VA sets rules for set-aside program

New Rules for SDVOSBs and what they mean to you.

By Jason Miller
Executive Editor
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.


8 Responses

  1. I am a vip.vetbiz certified SDVOSB architectural firm, Willow Design Inc., with a NAICS Code of 541310.

    I have also registered with the vip.vetbiz a company called Indigo Products. Indigo is a distributor of architectural products, and is joint venturing with a contractor for a set aside construction project with the VA.

    Please advise on how the new rule effects me. Both Indigo and Willow have the same personnel and work from the same office. The liability insurance requirements between architectural design and construction are the basic reason for differentiating the two companies.

  2. What do you do if you are not a bidder on a VA SDVOSB Set Aside project, but know that the winning bidder’s 51% Service Disabled Veteran owner holds a full-time government position?

  3. The new ruling regarding Veteran Owned Businesses prohibits Veterans from being competitive outside a single location. Additionally, what is the difference in me owning two separate businesses, one in Portland and one in Seattle, or a single business with two locations?

    Also, I think it inconceivable with today’s technology (video conferencing, instant messaging, email, etc.) to state that one cannot “control” a company without being inside its four wall.

    The comment period is open until March 10th. I would encourage all Veteran owned businesses to comment via

  4. If the fraud prevention is not adequate then the program needs to be corrected immediately. I am a SDVOSB contractor and have witnessed a 1000% increase in “SDVOSB” companies. Many of these companies are using “TEAMING” Agreements or simply putting people into business to bid this work. It is allowing large business concerns access into this specialized program.

    I have protested a companies participation in the SDVOSB program and they were found to be “Other than small business”. But we cannot continue to police our industry. We are already small business and our resources are limited. We need help.

  5. I am a Vietnam service disabled veteran owned small business and would like be able to apply for federal contracts.
    I have a degree in Architecture and had my own business for 18 years. I have opened REYES DESIGN & CONSTCUTIOIN SERVICES. Please let me know how, where and when. How do I certify, register or apply.

  6. • This is a wonderful opinion. The things mentioned are unanimous and needs to be appreciated by everyone.

    Mba Business

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