The Defense Department's inspector general found the department is awarding service-disabled veteran-owned small business contracts to ineligible businesses. The IG report also found DoD made coding errors when inputing these contracts into the federal procurement database, affecting 137 contracts valued at about $1.3 billion.

One of the reasons for awards to ineligible firms was contracting officers were not checking the Central Contractor Registration (CCR) database.

"Had they checked the CCR, they would've known that [the ineligible businesses] were not representing themselves as service-disabled veteran-owned small businesses," said Devon Hewitt, a partner at Protorae Law and a member of the American Legion's Small Business Task Force.

The other factor — and the "major reason" — that contributed to contracts going to ineligible firms is DoD relies on a self-verification process. This is true government-wide, except for the Veterans Affairs Department, which has its own verification process for veteran-owned contractors.

The DoD IG recommended DoD adopt a process similar to Va's process, but Hewitt said, "if you ask veterans, I think they would say the Veterans Administration is not doing a better job and it has received a number of complaints, and there have been a number of recent hearings on the program."

Particularly, veterans have complained about delays and the lack of thoroughness in becoming verified, Hewitt said. At the same time, VA has been accused of inconsistencies in its verification, she said.

Another challenge with expanding VA's program governtmentwide is VA has different standards for service-disabled veteran-owned small businesses than other agencies. Hewitt said these standards are similar, "but not identical."

And in tight budget times, yet another challenge is having the resources to verify contracts. Verification requires people to screen applications, review documents and sometimes go on site visits, she said.

"There is statutory authority that is specific to the Department of the VA. And that authorizes the VA to do this kind of screening and provides the resources for VA to do that," Hewitt said. "The other agencies don't have those resources, and it is resource-intensive."