State Program for Disabled Veterans Lacks Adequate Oversight, Audit Finds

The Disabled Veteran Business Enterprise (DVBE) Program, intended to honor California’s disabled veterans by having them benefit financially from doing business with the state, lacks adequate oversight and has helped only a small percentage of companies, the state auditor reported February 14.

The program directs California government agencies to procure goods and services from firms that the Department of General Services (DGS) has certified as meeting eligibility criteria required by law. The program requires that government entities that award contracts for goods and services strive to expend at least 3 percent of the cumulative value of all their contracts on DVBE firms.

Five years ago, a state audit pointed out several shortcomings of the program, and the auditor stated this week that “many of the issues we reported in 2014 still persist.”

The latest audit found:

  • The six awarding departments reviewed by the auditor could not fully support the DVBE participation data they reported for fiscal year 2017-18. “Most significantly, five of these six departments overstated some DVBE participation amounts,” the auditor stated. “As a result, departments’ claimed DVBE participation levels could be significantly inflated and could lead users of this information to draw incorrect conclusions about these departments’ success in meeting the 3 percent goal.”

  • The program continues to benefit only a small percentage of firms. Just 133 (8 percent) of the 1,671 certified DVBE firms received contracts directly from awarding departments during fiscal year 2017-18. Of the 133 firms, 30 captured most of the revenue associated with these contracts. “Awarding departments stated that they often struggle to find a DVBE firm that can provide the services or products they need, and they attribute this difficulty to a lack of qualified DVBE firms and the complexities involved in using General Services’ procurement system to identify such DVBE firms,” the auditor wrote.

  • The California Department of Veterans Affairs and DGS have not measured the success of their outreach efforts to encourage more firms to participate in the program. “In addition, until recently neither department had considered the types of products and services that awarding departments struggle to procure from DVBE firms to help inform the two departments’ outreach activities,” the auditor reported.

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