Veteran-Owned Small Businesses:
Planning and Data System for VA's Verification Program Need Improvement
GAO-13-95: Published: Jan 14, 2013. Publicly Released: Jan 14, 2013.
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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.
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.
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Recommendations for Executive Action
Status: Closed - Implemented
Comments: VA provided a draft strategic plan on September 17, 2013 and a final approved plan on December 19, 2013. Per VA, the plan was "approved" by the appropriate entities. (Note: According to VA, there is no formal requirement within VA to have an office-level strategic plan, and therefore no specific approval authority. However, the plan received concurrence by the offices that are affected by OSDBU operations and was approved by the Verification Review Task Force.)
Recommendation: To improve the management and oversight of VA's Service-Disabled Veteran-Owned Small Business (SDVOSB) and Veteran-Owned Small Businesses (VOSB) verification program, the Secretary of Veterans Affairs should 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 longer-term 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.
Agency Affected: Department of Veterans Affairs
Status: Closed - Implemented
Comments: VA awarded a contract for a revised IT system (Veterans Enterprise Management System - VEMS) on 9/12/2013. This new system will replace the existing verification program's data system (VCMS). The revised system supports the Office of Small and Disadvantaged Business Utilization's (OSDBU) strategic objective (from its draft strategic plan) to "Evolve OSDBU information technology capabilities to improve efficiency and effectiveness of service delivery." The contract requires that the program provide enhanced case management and automation functions and presents a flexible and scalable platform.
Recommendation: To improve the management and oversight of VA's SDVOSB and VOSB verification program, the Secretary of Veterans Affairs should direct OSDBU and the Office of Information and Technology, 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.
Agency Affected: Department of Veterans Affairs