or developed procedures to assess verified 

firms’ compliance with program rules after verification. Such procedures 

could include unannounced site visits to contract performance locations, 

interviews with contracting officials, and risk-based periodic reviews of 

verified firms receiving contracts.19

 

17According to VA, as of September 30, 2012, VA’s publicly available VIP database listed 

only those firms that were either verified or in the reverification process, not those with 

pending initial applications or requests for reconsideration.

As of January 4, 2013, we were 

reviewing documentation provided by VA in December 2012 to determine 

if VA’s actions taken to address some of our prior recommendations are 

sufficient to consider them implemented. We will also continue to review 

documentation provided by VA in the future to assess whether the 

remaining recommendations have been implemented. In addition, we 

noted that as of mid-July 2012 some 2,355 firms in the VIP database had 

been verified only under the less rigorous 2006 Act process. We found 

that the presence of firms that had been subject only to the less-stringent 

18GAO-12-697. 

19VA also had not implemented recommendations (1) related to the Debarment 

Committee’s criteria, processes, and guidelines; (2) for removing SDVOSB contracts from 

ineligible firms; and (3) for advertising debarments and prosecutions of firms that 

misrepresented their eligibility. VA’s Debarment Committee, which VA instituted in 

September 2010, debars or suspends companies that misrepresent their status in the 

application process or during the verification eligibility period, denying the applicant further 

contracting opportunities with the federal government.

VA Has Adopted Changes 

to Improve Verification 

Operations and Address 

Some Identified 

Weaknesses and Concerns
 

Page 13 GAO-13-95 VA Verification Program 

process that VA previously used represented a continuing vulnerability. 

By September 30, 2012, VA had reverified or removed from the VIP 

database 622 of the firms that were originally verified under the 2006 Act 

process, but had yet to reverify the remaining 1,733 firms, according to 

VA’s inventory of verified firms.20 The inventory indicated that the 2-year 

verification period for 1,159 of these remaining firms expired on or before 

September 30, 2012, so they were not eligible to receive VA contracts 

after that date and were due to be removed from the database.21

In interviews with us between April 2012 and June 2012, veterans’ 

organizations cited applicant concerns about other aspects of the 

verification program, such as the rationale for determinations and the time 

it took VA to make determinations, as the following examples illustrate.

 VA 

officials said that firms whose 2-year verification period had not yet 

expired would be removed from the database upon expiration if they had 

not been verified under the 2010 process. According to VA, fewer than 

120 companies that were verified under the 2006 process remained in 

VIP as of December 1, 2012.

22

• We observed several outreach sessions that VA conducted in May 

and June 2012 with veterans’ organizations and an association of 

organizations that provided technical assistance with procurement. In 

these sessions and in our follow-up interviews with participants, the 

organizations stated that VA’s guidance for applicants did not always 

adequately explain how VA interpreted some of the subjective 

eligibility standards in its regulations, such as the requirements that 

owners have good character. They also said that they and applicants 

 

20VA’s database does not flag whether a firm was verified under the 2006 Act process or 

the 2010 process, but VA developed an inventory of verified firms, which it uses to 

manually track when firms were last verified and which process was used. 

21In June 2012, VA adopted a class deviation to its acquisition regulation providing that, at 

the time of submission of an offer, previously verified SDVOSBs or VOSBs identified by 

CVE as currently undergoing the reverification process were eligible to be reverified on an

expedited basis. Contracting officers could not make an award until the reverification was 

complete. The class deviation expired on September 30, 2012. According to VA officials, 

firms whose 2-year verification period had expired were removed from VIP, were no 

longer eligible for expedited processing, and could not receive contracts until they were 

verified again.

22We did not independently corroborate the applicant concerns that veterans’ 

organizations cited in interviews with us, and CVE only recently started to informally track 

the customer service requests it receives. 
 

Page 14 GAO-13-95 VA Verification Program 

sometimes found the rationale for denial to be unclear or 

inconsistent.23

• Representatives from two of the veteran service organizations that we 

interviewed also raised concerns about the length of time it could take 

to process an application. According to VA officials, it took on average 

more than 130 days after receiving a complete application to make a 

determination in July 2011. As of October 2012, it took approximately 

85 days.

 

24

With the hiring of a new CVE director in December 2011, CVE conducted 

a review of the verification process to identify ways to increase its 

efficiency and began adopting changes to the verification process to 

improve its operations and address program weaknesses and applicants’ 

concerns.25

• CVE revised its Standard Operating Procedures (SOP) to reflect 

current practices and help ensure greater consistency in its 

verification processes. These procedures describe the purpose, 

scope, statutory references, staff roles, and implementation steps.

For example, as a result of this review, CVE did the following:

• CVE instituted a more robust quality assurance process to ensure that 

staff adhered to the approved procedures. For example, CVE 

 

23According to VA, since the initial outreach sessions VA has begun including counselors 

from these organizations in training conducted for CVE evaluation and examination staff in 

an effort to ensure consistency in interpreting the program’s regulations.

24VA’s goals, set out in the verification program regulations, are to (1) advise an applicant 

within 30 days after receiving an initial verification application whether it is complete and, if 

not, what additional information or clarification is required and (2) make an initial 

determination within 60 days of receiving a complete application, if practicable. 38 C.F.R. 

§74.11. In addition, VA’s goal is to decide a request for reconsideration within 60 days 

after receipt, if practicable. 38 C.F.R. §74.13. However, VA officials said that, in practice, 

the agency uses an interim goal of making a determination within 90 days of receiving a 

complete application because, according to the officials, the 60-day goal is not practicable 

at this time. In calculating whether it meets these goals, VA excludes any time spent 

waiting for additional information it asks firms to supply to complete the application or 

during the examination. Thus, even if VA meets its goals for processing applications, the 

actual time from submission to approval or denial may be much longer, depending on how 

quickly the firm responds to any requests for additional documentation. 

25Because CVE implemented these changes during the course of our work, not enough 

time had passed for us to assess their effectiveness.
 

Page 15 GAO-13-95 VA Verification Program 

employees and contractors are now subject to both scheduled and 

spot audits and must resolve any major deficiencies within 10 days.

• CVE hired its first training officer and revised its training program with 

the goals of ensuring that CVE staff were properly trained and 

qualified to perform their duties, achieved high performance, and were 

responsive to changing business requirements, among other things. 

The training officer is responsible for coordinating training for staff 

(including contractors), including weekly training on the verification 

program and customer service, as well as monthly fraud education.

• CVE added specific methods of communicating with applicant firms, 

with the goal of ensuring that applicants receive an email from VA at 

least every 30 days with an update on the status of their application.

• CVE began using the initiation phase, rather than the examination 

phase, to determine whether an application was complete, so that any 

missing documentation or inadequate explanations can be addressed 

before the examination process begins.

• CVE began tracking staff productivity levels and more closely 

monitoring the quality of their work. For example, beginning in the 

spring of 2012, CVE started setting targets for the numbers of cases 

that individual staff members should review each day. Also, in 

September and October 2012, CVE’s evaluation team reviewed the 

results of contractors’ examinations to identify cases that had not 

been properly completed or in which the recommended finding should 

be overturned.26

VA has also revised the organizational structure for the verification 

program, but VA officials said that human capital challenges remained. In 

general, CVE is structured so that a federal employee oversees a team of 

Contractor staff with the most rejected cases were 

recommended for additional training.

 

26According to a CVE report on this effort, out of 439 examinations reviewed, 46 (10 

percent) were not properly completed (e.g., the evaluation team identified additional 

issues or the draft decision letter was not properly formatted) and 10 (2 percent) were 

overturned.
 

Page 16 GAO-13-95 VA Verification Program 

contractors.27 VA uses a mix of federal employees and contractors to 

complete verifications because contractors have greater flexibility to adjust 

staffing levels in response to variations in the number of applications 

submitted, according to VA officials. Between December 2011 and October 

2012, VA adopted changes to the verification program’s organizational 

structure to make it more efficient, increase oversight of federal staff and 

contractors, and strengthen functions that did not previously have 

dedicated staff, such as training. VA officials (1) reorganized and increased 

the number of employees and contractors assigned to the verification 

process and (2) created several new teams including quality assurance, 

training, records management, and customer service. During this period, 

VA added about 3 full-time equivalent staff and 64 contractors to the 

verification program.28

VA has also sought to improve outreach to applicants through additional 

online resources and a new Verification Counseling program. In 

November 2011, VA began posting on its website verification assistance 

briefs intended to clarify aspects of the program’s rules. These briefs 

cover topics that VA officials have determined cause the majority of 

denials, such as full-time control and transfer restrictions.

(See app. III for the verification program’s 

organization charts as of December 2011 and October 2012.) However, VA 

officials said that the verification program faces ongoing human capital 

challenges. For example, 5 of the verification program’s 27 full-time federal 

positions were vacant as of November 2012. As of early November 2012, 

CVE was developing a business case to justify the staff organization 

necessary to support verification operations, including revised federal 

employee labor categories and modifications to contractor support.

29

 

27In some instances CVE is almost entirely dependent upon contractor support to perform 

some aspects of the verification process. For example, of the 52 total staff involved with 

initiations and examinations, 48 are contractors. Similarly, 49 of the 51 staff in risk 

management/quality control who conduct the site visits are contractors.

In addition, 

VA launched a self-assessment tool in June 2012 to help applicants 

28As of October 2012, the verification program had about 28 full-time equivalent 

government employees and 174 contractors. In addition, five staff from VA’s Office of 

General Counsel were assigned to the verification program to review requests for 

reconsideration and provide legal review.

29Under program regulations, a veteran owner must have total unconditional control (full 

decision-making authority) over the applicant business and ownership must be direct and 

unconditional, meaning that the veteran owners must be able to transfer his or her 

ownership interest to anyone at any time, without restriction. 
 

Page 17 GAO-13-95 VA Verification Program 

understand the rules, regulations, eligibility criteria, and review process 

for verification.30 Recognizing that some applicants needed additional 

support, VA launched a Verification Counseling program in June 2012. 

According to VA, this program integrates the Verification Assistance 

Partner counselors (initially, selected veterans’ support organizations and 

business associations and Procurement Technical Assistance Centers) 

into the regular training provided to CVE examination and evaluation staff. 

These counselors in turn provide counseling to firms interested in 

becoming verified.31 The program is intended to increase understanding 

of the verification program’s eligibility requirements so that ineligible firms 

would be less likely to apply and eligible firms would be more likely to 

submit the materials necessary for them to succeed in their initial 

applications.32

To mitigate an anticipated increase in its workflow over time, VA initiated 

two efforts in early 2012 to modify its approach to reverifying firms’ 

eligibility. VA’s verification regulations issued in May 2008 limited the term 

of the verification status of a firm to a 1-year time period. However, as 

growing numbers of firms verified under the 2010 process began to 

require reverification in early 2012, VA recognized that it would face a 

mounting workload over time if it reverified firms annually using its full 

 

30The tool also includes a set of frequently asked questions, the rationale for requested 

documents, and examples of common reasons for denial and ways to mitigate them, 

among other things. Department of Veterans Affairs, “Verification Self Assessment Tool,” 

(Washington, D.C.: Department of Veterans Affairs, 2012), accessed December 5, 2012, 

https://www.research.net/s/Verification_Assessment_Tool. 

31Program participants as of October 2012 included the Association of Procurement 

Technical Assistance Centers, the National Veteran Small Business Coalition, VETForce, 

VETS Group, and the American Legion. Congress created the Procurement Technical 

Assistance Program, which includes the Procurement Technical Assistance Centers, to 

help businesses seeking to compete successfully in federal, state, and local government 

contracting. The centers are funded through cooperative agreements between the 

Department of Defense and state/local entities.

32At the outset of the counseling program, OSDBU and CVE officials said that the decision 

to have independent organizations rather than CVE staff counsel firms through the 

verification process was intended to mitigate potential conflicts of interest that could arise 

if staff were responsible for verifying the eligibility of firms they had assisted. When CVE 

was initially formed in 2001, it helped veterans interested in forming or expanding their 

own small businesses, and it continued advocating for SDVOSBs and VOSBs when it first 

assumed responsibility for implementing VA’s verification program. Over time, however, 

OSDBU eliminated CVE’s advocacy responsibilities to mitigate potential conflicts of 

interest. By the time we began our work in February 2012, CVE’s operations focused 

exclusively on the verification program. 
 

Page 18 GAO-13-95 VA Verification Program 

examination procedures. As a result, VA began to develop procedures for 

a simplified reverification process, which it introduced in early June 

2012.33 VA also began the process of modifying the verification program 

regulations to extend the verification period from 1 year to 2 years and 

published an interim final rule to this effect in late June 2012.34 As a result 

of the rule change, additional firms eligible for simplified reverification will 

not begin reaching the expiration of their verification period until February 

2013.35

Despite the steps that VA had taken since December 2011, the Secretary 

of Veterans Affairs acknowledged ongoing concerns about the program 

and announced the creation of a senior executive task force to review the 

verification program and determine whether it had sufficient resources 

and support. The task force, created in June 2012, was initially charged 

with reporting back within 60 days with suggested changes that would 

help streamline the verification process. In August 2012, the task force 

adopted a charter stating that its purpose was to review all aspects of the 

verification program, including processes, operating policies, 

management information systems, staffing, and resources. The task force 

presented its preliminary findings to the VA Chief of Staff in early 

November 2012. The review results and recommendations of the task 

force were expected to be provided to the Office of the Secretary for final 

approval during the second quarter of fiscal year 2013.

In late October 2012, VA determined that a firm would be eligible 

for simplified reverification one time before again requiring full 

examination (i.e., once every 4 years).

 

33According to VA officials, under these procedures, certifying firms that had been verified 

under the 2010 Act process (but not the 2006 Act process) could be reverified after (1) 

certifying that there been no changes to the business since their full document 

examination, or ( 2) if there were changes, certifying those changes and submitting any 

changed document. CVE would examine only the changed documentation to determine its 

effect on eligibility. All firms reverified under the simplified process would be subject to 

random or risk-based audits, and any firm found not to be in compliance after they 

certified that there were no changes would be considered to have misrepresented its 

status and subject to potential debarment or suspension. A firm could go through the 

simplified process once before it had to go through a full verification.

3477 Fed. Reg. 38181 (June 27, 2012). VA applied this extension retroactively to 

previously verified firms.

35According to VA officials, VA processed 194 applications for simplified reverification that 

were submitted before the interim final rule extended the verification period to 2 years. VA 

notifies firms of the need to be reverified 120 days before their verification period expires, 

so VA officials said that they expected to begin processing new applications for simplified 

reverification as early as December 2012.
 

Page 19 GAO-13-95 VA Verification Program 

During the period covered by our review, VA had not created a formal 

strategic plan for the verification program. However, in response to our 

inquiries, OSDBU compiled a strategic planning document in late October 

2012 that covered the verification program. This plan was based on a 

series of planning documents that were initially developed between June 

and December 2011 for internal discussions and conversations with 

congressional staff. This initial strategic planning effort appears to have at 

least partially followed key leading federal strategic planning practices,

but additional progress is needed to improve the usefulness of the plan. 

We have previously reported that agency-wide strategic planning 

practices required under the Government Performance and Results Act of 

1993 (GPRA)—which was amended by the GPRA Modernization Act of 

2010 (GPRAMA)36—can also serve as leading practices for planning at 

lower levels within federal agencies, such as individual programs or 

initiatives.37 We have also previously identified six leading practices in 

federal strategic planning that are most relevant to initial strategic 

planning efforts: (1) defining the mission and goal; (2) defining strategies 

that address management challenges and identifying resources needed 

to achieve goals; (3) ensuring leadership involvement and accountability; 

(4) involving stakeholders; (5) coordinating with other federal agencies; 

and (6) developing and using performance measures.38

According to OSDBU and CVE officials, VA did not develop a formal 

strategic plan when it was initially developing the verification program 

because the primary concern at the time was to develop and implement 

initial verification procedures and program regulations. Once the program 

was launched in 2008, CVE continued to make its immediate operational 

challenges a higher priority than long-range strategic planning. Although 

VA’s focus on getting the verification program running and reacting to 

For a description 

of each of these practices, see appendix I.

 

36Pub. L. No. 103-62, 107 Stat. 285 (1993); Pub. L. No. 111-352, 124 Stat. 3866 (2011). 

GPRAMA provides federal agencies with an approach to focusing on results and 

improving government performance by, among other things, developing strategic plans. 

Examples of GPRAMA plan components include a mission statement; general goals and 

objectives, including outcome-oriented goals; and a description of how the goals and 

objectives are to be achieved, including the processes and resources required.

37For example, see GAO, Environmental Justice: EPA Needs to Take Additional Actions 

to Help Ensure Effective Implementation, GAO-12-77 (Washington, D.C.: Oct. 6, 2011).

38GAO-12-77. These practices were selected from among GPRA, Office of Management 

and Budget guidance, and prior GAO work.

OSDBU’s Initial Strategic 

Planning Effort Applied 

Some Best Practices, but 

Stakeholder Involvement, 

Performance Metrics, and 

Long-term Focus Could Be 

Improved
 

Page 20 GAO-13-95 VA Verification Program 

legislative change may have seemed reasonable at the time, its failure to 

develop a comprehensive strategic plan contributed to programmatic 

inefficiencies. For example, as discussed in greater detail later, VA 

developed the data system for the verification program without fully 

considering its long-term information needs. Resulting shortcomings of 

the system have required CVE to develop inefficient workarounds to 

operate and oversee the program.

After the new OSDBU executive director started in April 2011, OSDBU 

began developing planning documents for 2011 through 2012 that 

covered OSDBU and its three mission areas—the verification program, 

strategic outreach, and acquisition support.39

Based on our review of the strategic plan and the six documents OSDBU 

drew upon to compile it, as well as OSDBU officials’ description of the 

process they undertook to develop these documents, OSDBU appears to 

have at least partially applied the six leading federal strategic planning 

practices that we previously identified, as described below.

After we asked VA about 

the lack of a strategic plan for the verification program, OSDBU officials 

compiled the separate OSDBU planning documents into a single 

document and updated them to include some milestones, tasks, and 

metrics for 2013. VA officials said that they considered this document to 

be the strategic plan for OSDBU and the foundation of its efforts for fiscal 

year 2013, and found that the compiled document could serve as a more 

comprehensive basis for future planning.

40

• Defining the mission and goals. The plan provides OSDBU’s primary 

mission and alludes to the components of the mission for the 

verification program (verifying eligible firms and preventing ineligible 

firms from being verified), but does not explicitly describe the 

 

39Strategic outreach includes activities such as a National Veteran Small Business 

Conference, vendor outreach events, and providing federal contracting information and 

assistance to SDVOSBs. Acquisition support includes activities such as supporting VA’s 

small business goal achievement, maintaining VA’s Forecast of Contracting Opportunities, 

and training VA acquisition staff on small business-related rules and processes.

40Because VA prepared the initial strategic planning document as we were completing our 

draft report, we did not conduct a comprehensive review of the strategic plan, the 

supporting documents that VA provided, or the process that VA undertook to develop 

these documents. 
 

Page 21 GAO-13-95 VA Verification Program 

verification program’s mission.41 The plan identifies broad, long-term 

goals for OSDBU, which according to OSDBU officials were initially 

intended to be achieved by 2012. These goals include achieving a 

sustainable organizational structure to support its mission and ensuring 

compliance with all statutory requirements. Long-term objectives for the 

verification program include, among other things, meeting all regulatory 

requirements, providing quality customer experience, certifying CVE’s 

processes and staff, and preventing ineligible firms from being verified 

through rigorous quality control. As we have previously reported, goals 

in strategic plans should ideally explain what results are expected and 

when to expect those results. Thus, such goals are an outgrowth of the 

mission and are often results-oriented.42

• Defining strategies that address management challenges and identify 

resources needed to achieve goals. The planning documents identify 

management challenges that affect the verification program, such as 

human capital and technology. For example, the planning documents 

note that verification staff need training on the verification 

requirements. While the compiled strategic plan does not identify the 

specific resources necessary to overcome these challenges, it lays 

out strategies with more specific tasks to address them, such as 

developing and conducting staff training for verification.

However, based on the broad 

wording of some of the goals and objectives for the verification 

program, assessing whether they have been accomplished and the 

results achieved would be difficult.

• Ensuring leadership involvement and accountability. According to 

OSDBU officials, more senior VA officials were aware of OSDBU’s 

long-term goals, and OSDBU regularly briefed VA’s Chief of Staff and 

other senior VA officials on its plans and progress. However, while 

OSDBU compiled the strategic plan itself in late October 2012, it had 

 

41OSDBU’s primary mission, as articulated in VA’s agency-wide strategic plan for 2011-

2015, is to “expand small business participation in federal procurement opportunities 

through aggressive OSDBU outreach, enhanced verification, analysis, outreach, training, 

program modernization, and IT enhancements.” The draft interim report of the senior 

executive task force reviewing the verification program states that the mission of the 

verification program is to “implement [the verification program regulation], enabling eligible 

veteran owned small businesses (VOSB) to gain access to the VA Veterans First program 

while preventing ineligible firms from doing so.” 

42GAO, Agencies’ Strategic Plans Under GPRA: Key Questions to Facilitate 

Congressional Review, GAO/GGD-10.1.16 (Washington, D.C.: May 1997).
 

Page 22 GAO-13-95 VA Verification Program 

not yet been reviewed or approved outside of OSDBU as of early 

November 2012, and we could not assess whether or how senior VA 

leaders would be involved in monitoring its implementation.43

• Involving stakeholders. OSDBU officials said that they had briefed 

stakeholders, including congressional staff and committees, while 

developing the initial planning documents for 2011 and 2012 that 

formed the basis for OSDBU’s strategic plan. The officials said that 

OSDBU’s planning was informed by extensive feedback on the 

verification program from the VA acquisition community, 

congressional staff and committees, veteran support organizations 

and business associations, and veteran-oriented media, as well as 

through direct contact with applicants. However, since the strategic 

plan was only recently compiled in response to our review, VA had not 

shared the plan with key stakeholders, thus missing an opportunity to 

promote transparency of the verification program’s plans and priorities 

and to facilitate continued stakeholder involvement.

To help 

hold managers accountable for elements in the plan, OSDBU officials 

said that the Executive Director met regularly with staff to discuss their 

plans and performance. For example, the officials said that OSDBU 

and CVE officials hold weekly meetings to discuss the status of the 

verification program and applications reviewed.

• Coordinating with other federal agencies. OSDBU officials said that 

they met with officials from other agencies’ OSDBUs prior to the 

development of the planning documents to discuss the verification 

program, in particular the program’s potential government-wide 

expansion.44 An official said that they did not coordinate with SBA—

which administers the government-wide SDVOSB contracting 

program and certifies the eligibility of firms for other government-wide 

contracting programs—when they were developing the planning 

documents.45

 

43According to VA officials, the agency is developing a schedule to brief VA senior leaders 

and other key stakeholders when the plan is completed.

44All federal agencies with procurement authority are required by law to have an OSDBU 

that works specifically on contracting issues for these businesses. 15 U.S.C. § 644(k). 

45VA and SBA officials have met to discuss the alignment of regulations and 

interpretations.
 

Page 23 GAO-13-95 VA Verification Program 

• Developing and using performance measures. The strategic plan that 

OSDBU compiled contained “metrics” related to the verification 

program that consisted of a combination of output, efficiency, and 

customer service measures but lacked quality and outcome measures 

aligned with long-term goals.46 Over 80 percent of the metrics in the 

plan (31 of 38 items) related to the implementation of a specific task 

rather than whether the desired outcomes are being achieved.47 For 

example, the verification-related metrics for 2013 include “provid[ing] 

improved training of CVE staff” and “review[ing] fraud training program 

with OIG,” in support of a strategy to improve the capability of CVE 

staff to perform accurate and timely evaluation of applications and 

detect misrepresentation and fraud. But the plan does not identify 

measures that could be used to assess the impact of the identified 

long-term goals and strategies, such as a reduction in the number of 

examinations that are not properly completed. As previously 

discussed, CVE has begun tracking staff productivity levels and more 

closely monitoring the quality of their work, but these measures are 

not included in the strategic plan.48

 

46We have previously defined various types of measures as: performance measures that 

tell us how many things we produce or services we provide (output measures); 

performance measures that tell us if we are operating efficiently (efficiency measures); 

performance measures that tell us whether or not we are satisfying our customers 

(customer service measures); performance measures that tell us about the quality of the 

products or services we provide (quality measures); and performance measures that 

would demonstrate to someone outside of our agency whether or not we are achieving our 

intended results (outcome measures). See GAO, Results-Oriented Government: GPRA 

has Established a Solid Foundation for Achieving Greater Results, 

Recognizing some of the 

GAO-04-38 

(Washington, D.C.: Mar. 10, 2004).

47We have previously reported that performance measures should demonstrate results, 

provide useful information for decision making, and be aligned with an agency’s goals and 

mission. See GAO, Tax Administration: IRS Needs to Further Refine Its Tax Filing Season 

Performance Measures, GAO-03-143 (Washington, D.C.: Nov. 22, 2002). In addition to 

measures contained in the OSDBU Strategic Plan, the VA strategic plan identifies two 

formal evaluative metrics that relate to the verification program: the percent of initial 

verification applications in the VIP database that are processed and decided within 90 

days of receipt, and the percent of renewal verification applications that are processed 

within 60 days. 

48While the strategic plan does not identify all of these measures, VA staff track the status 

of individual applications, staff productivity levels, and some programwide statistics, such 

as the number of requests for reconsideration; applications approved, denied, withdrawn, 

or open; applications that exceed goals for processing times; and site visits conducted. VA 

officials told us, however, that data limitations prevented them from obtaining accurate 

measures of processing times directly from the data system and instead staff must use 

spreadsheets to manually track the processing time for each application to calculate these 

metrics. 
 

Page 24 GAO-13-95 VA Verification Program 

challenges with its existing measures, VA has undertaken a recent 

initiative with a university to improve OSDBU’s performance 

measures. OSDBU officials expected to incorporate these measures 

into future planning efforts.

Lastly, OSDBU’s initial strategic planning effort was more short-range 

than long-range in focus. GPRAMA requires that agency-level strategic 

plans cover at least a 4-year period.49 The planning documents that 

OSDBU developed in 2011 only covered 2011 through 2012 because 

they expected the program to have achieved its initial long-term goals 

within that time, according to OSDBU officials. In compiling the strategic 

plan to respond to our enquiries, OSDBU officials told us that they 

recognized the value of expanding the coverage of the plan to include 

strategies and metrics for activities to be completed in 2013. But the plan

did not include strategies and metrics beyond 2013. The longer-term 

focus of a strategic plan is one of the key distinctions from a performance 

plan that focuses on annual goals and measures. Without a longer-term 

perspective, the current strategic plan serves as more of a short-term 

management plan rather than as a longer-term guide to help frame the 

needs and direction of the verification program.

The verification program’s current data system lacks certain data fields 

and reporting and workflow management capabilities needed to provide 

key information for program management. We have previously reported 

that an agency must have relevant, reliable information to run and control 

its operations.50

Since the verification program began in 2008, VA has relied on data 

systems that it developed on an incremental, ad hoc basis in response to 

immediate needs, without an overarching plan or vision, and without 

centralized oversight by VA’s Office of Information and Technology 

More specifically, we have noted that pertinent 

information should be identified, captured, and distributed to the right 

people in sufficient detail, in the right form, and at the appropriate time to 

enable them to carry out their duties and responsibilities efficiently and 

effectively.

 

49Pub. L. No. 111-352 § 2 (codified at 5 U.S.C. 306(b)). 

50GAO, Internal Control Management and Evaluation Tool, GAO-01-1008G (Washington, 

D.C.: August 2001). 

Information Technology 

Limitations Have 

Hampered VA’s Ability to 

Manage the Verification 

Program
 

Page 25 GAO-13-95 VA Verification Program 

(OI&T). As stated earlier, VA initially did not develop a strategic plan that 

might have provided a framework for envisioning the verification 

program’s information needs from the outset. Rather, VA initially modified 

its existing VIP database to address only its immediate need to accept 

firms’ application forms and identify verified firms. VA staff also created a 

separate database to track the results of checks that it used to verify that 

firms met its basic eligibility requirements, such as veteran and servicedisability status.51 When VA began requiring firms to submit a 

standardized set of documents under the 2010 process, these documents 

were collected in a variety of formats, and paper copies had to be 

manually uploaded to CVE secure servers, according to VA officials.52

According to VA, in some cases documentation was shredded to protect 

confidential information without first being uploaded to the server. In 

response to these problems, VA hired a contractor to develop the 

Verification Case Management System (VCMS), which went online in 

2011. VCMS was integrated with VIP to enable VA to better track and 

retrieve documents and manage the verification process. According to VA 

officials, the project was managed by the program office because VIP and 

VCMS were funded by VA’s Supply Fund, and not through appropriated 

information technology funds, which are overseen by OI&T.53

The resulting VIP/VCMS system aids in performing some tasks. For 

example, VIP/VCMS allows applicants to upload documents directly into 

the web-based system, and applicants and VA to track applicants’ broad 

phase of review (i.e., initiation, examination, or evaluation). VA staff and 

contractors can also use VIP/VCMS to send and maintain a record of 

emails to the applicant to, for example, request additional documentation, 

provide status updates, or send the determination letter. The system also 

allows VA officials to run some reports, such as the number of initial 

applications and requests for reconsideration that have been approved, 

 

51Under the 2006 Act process VA generally only collected information related to the 

ownership and veteran status of applicant firms; it did not systematically collect business 

documents from firms.

52When VA began accepting documents, applicants could submit their information through 

faxes, mail, and compact discs.

53CVE, and its IT resources, are funded through the Supply Fund, which is funded with 

nonappropriated dollars. The Supply Fund is a revolving fund that supports VA’s mission 

by the operation and maintenance of a supply system, including procurement of supplies, 

equipment, personal services, and the repair and reclamation of used, spent, or excess 

personal property.
 

Page 26 GAO-13-95 VA Verification Program 

denied, withdrawn or completed by year as well as the open applications 

that have been in the system for more than 90 days.

However, VIP/VCMS has significant shortcomings that could have been 

avoided with better planning for and oversight of the system’s 

development. Specific areas with remaining shortcomings include the 

following:

• Data fields. VA officials said that, because of the need to get a system 

in place quickly, the responsible staff at the time did not consider all of 

the data elements that would be useful for monitoring program trends 

and staff performance and did not plan for future phases that would 

add more data fields. For example, VCMS did not include data fields 

to track the reasons for denial (i.e., specific eligibility, ownership, or 

control issues); the basis for requests for reconsideration and their 

outcomes; and the incidence and reasons for applications being 

returned to a lower level of the process for rework or for a reversal of 

a contractor or staff member’s recommendation to approve or deny an 

application. VCMS also lacks fields to facilitate monitoring the reasons 

for and results of customer service inquiries.

• Reporting. VCMS currently also allows only limited reporting, and 

users cannot always customize their search criteria to obtain data in 

the form they need to monitor the program. We noted in our August 

2012 report that VCMS’s limited reporting capabilities, and the lack of 

certain data within the system, resulted in inconsistent aggregate 

reporting and made tracking the inventory of firms difficult for VA.54

• Workflow management. VCMS has the capability to track which broad 

phase of the verification process an application is in and to record 

which staff completed certain actions in the system, but it does not 

meet VA staff or contractors’ needs for assigning and monitoring the 

progress of applications. As a result, the contractor that initially 

examines applications relies on a workflow management system 

outside of VCMS to assign and track applications as they move 

In 

response, VA conducted a laborious process to develop a manual 

inventory of firms that have been verified under the 2006 and 2010 

Act processes and the dates that those firms were verified, which VA 

staff could not obtain directly from VCMS.

 

54GAO-12-697. 
 

Page 27 GAO-13-95 VA Verification Program 

through the steps of the examination phase. Similarly, each of the 

team supervisors that we talked to has created spreadsheets to track 

the status of applications as their team reviews them. The reliance on 

these other systems is inefficient and increases the risk that data will 

not be completely or accurately recorded across systems.

In addition, VCMS experienced periodic outages following its initial launch 

in 2011 and after its most recent modification. According to VA officials, 

VCMS crashed almost immediately after its launch in May 2011 because 

it could not handle the volume of data that VA began receiving. The 

system was also off-line for a month in September 2011 following another 

modification. During these outages, firms that had a contract pending and 

needed to be verified in order to receive the contract could be manually 

processed on a case-by-case basis.55 More recently, VCMS was 

unavailable from May 9 to June 6, 2012, during which time applicants 

could not submit new applications, and staff could not request additional 

documentation through the system. This outage was caused by a security 

problem that was identified in routine testing by OI&T as VA was 

preparing to launch a modification to the system.56

VA is in the process of planning to either modify or replace the current 

version of VCMS to address the identified shortcomings, but this planning 

effort has not been tied to broader long-term strategic planning for the 

verification program. VA officials have identified elements that the next 

iteration of VCMS should include. For example, the officials would like the 

program to automate some aspects of the background company research 

and generally make the verification process less burdensome on 

veterans. Following the program outage in May 2012, verification program 

officials began reaching out to OI&T for assistance in overseeing both the 

current system and a potential modification or replacement. These 

discussions received further emphasis through the previously discussed 

senior executive task force, which included representatives of OI&T. As a 

result of an expected recommendation by the task force, OI&T assigned 

staff in July 2012 to begin formally planning for either a modification or a 

replacement system, a process that OI&T will manage. VA is considering 

 

55While VCMS was not operating, CVE staff worked manually to process the backlog of 

applications that had been previously submitted.

56While OI&T did not manage the development of VCMS, VA officials said that the system 

has been subject to mandatory information security testing before the system and any 

modifications became operational.
 

Page 28 GAO-13-95 VA Verification Program 

short- and long-term information needs as it defines the business 

requirements for the system. But, as we have seen, the initial strategic 

plan that OSDBU developed in late October 2012 does not specify 

longer-term goals for the verification program or define program 

strategies and activities beyond 2013. Without tying the effort to modify or 

replace the verification program’s data system to more comprehensive, 

long-term strategic planning, the resulting system risks again failing to 

meet the verification program’s long-term needs and goals.

Expanding VA’s verification program to support the government-wide 

SDVOSB contracting program would require VA to increase the scale of 

its program to verify potentially thousands of additional firms. VA has 

faced ongoing challenges implementing its verification program, and it 

would need to continue to stabilize and improve its verification operations 

by addressing remaining vulnerabilities to fraud and abuse, 

demonstrating whether recent operational changes have resulted in 

improved performance and whether new methods for educating 

applicants are effective, and addressing data system limitations.57

VA has not formally projected how many firms it might need to verify 

under a government-wide SDVOSB verification program, and a number of 

factors make such a projection difficult. For example, the scale of a 

program would depend on whether firms would be required to obtain 

verification to bid on contracts or only to receive contract awards, how 

likely firms that are already self-certified as SDVOSBs would be to seek 

verification if it were required, and how many new or existing SDVOSBs 

that have not yet self-certified might seek verification in the future. 

Also, 

as VA revises its verification program regulation, it is considering policy 

issues that would impact a government-wide verification program.

 

57In 2009, we suggested that Congress consider providing VA with the authority and 

resources necessary to expand its SDVOSB eligibility verification process to all 

contractors seeking to bid on SDVOSB contracts government-wide (see GAO-10-108). 

Such an action is supported by the fact that VA maintains the database identifying servicedisabled veterans and is consistent with VA’s mission of service to veterans. For purposes 

of this report, we were asked to consider steps necessary for VA to expand its verification 

program government-wide. Accordingly, we did not evaluate whether another agency, 

such as SBA, could or should assume responsibility for such a program. Also, we focused 

on the potential for a government-wide verification program that would apply only to 

SDVOSBs (not all VOSBs), because they are the subject of government-wide contracting 

goals and preferences and because a recent legislative proposal for a government-wide 

verification program would have applied only to SDVOSBs.

Expanding Its 

Verification Program 

Government-wide 

Would Require VA to 

Improve the Program 

and Address Policy 

Issues
 

Page 29 GAO-13-95 VA Verification Program 

Nonetheless, we developed rough order of magnitude estimates of how 

many more SDVOSBs—beyond those that VA has already verified or was 

in the process of verifying as of September 30, 2012—might seek 

verification if it were required government-wide, as follows.58

• We estimated that about 3,600 self-certified SDVOSBs with recent 

federal contracts with agencies other than VA would be the most likely 

to seek verification in order to continue to seek or win federal 

contracts.59

• We also estimated that nearly 12,800 self-certified SDVOSBs without 

recent contract obligations might also apply for verification.60

 

58Some of the firms included in our estimates might seek verification under VA’s existing 

program regardless of whether a government-wide program were adopted, so our 

estimates are presented only as a snapshot based on the current scale of VA’s program. 

In developing our estimates of the additional number of firms that VA might need to verify 

under a potential government-wide program, we excluded 4,519 verified SDVOSBs in the 

VIP database and 479 SDVOSBs with pending applications for initial verification or 

reverification or requests for reconsideration as of September 30, 2012. We did not 

exclude from our estimates firms that VA has already denied verification, because they 

generally would be eligible to reapply for verification after 6 months under VA’s current 

regulations. 

However, we could not determine how many of these firms had been 

actively seeking contracts or how likely they would be to do so in the 

59The estimate of 3,600 firms is based on the number of self-certified SDVOSBs (i.e., 

registered in CCR but not yet under review or verified by VA as of September 30, 2012) 

that received contract obligations from agencies other than VA in fiscal years 2010 or 

2011 (the last full fiscal year available), according to FPDS-NG. About 1,300 additional 

SDVOSBs received contract obligations from VA in fiscal years 2010 or 2011 but were not 

verified or under review as of September 30, 2012. (VA did not require firms to be verified 

prior to receiving a contract award until Jan. 1, 2012). If a government-wide program were 

adopted and these 1,300 firms had not yet been verified in order to continue to receive VA 

contracts, they might also seek verification in order to obtain other federal contracts.

60The estimate of 12,800 firms is based on the number of self-certified SDVOSBs (i.e., 

registered in CCR but not yet verified by VA as of Sept. 30, 2012) that did not receive 

contract obligations in fiscal years 2010 or 2011 (the last full fiscal year available), 

according to FPDS-NG.
 

Page 30 GAO-13-95 VA Verification Program 

future. As a result, predicting how many would actually be motivated 

to seek verification if it were required is difficult.61

• Beyond firms that have already registered as prospective federal 

contractors, thousands of existing or new SDVOSBs could eventually 

register and seek verification if it were required. We did not identify a 

current estimate of the number of SDVOSBs in the United States. 

However, an SBA analysis of data from the Census Bureau’s 2007 

Survey of Business Owners found that there were around 200,000 

service-disabled veteran-owned businesses (of any size) at that time.62

Considering the additional operational challenges that VA would face in 

preparing to verify potentially thousands of additional firms, VA would 

need to continue to address existing program weaknesses to stabilize

and improve its verification program. Our prior and current work indicates 

that several aspects of VA’s current verification program, specified below, 

would have to be addressed before the program could be effectively 

implemented government-wide.

• Internal controls and fraud prevention and detection. In August 2012, 

we suggested that expanding the verification program governmentwide should not be considered until VA demonstrates that it has 

reduced its own program’s vulnerability to fraud and abuse.63

 

61As discussed, we focused our analysis on a potential government-wide SDVOSB 

verification program. If a government-wide verification program also required other 

(nonservice-disabled) VOSBs to be verified, we estimated that an additional 12,500 other 

self-certified VOSBs with federal contract obligations in fiscal years 2010 or 2011 and 

24,100 other self-certified VOSBs without contract obligations in those years might also 

apply for verification.

We 

reported that VA had taken some positive action to enhance its fraud 

prevention efforts by establishing processes in response to 6 of 13 

recommendations we issued in October 2011, including conducting 

unannounced site visits to high-risk firms and developing procedures 

for referring suspicious SDVOSB applications to the OIG. However, 

the remaining 7 prior recommendations, including removing contracts 

from ineligible firms and formalizing procedures to advertise 

62U.S. Small Business Administration, Office of Advocacy, Veteran-owned Businesses 

and their Owners—Data from the Census Bureau’s Survey of Business Owners 

(Washington, D.C.: March 2012). SBA reported that there were more than 2.1 million 

nonservice-disabled veteran-owned businesses (of any size) in 2007.

63GAO-12-697. 
 

Page 31 GAO-13-95 VA Verification Program 

debarments and prosecutions of firms found to be misrepresenting 

their SDVOSB status, had not been implemented. As of January 4, 

2013, we were reviewing documentation that VA had recently 

provided to determine whether VA’s actions are sufficient to consider 

some of the recommendations implemented.

• Operations. A major expansion of the verification program would have 

a greater chance at success if its priorities and operations were more 

stable and if the recent changes that VA adopted were shown to have 

improved the program’s performance. For example, the steps VA has 

taken to standardize its procedures and make them more efficient, 

improve its quality assurance process, and enhance training of CVE 

employees and contractors are promising. However, it is too soon for 

us to test the effectiveness of these evolving procedures, and it is not 

clear whether VA will adopt further significant changes as a result of 

the recommendations of the senior executive task force reviewing the 

verification program.

• Applicant Education. Because a government-wide program would 

potentially affect thousands of additional firms, VA would need to have 

in place effective methods for educating business owners about the 

program and for obtaining and responding to their feedback. VA 

officials suggested that the agency’s recent efforts to clarify online 

guidance for applicants and to partner with organizations to better 

educate applicants about the verification requirements were intended to 

help firms understand the rationale for the required documentation and 

explain how VA interprets the documents submitted in making its 

determinations. The officials described plans for collecting the data they 

would need to evaluate these efforts, which included assessing 

whether denial rates differed for firms that used the online guidance or 

received assistance from a partner organization and those that did not.

• Information technology. As we noted earlier, the limitations of the 

verification program’s information system (VIP/VCMS) have 

hampered VA’s ability to effectively manage, monitor, and report on 

the program’s operations and results. Addressing these limitations by, 

for example, ensuring that the information system collects the data 

needed to monitor the consistency and accuracy of VA’s 

determinations, allows customized reporting to meet managers’ 

needs, and supports efficient workflow management would also help 

position VA to manage an expanded government-wide program. 

Furthermore, CVE and OI&T officials said that, in planning to modify 

or replace VIP/VCMS, they were factoring in the potential need for the 

system to have the capacity and flexibility to expand to a government-
 

Page 32 GAO-13-95 VA Verification Program 

wide scale and to be adapted for automated interagency information 

sharing. For example, the officials said they were planning to consider 

how to enable contracting officers from other agencies to determine 

whether an SDVOSB was verified without having to manually search 

for the firm in VIP.

In addition, VA has begun a process to revise the verification program’s 

regulations, which would likely serve as the starting point if VA were 

charged with implementing a government-wide verification program. VA 

officials said that they were planning to revise the regulations partly in 

response to applicants’ and veterans’ organizations concerns about VA’s 

eligibility standards. For example, two veterans’ organizations questioned 

VA’s regulatory requirement that veteran owners be able to transfer their 

ownership interest without restriction by nonveteran owners, effectively 

suggesting that VA’s standard for establishing control of a firm is too 

strict. The organizations stated that because nonveteran owners might 

reasonably expect to have a say in such transfers, the requirement limited 

the ability of SDVOSBs and VOSBs with nonveteran minority owners to 

participate in the Veterans First program. VA officials said that they would 

weigh this and other concerns as they developed proposed revisions to 

the regulation, a process that they expected to result in a final rule by 

mid-2014.

Any changes to VA’s verification requirements could create or widen 

differences between the various government-wide small business 

contracting programs’ requirements and VA’s, a consideration that would 

likely be of even greater importance if VA’s verification program were 

expanded. In addition to the government-wide SDVOSB program, federal 

contracting preference programs give federal agencies the authority to set 

aside contracts for small business concerns and specific types of small 

businesses: women-owned small businesses, businesses located in 

historically underutilized business zones (HUBZone), and socially and 

economically disadvantaged small businesses participating in SBA’s 8(a) 

program. While the SDVOSB and women-owned small business 

programs allow firms to self-certify their eligibility, SBA reviews supporting 

documentation to certify HUBZone and 8(a) firms, with the 8(a) program 

requiring more extensive documentation similar to what is required under 

VA’s verification program. (See app. IV for a description of these 

programs and their verification requirements.) Some veterans’ 

organizations and others with whom we spoke have cited perceived 

differences between VA’s eligibility standards and SBA’s standards for 

the government-wide SDVOSB program and the 8(a) program, whose 

certification process is most similar to VA’s verification program.
 

Page 33 GAO-13-95 VA Verification Program 

However, VA and SBA officials worked together to compare the three 

programs’ regulations and VA’s and the 8(a) program’s documentation 

requirements. Initially, VA and SBA officials told us that they did not find 

major differences in the programs’ regulatory eligibility requirements, the 

agencies’ interpretation of them, or the documentation requirements for 

verification. In commenting on a draft of this report, SBA subsequently 

stated that, while the wording of the regulations pertaining to eligibility

requirements was comparable, there was a distinction regarding 

ownership by spouses of disabled veterans.

64 SBA also stated in its 

comment letter that there were some key differences in how the agencies 

interpreted the regulations and that the agencies were consulting with one 

another to determine whether those differences could or should be 

resolved. Going forward, if VA adopts unilateral changes to its verification 

policies and procedures, these changes could have the effect of making it 

more difficult to align the programs. VA officials told us that the tension 

between competing calls for VA to ease its requirements and to be 

consistent with the government-wide SDVOSB and 8(a) programs would 

be a major consideration as VA considered changes to its regulations—

particularly considering the potential for a government-wide SDVOSB 

verification program. Accordingly, the officials said that they were 

consulting with SBA as they began to develop proposed changes to VA’s 

verification program regulation.

The opportunity to receive set-aside or sole-source contract awards under 

the Veterans First program is a significant benefit that provides billions of 

dollars in contracts annually to SDVOSBs and VOSBs. As a result, the 

program warrants strong internal controls to provide reasonable 

assurance that the contracts VA enters into are awarded to eligible firms. 

At the same time, an inherent tension exists between the need for 

effective internal controls and the Veterans First program’s goal of 

increasing contracting opportunities for SDVOSBs. If VA fails to correctly 

verify eligible firms, or if firms’ concerns about the verification process 

deter them from applying, VA’s ability to sustain its high levels of 

contracting with SDVOSBs and VOSBs could ultimately be at risk. VA has 

made progress toward reducing its vulnerability to fraud and abuse, and 

CVE’s new management team has initiated a variety of operational 

 

64By statute, firms owned and controlled by surviving spouses of deceased veterans may 

be eligible for verification by VA (38 U.S.C. § 8127(h)), but they are not eligible under 

SBA’s regulations for the SDVOSB program. 

Conclusions
 

Page 34 GAO-13-95 VA Verification Program 

changes in an effort to improve the program. VA has also initiated efforts 

to develop a comprehensive strategic plan for the verification program. 

This initial strategic planning effort represents a positive step that appears 

to have at least partially applied key leading federal strategic planning 

practices. However, the initial plan includes only goals intended to be met 

within 2 years, and many of the performance measures focus on the 

implementation rather than the outcomes of activities. Additionally, VA 

has not shared the plan with key stakeholders. As it continues to develop 

and refine its strategic plan, VA could strengthen its effort by ensuring 

that the plan articulates results-oriented, long-term goals and objectives 

for the verification program, that the metrics are focused on outcome 

measurements that can be used to monitor the verification program’s 

performance and demonstrate results, and that key stakeholders are 

involved in evaluating the plan.

The initial lack of a comprehensive strategic plan for the verification 

program has also contributed to the development of a data system that 

has proven to be inadequate. The system does not collect data for 

monitoring program trends and staff performance, has limited reporting 

and workflow management capabilities, and has been unable to accept 

applications for extended periods, hindering VA’s ability to operate and 

monitor the verification program. VA has started taking steps to address 

the shortcomings in the data system by shifting responsibility for 

developing plans to enhance or replace VCMS from CVE to OI&T. But 

without tying that effort to long-term strategic planning, VA risks failing to 

meet the program’s information needs going forward.

As VA revises its verification program regulations and considers the 

relationship between its policies and those of other federal small business 

contracting preference programs, the agency faces a tension between 

competing calls to reduce the burden on applicants and to be vigilant in 

preventing and detecting fraud. This tension would underlie a 

government-wide SDVOSB verification program as well. Addressing 

these policy issues for its own program—or ultimately for a governmentwide verification program—will require VA to weigh certain tradeoffs. 

These include deciding how to reduce the administrative burden that the 

verification process places on eligible firms and maintain sufficient fraud 

prevention and detection controls to provide reasonable assurance that 

the billions of VA contract dollars set aside for SDVOSBs and VOSBs 

reach their intended beneficiaries.
 

Page 35 GAO-13-95 VA Verification Program 

To improve the management and oversight of VA’s SDVOSB and VOSB 

verification program, we recommend that the Secretary of Veterans 

Affairs take the following two actions:

• Direct OSDBU to continue to develop, refine, and implement a formal 

strategic plan to provide a comprehensive framework to guide, 

integrate, and monitor the verification program’s activities over time. 

As OSDBU refines the strategic plan, it should incorporate longerterm goals and objectives for the verification program. The plan 

should also incorporate outcome measures that OSDBU can use to 

better monitor the verification program’s progress and demonstrate its 

results. OSDBU should also share the plan with key stakeholders.

• Direct OSDBU and OI&T, as they modify or replace the verification 

program’s data system, to integrate their efforts with OSDBU’s 

broader strategic planning effort for the verification program to ensure 

that the new system not only addresses the short-term needs of the 

program but also can be readily adapted to meet longer-term needs.

We provided a draft of this report to the Department of Veterans Affairs 

and the Small Business Administration for comment. In its written 

comments, VA generally agreed with GAO’s conclusions and concurred 

with the two recommendations. VA stated that it had actions under way 

that would address each recommendation. VA indicated that it anticipated 

submitting a strategic plan to the Office of the Secretary in fiscal year

2013 and would develop a schedule to brief VA senior leaders and other 

key stakeholders once the plan is approved. VA also provided additional 

information about its efforts to replace the verification program’s data 

system. VA noted that it had begun the process of replacing the existing 

system and had developed a work statement for the replacement system. 

VA also provided technical comments that we incorporated as appropriate 

into the report. In its technical comments, VA disagreed with the status of 

some of the prior GAO recommendations that we noted had not been fully 

implemented, including the provision of regular fraud awareness training 

and unannounced random and risk-based audits of verified firms to 

ensure compliance with the program rules. We have revised the report to 

indicate that, as of January 4, 2013, we were reviewing documentation 

provided by VA in December 2012 to determine if VA’s actions taken to 

address some of our prior recommendations are sufficient to consider 

them implemented. We also noted that we will continue to review 

documentation provided by VA in the future to assess whether the 

remaining recommendations have been implemented. 

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
 

Page 36 GAO-13-95 VA Verification Program 

In its written comments, SBA provided additional information on its views 

on eligibility requirements for VA’s Veterans First Contracting Program, the 

government-wide SDVOSB contracting program, and the 8(a) program. In 

particular, SBA stated that a statement in our draft report was not 

accurate—specifically, our comment that VA and SBA did not find major 

differences in the programs’ eligibility requirements, the agencies’ 

interpretation of the requirements, or the documentation required for 

verification. SBA noted that, statutorily, surviving spouses of disabled 

veterans might be eligible for VA verification but that they were not eligible 

under SBA’s regulations for the government-wide SDVOSB program. SBA 

also noted that it provided an avenue of appeal through its SDVOSB status 

protest and 8(a) eligibility processes but that VA did not have a similar 

appellate procedure. Finally, SBA stated that the wording of the regulations 

pertaining to VA’s and SBA’s eligibility requirements was similar but that 

there were some key differences in interpretation that the two agencies 

were reviewing. We have revised our discussion of VA’s and SBA’s effort 

to compare the programs’ eligibility and documentation requirements, citing 

the difference noted by SBA with respect to the eligibility of surviving 

spouses and noting that the agencies were consulting with each other to 

determine whether differences of interpretation could or needed to be 

resolved. We also added clarifying language in appendix I describing how 

we obtained information on VA and SBA efforts to compare program 

regulations. In addition, we clarified the differences between SBA’s and 

VA’s status protest mechanisms in appendix IV. VA’s and SBA’s comments 

are reprinted in appendixes V and VI. 
 

Page 37 GAO-13-95 VA Verification Program 

We are sending copies of this report to the appropriate congressional 

committees, the Administrator of SBA, the Secretary of Veterans Affairs, 

and other interested parties. In addition, the report will be available at no 

charge on the GAO website at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

me at (202) 512-8678 or shearw@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made key contributions to this report 

are listed in appendix VII.

William B. Shear

Director

Financial Markets and Community Investment
 

Page 38 GAO-13-95 VA Verification Program 

List of Requesters

The Honorable Patty Murray 

Chairman

Committee on Veterans’ Affairs

United States Senate

The Honorable Claire McCaskill

Chairman

Ad Hoc Subcommittee on Contracting Oversight

Committee on Homeland Security 

and Governmental Affairs

United States Senate

The Honorable Maria Cantwell

United States Senate

The Honorable Bernard Sanders

United States Senate
Appendix I: Scope and Methodology

Page 39 GAO-13-95 VA Verification Program 

Our objectives were to (1) describe and assess the progress that the 

Department of Veterans Affairs (VA) has made in establishing a program 

to verify the eligibility of service-disabled veteran-owned small businesses 

(SDVOSB) and veteran-owned small businesses (VOSB) on a timely and 

consistent basis, and (2) describe the key operational and policy issues 

that VA would need to address should its verification program be 

implemented government-wide. Because VA was introducing significant 

changes to its procedures and operations at the time of our study, we 

determined that evaluating VA’s compliance with its past procedures 

would be of limited value and that testing the effectiveness of verification 

procedures that were still evolving would be premature. We focused 

instead on issues related to planning for and designing the verification 

program and on changes in its management and operations that the 

Center for Veterans Enterprise (CVE) instituted since December 2011.1

To describe and assess the progress VA has made in establishing a 

program to allow it to verify the eligibility of SDVOSBs and VOSBs on a 

timely and consistent basis, we reviewed relevant statutes, regulations, 

and procedures for the verification program. The reviewed regulations 

and procedures included the verification program regulations issued in 

February 2010, an interim final rule issued in June 2012, and the 

Standard Operating Procedures that CVE had adopted as of August 

2012.2

 

1

VA hired a new Executive Director of the Office of Small and Disadvantaged Business 

Utilization (OSDBU) in April 2011 and a new Director of CVE in December 2011, and—

because of turnover and the creation of new positions—nearly all of CVE’s senior staff 

members were hired in 2012. Rather than expecting these staff to provide detailed 

information about changes that occurred before their tenures, we focused on changes that 

CVE instituted since December 2011.

We also reviewed planning and organizational documents, such 

as organizational charts and sample reports from the Verification Case 

Management System (VCMS). We reviewed VA guidance available 

online for applicants, such as an applicant guide, frequently asked 

questions, Verification Assistance Briefs, and an online self-assessment 

tool for prospective applicants. In May and June 2012, we observed three 

training sessions held by VA for the participants in its Verification 

Counseling program, an outreach program that VA launched to assist 

applicant firms. To determine the volume of completed and pending 

applications and their status (pending, withdrawn, approved, or denied), 

we reviewed VCMS data on applications submitted to VA between 

2

75 Fed. Reg. 6098 (Feb. 8, 2010); 77 Fed. Reg. 38181 (June 27, 2012).

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

Page 40 GAO-13-95 VA Verification Program 

November 1, 2011, and September 30, 2012, and VA’s Verification

Master Inventory List, a manually maintained inventory of all verified firms 

that VA uses to supplement VCMS.3

As part of our assessment of the progress VA has made in establishing a 

program to allow it to verify the eligibility of SDVOSBs and VOSBs on a 

timely and consistent basis, we assessed whether VA had used federal 

strategic planning practices in developing the verification program. We 

have previously reported that agency-wide strategic planning practices 

required under the Government Performance and Results Act of 1993 

(GPRA)—which was amended by the GPRA Modernization Act of 2010 

(GPRAMA)

We assessed the data by 

interviewing knowledgeable VA officials, reviewing related documentation, 

and checking the data for illogical values or obvious errors and found 

them to be sufficiently reliable for the purpose of illustrating general 

characteristics of the verification program. We also interviewed officials 

from three of the contractors who perform aspects of the verification 

process—GCC Technologies, LLC; HeiTech Services, Inc.; and Addx 

Corporation—to understand their roles in the verification program, and 

representatives from three veteran service organizations and a technical 

assistance association that were participating in the Verification 

Counseling program–VETForce, American Legion, National Veteran 

Small Business Coalition, and Association of Procurement Technical 

Assistance Centers—to discuss their views on the verification program 

and their expectations of the Verification Counseling program.

4

—can also serve as leading practices for planning at lower 

levels within federal agencies, such as individual programs or initiatives.5

 

3

We chose this period because fiscal year 2012 roughly coincided with the December 

2011 to November 2012 period that was the focus of our work. Fiscal year 2012 began on 

October 1, 2011, but because VCMS was not available for part of the month of October 

2011, VA officials recommended that we exclude from our analysis data on applications 

submitted in October 2011. 

To evaluate the extent to which VA was following leading strategic 

planning practices in relation to the verification program, we selected six 

4

Pub. L. No. 103-62 (August 3, 1993); Pub. L. No. 111-352 (Jan. 4, 2011). GPRAMA

provides federal agencies with an approach to focusing on results and improving 

government performance by, among other things, developing strategic plans. Examples of 

GPRAMA plan components include a mission statement; general goals and objectives, 

including outcome-oriented goals; and a description of how the goals and objectives are to 

be achieved, including the processes and resources required.

5

For example, see GAO, Environmental Justice: EPA Needs to Take Additional Actions to 

Help Ensure Effective Implementation, GAO-12-77 (Washington, D.C.: Oct. 6, 2011). 
Appendix I: Scope and Methodology

Page 41 GAO-13-95 VA Verification Program 

leading practices that we had previously identified as being relevant to 

agencies’ initial strategic planning efforts.6

Table 1: Selected Leading Practices in Federal Strategic Planning

We reviewed a strategic 

planning document that OSDBU compiled in 2012 in response to our 

study, and six planning documents prepared between June 2011 and 

December 2011 that OSDBU officials said provided the basis for the 

strategic plan. We compared these documents, and the planning activities 

associated with them, to the six leading practices, as shown in table 1. 

Because VA prepared the initial strategic planning document as we were 

completing our draft report, we did not conduct a comprehensive review 

of the strategic plan, the supporting documents that VA provided, or the 

process that VA undertook to develop these documents.

Selected leading practice Characteristics

Define the mission and goals A mission statement explains why the agency—or a specific program—exists, what it does, 

and how it does it.

Strategic goals explain the purpose of agency programs and the results—including 

outcomes—that they intend to achieve.

Define strategies that address 

management challenges and identify 

resources needed to achieve goals

Strategies should address management challenges that threaten an agency’s ability to meet 

its long-term strategic goals.

Strategies should include a description of the resources needed to meet established goals.

Ensure leadership involvement and 

accountability

Only an agency’s senior leadership can ensure that strategic planning becomes the basis for 

day-to-day operations.

Successful organizations use formal and informal practices to hold managers accountable 

and create incentives for working to achieve the agency’s goals.

Involve stakeholders Successful organizations involve stakeholders in developing their mission, goals, and 

strategies to help ensure that they target the highest priorities.

Stakeholders can influence success or failure of agencies’ programs.

Stakeholders include: Congress and the administration; state and local governments; 

agency staff; agency customers; interest groups; and the public.

Coordinate with other federal 

agencies

Agencies can coordinate in defining their mission, goals, and strategies to ensure that 

programs contributing to similar results are mutually reinforcing and efficiently employing 

federal funds.

Develop and use performance 

measures

Performance measures allow an agency to track the progress it is making toward its mission 

and goals, provide managers information on which to base their organizational and 

management decisions, and create powerful incentives to influence organizational and 

individual behavior.

Source: GAO-12-77. 

 

6

GAO-12-77. 
Appendix I: Scope and Methodology

Page 42 GAO-13-95 VA Verification Program 

We also assessed the extent to which the verification program’s data 

system provided the information needed to run and control the verification 

program’s operations, a key standard for effective internal controls.7 In 

particular, we focused on the timely availability of pertinent information 

sufficient to enable people to carry out their duties efficiently and 

effectively, a factor that we previously identified as important in assessing 

this standard.8

To describe the key operational and policy issues that VA would need to 

address if its verification program were to be implemented governmentwide, we developed rough order of magnitude estimates of how many more 

SDVOSBs—beyond those that VA had already verified or was in the 

process of verifying as of September 30, 2012—might seek verification if it 

were required government-wide. Specifically, our rough estimates were 

based on the number of self-certified SDVOSBs listed in the Central 

Contractor Registration (CCR) database as of March 2012 that had not yet 

been verified and were not in the verification process based on information 

in VA’s database as of September 30, 2012.

We reviewed data system documentation and reports that 

the system produces and interviewed officials from VA and the 

contractors that perform aspects of the verification process to determine 

how the data system was developed and how VA uses it, and to identify 

the capabilities and limitations of the data system.

9

 

7

To estimate the number of

self-certified SDVOSBs with recent federal contracts with agencies other 

than VA that would be the most likely to seek verification in order to 

continue to seek or win federal contracts, we used the number of these 

self-certified SDVOSBs that received contract obligations from agencies 

other than VA in fiscal years 2010 or 2011 (the last full fiscal year available) 

using the Federal Procurement Data System-Next Generation (FPDS-NG). 

To estimate the number of self-certified SDVOSBs without recent contract 

obligations that might also apply for verification, we used the number of 

self-certified SDVOSBs that did not receive contract obligations in fiscal 

years 2010 or 2011, according to FPDS-NG. These are rough estimates 

since some of the firms included in our estimates might seek verification 

GAO-01-1008G. 

8

GAO-01-1008G. 

9

For verified SDVOSBs that did not appear as self-certified in CCR as of March 2012, we 

cross-referenced the Small Business Administration’s (SBA) Dynamic Small Business 

Search, which includes supplemental information on registered firms that meet SBA’s size 

standard for the firms’ industries. 
Appendix I: Scope and Methodology

Page 43 GAO-13-95 VA Verification Program 

under VA’s existing program regardless of whether a government-wide 

program was adopted. In addition, we could not determine how many of 

these firms have been actively seeking contracts or how likely they would 

be to do so in the future, making it difficult to predict how many would 

actually be motivated to seek verification if it were required. We assessed 

these data by interviewing VA officials knowledgeable about the VA data, 

reviewing documentation related to all of the data systems, and checking 

the data for illogical values or obvious errors and found them to be 

sufficiently reliable for the purpose of illustrating the potential scale of a 

government-wide verification program. We also reviewed our prior work on 

the verification program and that of the VA Office of Inspector General, as 

well as our assessment of the current status of the program, to identify 

issues that VA would need to address in implementing a government-wide 

program. Because of the Small Business Administration’s (SBA) role 

administering the government-wide SDVOSB program, we also interviewed 

VA and SBA staff about how the statutory and regulatory provisions 

implemented by the two agencies compare. In addition, we reviewed SBA 

documents and interviewed SBA staff for their views on a potential 

government-wide verification program.10

For both objectives we interviewed officials in VA’s Office of Small and 

Disadvantaged Business Utilization (OSDBU), CVE, Office of the General 

Counsel, and the Office of Information and Technology to understand their 

historical, current, and expected roles in the verification program. We also 

reviewed prior GAO reports and a VA Office of Inspector General report on 

the verification program and testimonies from congressional hearings on 

the government-wide SDVOSB program and VA’s verification program.

However, the SBA staff said that it 

would be inappropriate for them to comment on VA’s or SBA’s potential 

roles or other considerations in implementing a potential program.

We conducted this performance audit from February 2012 to January 

2013 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

 

10SBA administers the government-wide SDVOSB program, including deciding protests 

that a successful offeror or awardee is not owned and controlled by a service-disabled 

veteran. 
Appendix II: Verification Program Data as of 

September 30, 2012 

Page 44 GAO-13-95 VA Verification Program 

We reviewed VA’s database known as the Verification Case Management 

System (VCMS) to obtain data on the status of initial applications, 

requests for reconsideration, and applications for reverification submitted 

to VA between November 1, 2011, and September 30, 2012. We chose 

this period because fiscal year 2012 roughly coincided with the December 

2011 to November 2012 period that was the focus of our work.1

Based on our analysis of VCMS data, VA received approximately 4,900 

initial applications between November 2011 and September 2012. The 

monthly volume of initial applications fluctuated during this period, with 

VA receiving an average of about 450 initial applications per month. As 

shown in figure 3, approximately 14 percent of the 4,900 initial 

applications submitted during the period were pending a determination as

of September 30, 2012, and another 43 percent had been withdrawn.

Because 

we were primarily interested in the progress that VA had made 

processing applications that were submitted during the period that was 

the focus of our work, we excluded from our analysis applications VA 

processed during the period but that were submitted prior to November 1, 

2011. We used these data to determine the volume of applications that 

VA received between November 1, 2011, and September 30, 2012, and 

their status (pending, withdrawn, approved, or denied) as of September 

30, 2012. Because our analysis included applications that had been 

submitted less than 90 days ago, we expected a significant number of the 

cases to be pending as of September 30, 2012.

2

 

1

Fiscal year 2012 began on October 1, 2011, but because VCMS was not available for 

part of the month of October 2011, VA officials recommended that we exclude from our 

analysis data on applications submitted in October 2011. 

The remaining 43 percent of applications had received a determination 

and, of these, 61 percent were approved and 39 percent were denied.

2

Applicants can withdraw their applications at any time, or VA can withdraw an application 

if the applicant does not respond to requests to provide missing or additional requested 

documentation within 30 days.

Appendix II: Verification Program Data as of 

September 30, 2012
Appendix II: Verification Program Data as of 

September 30, 2012 

Page 45 GAO-13-95 VA Verification Program 

Figure 3: Status of Initial Applications Submitted between November 2011 and

September 2012, as of September 30, 2012

VA received approximately 560 requests for reconsideration during the 

period, according to VCMS data. As shown in figure 4, 27 percent of the 

requests for reconsideration submitted during the period were pending as 

of September 30, 2012, and 4 percent were withdrawn. The remaining 69 

percent of requests for reconsideration had received a determination and, 

of these, 52 percent were again denied, while 48 percent were approved 

based on revisions the applicant made in response to the initial 

determination.
Appendix II: Verification Program Data as of 

September 30, 2012 

Page 46 GAO-13-95 VA Verification Program 

Figure 4: Status of Requests for Reconsideration Submitted between November

2011 and September 2012, as of September 30, 2012

VA received about 690 applications for reverification during the period, 

according to VCMS data. As shown in figure 5, 19 percent of the 

applications for reverification submitted during the period were pending as 

of September 30, 2012, and 11 percent had been withdrawn. The 

remaining 70 percent of applications for reverification submitted during 

the period had been determined as of September 30, 2012, of which 

almost 80 percent were approved.
Appendix II: Verification Program Data as of 

September 30, 2012 

Page 47 GAO-13-95 VA Verification Program 

Figure 5: Status of Applications for Reverification Submitted between November 

2011 and September 2012, as of September 30, 2012
Appendix III: Verification Program 

Organizational Structure, December 2011 and 

October 2012 

Page 48 GAO-13-95 VA Verification Program 

Between December 2011 and October 2012, VA revised the 

organizational structure for the verification program. As shown in figures 6 

and 7, VA officials (1) reorganized and increased the number of 

employees and contractors assigned to the verification process and (2) 

created several new teams including quality assurance, training, records 

management, and customer service. As of October 2012, the verification 

program had about 28 full-time equivalent federal employees and 174 

contractors, an increase of about 3 full-time equivalent staff and 64 

contractors to the verification program since December 2011.1

 

1

In addition, five staff from VA’s Office of General Counsel were also assigned to the 

verification program to review requests for reconsideration and provide legal review.

Appendix III: Verification Program 

Organizational Structure, December 2011 and 

October 2012
Appendix III: Verification Program 

Organizational Structure, December 2011 and 

October 2012 

Page 49 GAO-13-95 VA Verification Program 

Figure 6: Verification Program Organizational Chart as of December 2011

Note: The chart shows authorized positions. Of the government full-time equivalents (FTE), 12 were 

vacant as of December 2011. 
Appendix III: Verification Program 

Organizational Structure, December 2011 and 

October 2012 

Page 50 GAO-13-95 VA Verification Program 

Figure 7: Verification Program Organizational Chart as of October 2012

Note: The chart shows authorized positions. Of the government full-time equivalents (FTE), five were 

vacant as of October 2012. 
Appendix IV: Verification or Certification 

Requirements Associated with Federal Small 

Business Contracting Preference Programs 

Page 51 GAO-13-95 VA Verification Program 

All federal agencies have the authority to set aside contracts for small 

business concerns and for several specific types of small businesses: 

SDVOSBs, women-owned small businesses, businesses located in 

historically underutilized business zones (HUBZone), and socially and 

economically disadvantaged small businesses participating in SBA’s 8(a) 

program (table 2). Some programs are also authorized to make solesource awards to these groups. For the government-wide SDVOSB 

program, business owners are required only to certify their eligibility 

online in the System for Award Management (SAM) and do not need to 

submit any supporting documentation. SBA does not verify the eligibility 

of these firms.1 Women-owned small businesses may obtain certification 

by an entity approved by SBA or self-certify their eligibility online in SAM; 

in either case, the firms must upload supporting documents to SBA’s 

online Women-Owned Small Business Program Repository for potential 

review by contracting officers or SBA. In contrast with these selfcertification programs, SBA must certify firms’ eligibility to receive 

contracts under the HUBZone and 8(a) programs. SBA reviews 

supporting documentation to certify HUBZone and 8(a) firms, with the 

8(a) program requiring more extensive documentation that is similar to 

that required by CVE for its verification program. For each of the 

government-wide small business contracting preference programs except 

for the 8(a) program, SBA provides a “status protest” mechanism for 

interested parties to a contract award to protest if they feel a firm 

misrepresented its eligibility in its bid submission.2 SBA’s status protest 

mechanism for the SDVOSB and women-owned small business 

programs and its certification process for the 8(a) program also provide 

interested parties with an avenue of appeal to SBA’s Office of Hearings 

and Appeals.3

 

1

SAM consolidated and replaced the Central Contractor Registration (a required point of 

registration for contractors and grantees wishing to do business with the government), 

Online Representations and Certifications Application (a system that allows vendors to enter 

representations and certifications for federal contracts), and the Excluded Parties List 

System (a database listing parties excluded from receiving federal contracts and certain 

subcontracts, as well as certain types of federal financial and nonfinancial assistance). 

However, VA’s OSDBU decides any SDVOSB or VOSB 

2

In the 8(a) program, a firm’s size may be protested in connection with an 8(a) set-aside 

contract, or reviewed in connection with a sole-source contract, but a firm’s 8(a) status 

may not be protested. Anyone with credible information calling into question the eligibility 

of an 8(a) concern may bring that to SBA’s attention. 

3

13 C.F.R. §§ 124.206, 125.28, and 127.605. For the HUBZone program, status protest 

decisions may be appealed to the Associate Administrator, Office of Government 

Contracting and Business Development. 13. C.F.R. §126.805. 

Appendix IV: Verification or Certification 

Requirements Associated with Federal Small 

Business Contracting Preference Programs 
Appendix IV: Verification or Certification 

Requirements Associated with Federal Small 

Business Contracting Preference Programs 

Page 52 GAO-13-95 VA Verification Program 

status protests arising from a VA solicitation.4

Table 2: Verification or Certification Requirements Associated with Federal Small Business Contracting Preference Programs

VA does not provide an 

appellate procedure for such decisions.

Small business contracting 

preference program Description Certification requirement 

Service-disabled veteranowned small businesses Contracts may be set-aside or awarded on a sole-source 

basis to small businesses that are majority-owned and 

whose management and daily business are controlled by 

one or more service-disabled veterans. 

Self-certification with no supporting documentation 

required. Contracting officers may accept selfcertification in the absence of a protest or other credible 

information calling a firm’s eligibility into question. SBA 

does not determine a firm’s eligibility except for a protest 

challenging the size, ownership and control, or servicedisability status of a firm in connection with a specific 

contract. 

Women-owned small 

businesses 

Contracts may be set-aside for small businesses in SBAdesignated industries that are majority-owned and whose 

management and daily business are controlled by one or 

more women.

Third-party certification by a federal agency, state 

government, or national certifying entity approved by 

SBA

or 

Self-certification with supporting documentation 

submitted to an online repository in accordance with 

standards set by SBA. 

Contracting officers may accept third-party certification or 

self-certification in the absence of a protest or other 

credible information calling a firm’s eligibility (size or 

ownership and control) into question. SBA does not 

determine eligibility except for a status protest in 

connection with a specific contract or an eligibility 

examination based on allegations or random selection. 

8(a) Minority Small Business 

and Capital Ownership 

Development Program 

Contracts may be set-aside or awarded on a sole-source 

basis to small businesses that are majority-owned and 

whose management and daily business are controlled by 

one or more socially or economically disadvantaged 

individuals and have demonstrated potential for success 

(generally in operation for at least 2 years) 

SBA certification based on an evaluation of required 

documents submitted by the firm. Prior to award, SBA 

reviews the size of certified firms in connection with 

specific contracts, and size may be protested, or a size 

determination may be requested in connection with 

specific contracts.

Businesses located in 

historically underutilized 

business zones (HUBZone) 

Contracts may be set-aside or awarded on a sole-source 

basis to small businesses owned and controlled by 

individuals operating in qualified HUBZones. Principal 

office must be located within a HUBZone and at least 35 

percent of the business’ employees must reside in a 

HUBZone. 

SBA certification based on an evaluation of required 

documents submitted by the firm. The certification 

process may also include a site visit to the firm’s 

purported principal office. SBA also reviews eligibility for 

certified firms for size or status protests in connection 

with specific contracts. 

Source: GAO analysis of relevant statutes, regulations, and program documents.

 

4

Any SDVOSB or VOSB status protest arising out of a VA solicitation, whether raised by 

the contracting officer or an offerer, will be decided by the Executive Director of VA’s 

OSDBU, whose decision will be final. This process will remain in place until VA and SBA 

execute an agreement to allow SBA to decide these protests. 48 C.F.R. § 819.307.SBA’s 

Office of Hearings and Appeals has confirmed VA’s jurisdiction. Size Appeal of HAL-PE 

Associates Engineering Services, Inc., SBA No. SIZ-5391 (2012); Matter of Airborne 

Construction Services, LLC, SBA No. VET-203 (2010); Matter of Reese Goel JV, SBA No. 

VET-199 (2010).
Appendix V: Comments from the Department 

of Veterans Affairs 

Page 53 GAO-13-95 VA Verification Program 

Appendix V: Comments from the Department 

of Veterans Affairs
Appendix V: Comments from the Department 

of Veterans Affairs 

Page 54 GAO-13-95 VA Verification Program 
Appendix V: Comments from the Department 

of Veterans Affairs 

Page 55 GAO-13-95 VA Verification Program 
Appendix VI: Comments from the Small Business 

Administration

Page 56 GAO-13-95 VA Verification Program 

Appendix VI: Comments from the Small 

Business Administration
Appendix VII: GAO Contact and Staff 

Acknowledgments

Page 57 GAO-13-95 VA Verification Program 

William B. Shear, (202) 512-8678 or shearw@gao.gov

In addition to the contact named above, Harry Medina (Assistant 

Director), Emily Chalmers, Pamela Davidson, Julianne Dieterich, Julia 

Kennon, Cory Marzullo, John McGrail, Daniel Newman, Jena Sinkfield, 

James Sweetman, and William Woods made key contributions to this 

report.

Appendix VII: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments

(250657)
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