Earlier this month, two businessmen were accused of fraudulently bidding for and winning Behind Bars$23 million work of highway construction projects in Iowa and Nebraska. The two businessmen owned and operated Midwest Contracting, an Omaha based construction company that holds itself out as a Service Disabled Veteran Owned Company.

The crux of the allegations allege that Midwest Contracting was not qualified to bid on or perform work under contracts directed toward service disabled veterans.

In order to qualify for the Veterans’ Entrepreneurship and Small Business Development Act projects, a service-disabled veteran must have control of the operation. To show control, the government requires that the service disabled veteran:

  • unconditionally own 51% of the company;
  • be the highest paid person;
  • receive 51% of profits;
  • control both the day-to-day management and long term decision making of the company; and
  • hold the highest officer position in the company.

Here, the government alleges that the service disabled veteran did not control the operations of the company, did not receive 51% of the profits, and was not the highest officer in the company. Instead, the indictment alleges that the non-veteran owner controlled and removed funds from the company, was occasionally listed as President of the company, and operated the day-to-day activities of the company.

This is certainly an extreme example of the steps the government may take to ensure that service disabled veterans truly own and operate entities vying for government projects. But, it also shows that the government takes very seriously the criteria construction companies must meet to qualify for Veterans’ Entrepreneurship and Small Business Development Act projects.