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. 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. 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. VA’s OSDBU has overall responsibility for the SDVOSB/VOSB verification program. Within OSDBU, the Center for Veterans Enterprise (CVE), maintains a database of eligible SDVOSBs and VOSBs and is responsible for verification operations, such as processing applications. 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.the verification program, see fig. 2.) To be eligible for verification under VA’s rules (For a timeline of major events affecting the small business concern must be unconditionally owned and controlled by one or more eligible parties (veterans, service-disabled veterans, or surviving spouses); 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. 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 adequate explanations for missing documents.to check the Excluded Parties List System to ensure that the applicant business and all owners are not on the list. 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). 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 2010.2008, VA modified its VIP database of self-certified SDVOSBs and After the verification program began in VOSBs to receive verification applications and publicly display names of verified firms. 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. 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. 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. 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. See appendix II for additional data on the verification program as of September 30, 2012. GAO-12-697. 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. 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. 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. 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. 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 sometimes found the rationale for denial to be unclear or inconsistent. 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.