New Rules for SDVOSBs and what they mean to you.
By Jason Miller
Federal News Radio
Veteran-owned and service-disabled veteran-owned small businesses must have only one business in the federal contract set-aside program and work in that business full time.
“The net effect of this change is that a company that is closely held by veterans would qualify regardless of the size of the employee stock ownership program,” the rule states. “Alternatively, a firm that is not closely held by veterans will find it much more difficult to qualify for the Verification Program.”
That was one of the major changes the Veterans Affairs Department announced today in a Federal Register notice finalizing the rule governing the set-aside contracting program. VA asks for comments on the changes detailed in the final rule.
VA issued an interim rule in May 2008 and has been reviewing comments and finalizing the rule since then.
The final rule states that veteran-owned and service-disabled veteran-owned small businesses must re-certify annually to VA that they meet the requirements to obtain set-aside contracts from agencies.
In addition to the change in ownership rules, the final rule states, “Any firm registered in the VA VetBiz VIP database that is found to be ineligible due to an SBA protest decision or other negative finding will be immediately removed from the VetBiz VIP database.”
The Center for Veterans Enterprise (CVE) will have final say on any request for reconsideration and must make that decision in 60 days after receiving the application.
VA, in all, received comments on the interim rule from five people. The department did not make any other substantive changes.
The rule comes after the Government Accountability Office told the House Veterans Affairs Committee in December that the service-disabled veteran-owned business program is vulnerable to fraud and abuse.
“GAO found that the government does not have effective fraud prevention controls in place for the SDVOSB program,” the audit agency states. “The 10 case-study firms that GAO investigated received approximately $100 million in SDVOSB sole-source and set-aside contracts through fraud, abuse of the program, or both.”
GAO adds that there is no one standard for small and service-disabled veteran-owned small businesses to qualify under.
“In addition to Small Business Administration’s statutory authority over administration of the SDVOSB program, several other government agencies have separate authority over issues related to the SDVOSB program,” GAO found. “The Veterans Benefits, Health Care, and Information Technology Act requires VA, among other things, to maintain a database of SDVOSBs and Veteran-Owned Small Businesses so contractor eligibility can be verified on VA SDVOSB and VOSB contracts.”
SBA says in fiscal 2008 agencies spent more than $13.8 billion with veteran-owned small businesses and more than $6.4 billion with service-disabled small firms. SBA has not made the 2009 data available yet.
In 2008, VA spent $1.6 billion on contracts with service-disabled companies, about 12 percent of the total for all of government.