Contracting program to help the disadvantaged riddled with fraud

[The Straight Story]

Contracting program to help the disadvantaged riddled with fraud


It's happened again. For the third time in as many years, a watchdog found that con artists and ineligible companies gamed the government's procurement system to fraudulently win small business contracts, this time in a program designed to assist economically disadvantaged individuals.

In a report released on Friday to the House Small Business Committee, the Government Accountability Office identified 14 firms that received set-aside or sole-source 8(a) contracts worth a combined $325 million through fraud or abuse. All together, these firms won an additional $1.2 billion in contracts since entering the 8(a) program, including $17 million in Recovery Act awards.

"The 8(a) program needs to strengthen its fraud prevention, detection, monitoring and investigative controls to minimize its vulnerability to fraud and abuse," the report said.


Investigators found companies representing themselves as disadvantaged despite owning yachts, luxury automobiles and millions of dollars in ocean-front property. The maximum threshold for entering the 8(a) Business Development Program is $250,000 in annual net worth, excluding the applicant's ownership interest of the company and primary residence. Other executives misrepresented their ethnicity or used a pass-through company to continue winning contracts long after graduating from the program, GAO found.

http://www.govexec.com/story_page.cfm?articleid=45179&oref=todaysnews