September 26, 2011

Senate Passes Manchin-Sponsored Legislation to Reduce Fraud in Small Business Contracting, Improve Disabled Veterans’ Access to Contracts

Washington, D.C. – U.S. Senator Joe Manchin (D-W.Va.) today applauded Senate passage of the Small Business Contracting Fraud Prevention Act of 2011, which was first introduced by his Republican colleague Senator Olympia Snowe (R-Maine). The bipartisan, commonsense bill is designed make sure only qualified small businesses win contracts with the federal government, and the legislation places special emphasis rooting out fraud from businesses claiming they are controlled by disabled veterans.  

“With so much waste, fraud and abuse running rampant in the federal government, it just makes common sense to put mechanisms in place that ensure our small business programs work correctly for the people they are meant to benefit,” Senator Manchin said. “When the federal government contracts with small businesses, taxpayer dollars are saved and American jobs are preserved. I will continue working to keep the federal government’s partnerships with small businesses strong, and doing all I can to ensure that small businesses are able to thrive, create jobs, and boost economic growth. I’m especially pleased that this law would go after people who misrepresent their businesses’ ties to disabled veterans. Our brave men and women have sacrificed so much for this country, and we should make sure that those who were disabled while serving the cause of freedom are first in line for these contracts.”  

The Small Business Contracting Fraud Prevention Act now awaits action in the House of Representatives. 

The bill would increase penalties for businesses that misrepresent themselves as small business-owned and controlled by service-disabled veterans. Such claims are now subject to civil penalties under the False Claims Act. It would help ensure that small businesses are registered annually as small businesses owned and controlled by service-disabled veterans with both the Small Business Administration and the Department of Veterans Affairs. 

The bill would also provide comprehensive oversight for effective certification, surveillance and monitoring, and robust enforcement of its entire contracting portfolio. The bill would also increase criminal penalties for businesses awarded contracts through fraudulent means. 

In addition, the bill would provide a three-year grace period for businesses that are designated as HUBZone (Heavily Underutilized Business Zone) businesses but that would lose that designation later this month due to recent Census data. Maintaining HUBZone designation allows West Virginia businesses that have already won contracts with the federal government to keep those contracts.  In addition, without the grace period, the federal government will have to spend millions of dollars rebidding the previously awarded contracts.


According to the Government Accountability Office (GAO), federal agencies including the SBA made $125 billion in improper payments last year.