Within VA, its OSDBU has overall responsibility for the SDVOSB and VOSB verification program. OSDBU’s Center for Verification and Evaluation (CVE) maintains the mandated database of verified SDVOSBs and VOSBs and is responsible for verification operations, such as application processing. CVE is led by a director and deputy director, and staff are organized into seven teams that either assist with a verification phase or supporting function. A federal employee leads each team and CVE contracts with several SDVOSBs to provide contractors that conduct verifications and supporting activities. As of January 2016, CVE had 16 federal employees and 156 contract staff (employed by five different SDVOSB contractors) verifying applications or filling supporting roles. CVE and its information technology are funded by VA’s Supply Fund, a fund that recovers its operating expenses through fees and markups on different products or services. CVE’s final obligations for fiscal year 2014 were $17.9 million and its approved budget for fiscal year 2015 was $16.1 million, representing a decrease of about 10 percent ($1.8 million). VA developed eligibility requirements and a process to verify the ownership and control of firms seeking contracting preferences as SDVOSBs and VOSBs and to confirm the status of any owner who indicates a service-connected disability. To be eligible for verification under VA’s rules the small business concern (hereafter, firm) must be unconditionally owned and controlled by one or more eligible parties (veterans, service-disabled veterans, or surviving spouses); the owners of the firm 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 a Small Business Administration protest decision. VA’s verification process consists of reviewing and analyzing a standardized set of documents submitted with each verification application. VA’s current verification process has four phases—initiation, examination, evaluation, and determination (see fig. 1). Denied applicant firms can request a reconsideration of the denial decision, but if the denial is upheld, must wait 6 months before submitting another application. VA maintains a database on its Vendor Information Pages (VIP) website of verified SDVOSBs and VOSBs. Once VA verifies a firm, the firm name appears with a verified logo in VIP. Verification is valid for 2 years, with the option of renewing for 2 additional years. To apply for renewal, verified firms must submit an application before expiration of their verification, answer questions about any key changes to their business structure, submit supporting business documents such as updated tax returns and any amended operating documents, and receive a full evaluation by CVE. Firms that receive a renewal have to undergo a full verification (reverification) after the 2-year renewal period expires (that is, firms must go through the full process every 4 years). In 2014, VA launched the MyVA Reorganization Plan in an effort to improve the efficiency and effectiveness of VA’s services to veterans. The plan’s strategy emphasizes improved service delivery, a veteran-centric culture, and an environment in which veteran perceptions are the indicator of VA’s success. MyVA extends to all aspects of the agency’s operations, including the verification program. In response to this organizational change, OSDBU is required to align its own strategy with MyVA and take steps to make its operations more customer service- oriented and veteran-centric. OSDBU has established in its strategic plan that its longer-term goals for the verification program are to transform the verification process to make it more veteran-friendly and to expand the program’s capacity to serve more veterans. In our May 2010 and January 2013 reports, we found that VA faced challenges in establishing a program to verify firms on a timely and consistent basis. We made a number of recommendations to address these issues. Since that time, CVE has made significant improvements to the verification program—consistent with our recommendations—such as improving application processing times, quality controls, and communication with veterans. Based on CVE’s administrative data, application processing times have decreased by more than 50 percent since October 2012—from an average of approximately 85 days—to 42 days in fiscal year 2015 (see fig. 2). VA officials attributed the decreased processing time to a number of process improvements, such as moving from paper to electronic applications, developing detailed written work instructions for staff and contractors conducting verification activities, and enhancing resources available to applicants to make them more aware of program requirements. Officials told us that they have been generally meeting their regulatory processing goal of 60 days (from receipt of a complete application) and had 5 applications (out of 3,129) in fiscal year 2014 and 11 applications (out of 4,651) in fiscal year 2015 that did not meet this goal. Our review of randomly selected application files corroborated that CVE generally met its processing goals, but the verification process can take longer from a veteran’s perspective. In calculating processing times, CVE excluded any time spent waiting for additional information it asked firms to supply, so the number of days it took an applicant to become verified typically was longer than CVE reported. To illustrate how long the process could take from the veteran’s perspective, we used the results of our case file review to estimate the average number of days it took veterans to receive an initial determination—including any time a firm took to prepare and submit additional requested documentation (time that VA excluded from its estimated processing times). Based on our analysis, it took firms that applied for verification from June through September 2014 an average of 68 days to receive an initial determination on verification eligibility. Additionally, firms can submit and withdraw their application multiple times if they need to correct issues or wish to apply at a later date, an option that can lengthen the verification process for some firms. Each time a firm resubmits an application, CVE resets the processing clock. Based on our case file review, we estimated that for 15 percent of applications submitted from June 2014 through September 2014, it took more than 4 months from the initial application date for firms to receive a determination from CVE. In 5 of the 96 applications we reviewed, the verification process took more than 6 months to complete. For 2 of the 5 applications, the process took 1 year or more to complete. In each of the 5 cases, the firm had submitted and withdrawn an application at least one time before submitting an application that received a final determination. VA officials said that weeks or months could pass between a firm’s withdrawal of its application and resubmission of a new application. Additionally, VA officials said that allowing applicants to withdraw and resubmit multiple applications was advantageous to the veteran (without the option, more veterans would receive denials and have to wait 6 months before submitting another application). CVE has continued to refine its quality management system since our May 2010 and January 2013 reports, including developing comprehensive work instructions, conducting site visits, and revising policies for investigating allegations of noncompliance. In particular, VA has made progress since our 2013 report. For example, at that time, VA was introducing significant changes to its procedures and operations, and we determined that our original focus on evaluating VA’s compliance with policies and procedures would be of limited value. Since our 2013 report CVE has put into place detailed written work instructions—which are used by CVE staff and contractors conducting verification activities—for each part of the verification process, and a quality manual that documents the requirements of its quality management system. According to CVE officials, the work instructions are updated on a regular basis. CVE officials said the agency received certification in 2015 that its revised quality management system was compliant with the International Organization for Standardization 9001:2008 quality management standards. CVE also has implemented an internal audit process and a continuous improvement process. As of September 2015, CVE had taken action on and closed 332 of 350 (95 percent) internal audit recommendations made since February 2013. Based on our case file review, we estimate that VA followed its policies and procedures for verifying SDVOSBs and VOSBs in 100 percent of applications that were approved or denied from June through September 2014. This included checking the veteran and disability status of the applicant, conducting research on the firm from publicly available information, and reviewing business documents to determine compliance with eligibility requirements (such as direct majority ownership by the veteran and experience of the veteran manager). In our May 2010 report, we found that VA had a large backlog of firms awaiting site visits, including some high-risk firms. As a result, we recommended that VA develop and implement a plan to, among other things, conduct timely site visits to high-risk firms. VA reported in October 2013 that it had conducted more than 1,000 site visits in fiscal year 2013 and there was no longer a backlog of firms awaiting site visits, which was consistent with our recommendation. In fiscal years 2014 and 2015, CVE conducted 1,750 site visits to gather additional information about firms during its application review, or check the accuracy of verification teams’ decisions and help ensure that verified firms continue to comply with program regulations. Specifically, CVE conducted 1,144 site visits in fiscal year 2014 and 606 site visits in fiscal year 2015 on verified firms and firms applying for verification. Of the fiscal year 2015 site visits, CVE used risk-based determinations to select the vast majority of firms for visits (93.7 percent or 568 firms). The remainder were randomly selected or chosen because they were in the application process. CVE officials said that firms identified through risk-based selection were chosen based on their risk to VA (for instance, if the firm had a VA contract). Officials reported low error and noncompliance rates as identified through site visits, described specifically below.