The sweeping defense policy bill poised to pass Congress this week seeks to crack down on stolen valor among businesses by making it harder for some of them to win federal contracts intended for veterans.
The compromise National Defense Authorization Act, or NDAA, includes an amendment that would stipulate that small businesses that self-certify as being service disabled and veteran owned could not count toward the government's target for how much contracting goes to such businesses.
The goal is to disincentivize stolen valor by motivating federal officials to award contracts to businesses that are formally certified as being veteran owned.
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"For too long, loopholes have allowed imposters to self-certify as service-disabled, veteran-owned small businesses and take advantage of government benefits set aside for our nation's heroes," Sen. Joni Ernst, R-Iowa, an Army National Guard veteran who sponsored the amendment, said in a statement to Military.com. "There is no room for error when it comes to our men and women who served, and service-disabled veterans should know that our grateful nation is doing everything in its power to support their success."
A separate provision of the bill would also increase the goal of how many contracting dollars go to veteran-owned small businesses from 3% to 5%.
Including the provisions in the compromise NDAA, the result of months of negotiations between House and Senate lawmakers, makes it all but certain to become law. The NDAA is anticipated to pass the Senate as soon as Wednesday and the House by the end of the week, sending it to President Joe Biden's desk for his expected signature.
Ernst's provision centers on the Service-Disabled Veteran-Owned Small Business Program, which allows the federal government to restrict competition for some contracts to just businesses owned by veterans with service-connected disabilities.
The 2021 NDAA required the Small Business Administration, or SBA, to set up a process to certify veteran-owned and service-disabled, veteran-owned small businesses. Previously, the Department of Veterans Affairs certified whether a business was owned by a service-disabled veteran for the purpose of awarding VA contracts, but businesses needed only to self-certify for contracts awarded by any other federal agency.
When the SBA announced the rules for the formal certification process in late 2022, it did not entirely end the ability to self-certify. Rather, the agency allowed self-certified businesses to continue to count toward the government's goal of 3% of contracting dollars going to small businesses owned by service-disabled veterans.
The SBA kept self-certification alive despite receiving numerous public comments calling for its elimination over concerns about fraud. But the SBA maintained that allowing self-certification for veteran-owned businesses was consistent with other programs, such as the Women-Owned Small Business Program, that allow for self-certification.
Still, the agency said it plans to do a comprehensive review of all self-certification programs and anticipated sunsetting any self-certification in five years.
The SBA estimated that applying for and maintaining formal certification would take businesses about three hours and cost $280.32 per applicant.
"Self-certification defeats the purpose of guaranteeing that service-disabled certified and veteran-certified firms are fairly represented in federal contracting as per the law," Ronald Washington, an executive committee member of a veterans entrepreneurship group called VET-Force, said in a statement shared by Ernst's office supporting her amendment. "Thousands of veteran-owned companies, and at an expense, have complied with becoming certified first through the VA and now with SBA.”
“It is only fair that everyone be held to the same expectations and standards," he said.
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