The GovCon Bulletin™
SBA Issues Final Rule Establishing VOSB & SDVOSB Certification Program
Earlier this week, on November 29, 2022, the U.S. Small Business Administration (SBA) issued a Final Rule establishing its Service-Disabled Veteran-Owned Small Business (SDVOSB) and Veteran-Owned Small Business (VOSB) Certification Program.
Before 2018, VOSB’s and SDVOSB’s were subject to dual regulations and certification rules enforced separately by the SBA and the Department of Veterans Affairs (VA). To be eligible for VOSB and SDVOSB set-aside contracts with the VA, small businesses had to comply with regulations promulgated by the VA and had to be verified by the VA’s Center for Verification and Evaluation. For contracts with all other federal agencies, the SBA’s SDVOSB program and the related SBA regulations provided opportunities for businesses to self-certify their SDVOSB status in order to be awarded SDVOSB sole source or set-aside contracts.
Subsequently, as we wrote about in a prior article, under the National Defense Authorization Act for Fiscal Year 2017 (NDAA 2017), the SBA took over responsibility for promulgating regulations setting the SDVOSB eligibility requirements for the VA’s certification program. Consequently, in 2018, the SBA issued a rule (discussed here) that created a uniform regulatory scheme setting the SDVOSB eligibility requirements for both VA procurements under the VA program and non-VA procurements under the SBA’s SDVOSB program.
More recently, the National Defense Authorization Act for Fiscal Year 2021 (NDAA 2021) further streamlined the certification process for VA and non-VA procurements by transferring responsibility for certifications of VOSB’s and SDVOSB’s for purposes of VA procurements from the VA’s Center for Verification and Evaluation to the SBA, as of January 1, 2023. NDAA 2021 also phased out the self-certification process for purposes of non-VA procurements and, instead, imposed a certification requirement at the SBA for SDVOSB's seeking sole source and set-aside contracts across the Federal Government. NDAA 2021, however, also created a one-year grace period after January 1, 2023, during which self-certified SDVOSB’s can file an application with the SBA for SDVOSB certification and continue to self-certify. Thus, after NDAA 2021, the SBA was solely responsible for certifying VOSB’s and SDVOSB’s for VA procurements and SDVOSB’s for non-VA procurements.
The SBA’s Final Rule, issued November 29, 2022, now establishes the Veteran Small Business Certification Program in a new 13 CFR Part 128 that sets forth eligibility requirements for VOSB and SDVOSB certification. Some notable aspects of the Final Rule are provisions stating that:
- Rights of first refusal that grant a non-qualifying veteran the contractual right to purchase ownership interests of a qualifying veteran will not affect the unconditional nature of ownership if the terms follow normal commercial practices.
- Companies may continue to self-certify as SDVOSB’s at the subcontract level and for purposes of SDVOSB goaling credit, although the SBA anticipates sunsetting all self-certifications after five years through a separate rule-making.
- A joint venture comprised of a certified VOSB or SDVOSB and other small businesses or an approved mentor does no have to be separately certified as a VOSB or SDVOSB to submit an offer on a VOSB or SDVOSB contract, as long as the joint venture agreement meets other requirements implemented by the Final Rule and as long as the VOSB or SDVOSB is not a joint venture partner on any other joint venture that submits an offer for a VOSB or SDVOSB set-aside contract.
The Final Rule becomes effective on January 23, 2022, and the Amadeo Law Firm anticipates offering a webinar or other guidance on the SBA’s new VOSB/SDVOSB certification program in the near future.