Written by Marci Love Thomas, a Senior Counsel in the Government Contracts Practice
Military service can uniquely prepare veterans for business ownership; veteran entrepreneurs have the benefit of intense training in leadership, discipline, and how to successfully reach an objective—often with limited resources. Statistically, veteran business owners are responsible for nearly one out of every ten small businesses in America, employ nearly six million workers, and generate over 1.5 trillion dollars in receipts each year. Over 200,000 veteran-owned businesses are owned by service-disabled veterans.
Given veteran entrepreneurs’ demonstrated success and influence on the U.S. economy, it is understandable why Congress created special federal contracting programs to assist veteran-owned and service-disabled veteran-owned small businesses. However, by creating separate contracting programs—Service-Disabled Veteran-Owned Small Business Concern (SDVO SBC) and Vets First—administered by two separate agencies, SBA and VA, veterans receive confusing, misleading, and, often incorrect information, about which program can best serve their businesses and, ultimately, veterans waste valuable time and resources that do not directly benefit their business.
SBA’s SDVO SBC program aims at helping service-disabled veteran-owned small businesses win federal contracts. SBA’s program provides contracting officers with the authority to set acquisitions aside for exclusive competition among SDVO SBCs and to make sole-source awards to SDVO SBCs, if certain conditions are met. SBA’s SDVO SBC program assists agencies in meeting the 3% government-wide procurement goal for SDVO SBCs.
SBA’s program is a self-certification program. A business can represent itself as a SDVO SBC for federal procurements in the System for Award Management (SAM), if the business is “small” under the NAICS code assigned to the procurement and is at least 51% owned and controlled, and managed by a veteran who has been deemed by the VA or DOD to have a service-connected disability.
VA’s Vets First program applies to acquisitions made by the VA. Vets First provides the VA sole-source contracting authority and permits restricted competition or set-asides for both veteran-owned and service-disabled veteran-owned small businesses. VA’s program also establishes specific goals for the VA—10% for veteran-owned small businesses and 7% for service-disabled veteran-owned small businesses.
Unlike SBA’s program, VA’s program requires a veteran-owned business to provide documentation to the Center for Verification and Evaluation (CVE) so that the VA can evaluate and determine if the business is eligible to be listed in the VA’s Vendor Information Pages (VIP) database. A veteran-owned business approved by CVE must be reverified after two years of verification or else the verification expires and the company is no longer listed for public search. CVE approved firms are eligible to participate in veteran-owned and service-disabled veteran-owned small business set-asides issued by the VA and the VA’s Veteran-Owned Small Business Mentor-Protégé Program.
For many veteran entrepreneurs, the distinctions between the two agencies’ programs have understandably become muddled. Often service-disabled veteran-owned small businesses pursue CVE, even when agencies other than the VA may offer better federal contracting opportunities for their industry.
There seems to be a misperception that once a company is CVE-approved and listed in the VA’s VIP database the company is insulated from an SBA SDVO SBC challenge. However, SBA’s Office of Hearings and Appeals has repeatedly held VA’s verification process only applies to the VA’s set-aside program and is not something SBA must consider. A firm listed in VA’s Vets First database may not meet the criteria for SBA’s SDVO SBC program and a company holding itself out as a SDVO SBC may not be approved by CVE.
For the maxim benefits from the set-aside programs, service-disabled veteran entrepreneurs should consider which federal agencies present the best contracting opportunities for their field. VA is a logical consideration; it is one of the federal government’s largest procurement organizations and VA spends over $3 billion annually with eligible veteran-owned small businesses. However, while awaiting CVE approval, a service-disabled veteran-owned small business can pursue numerous SDVO SBC set-asides at other agencies, including DOD and DHS, which are also large procurement organizations, exceed their SDVO SBC 3% goal, and do not require CVE.
Both SBA’s and VA’s programs have been in place long enough that the agencies should conduct a comprehensive review of the strengths and weaknesses of their programs. The agencies also should work together to determine how their programs can best serve the veteran entrepreneurs the programs are intended to assist without unduly straining veteran businesses’ time and resources.
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