Government program to give preference to service-disabled vets rife with fraud

A federal government set-aside program designed to give preferences to service-disabled vets has become rife with fraud and abuse, according to a five part series that began running in Monday.

The Service Disabled Veteran Operated Small Business (SDVOSB) program was created by Congress in 1999 to open lucrative federal contracting  to wounded warriors, who historically were hard to employ.

But the program has gained dubious notoriety, in part because of people like Warren Parker, a suburban Kansas City contractor whose firm, Silver Star Construction, received roughly $5 million in contracts through the program.

"Mr. Parker had a tremendously heroic resume,” says Mark Flatten, an investigative reporter for the Examiner. "Three Silver Stars, three Purple Hearts, Bronze stars. He even kept a diary of sniper kills that he purportedly got in Vietnam. Turns out that it was all a fraud," Flatten says.

In fact, Parker spent the entire Vietnam war in the U.S., where he was a National Guardsman. Until a citizen’s  tip about Parker's falsified record led to an indictment and a subsequent prison sentence in 2011, the Veterans Administration had relied on self-certification for the program. In others words, they trusted contract applicants to be honest about their service injuries.

The VA has since made changes to that certification process to great effect. "In 2011 when they changed the process for verification, 10,000 firms stopped, just dropped out of the program," says Rep. Phil; Roe (R-Tn.) "That showed how much fraud there was in the program."

No other federal agencies have moved away from self-certification.

Take the case of another disabled vet, Braulio Castillo, who got special preferences  through SDVOSB when he won the largest contract in IRS history, $500 million for IT services. His disability? A twisted ankle incurred at military prep school 27 year ago.

In his application for the contract, Castillo wrote,  "These are the crosses that I bear in my service to our great country."

When he testified in a Congressional hearing about the contract in June, Congresswoman Tammy Duckworth, a double amputee Iraq war vet, tore into him. "Twisting your ankle in prep school is not defending this nation," she said.

Legislation was introduced in the House last week to strengthen controls of the program across all agencies, and limit oversight of the entire program through just two agencies, the VA and the Small Business Administration. "What we're going to do is take both of those organizations and put them under the Small Business Administration. They can then do the verifications," says Roe.

Congressional action to remedy the program has lagged, in part, because few members want to be seen meddling with a program that's designed to help wounded warriors. But that reticence masks a reality.  Every dollar that's sent to a fraudulent contractor is a dollar not sent to a service disabled vet who deserves it.

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