The VA has announced a new Pre-Determination notification policy, anticipated to be effective May 1, 2013. This new policy will assist applicants into the VA’s Veteran-owned Small Business Program by allowing correction of easily fixable mistakes during the verification process. As a result, applicants will not have to wait to be denied by the VA to correct a relatively minor issue affecting eligibility. This new policy will only effect procurement opportunities issued by the VA, however it is certainly good news for veteran-owned small businesses interested in competing for VA contracts.

 Under VA regulations, the Center for Veterans Enterprise (CVE) is responsible for determining an applicant’s eligibility to be added to the Vendor Information Pages Database (VIP), and therefore be eligible for the VA’s Veteran-owned Small Business Program. The review process can take up to 90 days for CVE to complete, or possibly longer, as the VA regulations allow a great deal of leeway for CVE’s response time. Under the existing regulations, there is no mechanism to pause the process to allow for the correction of relatively simple issues with an application. This could prove to be a nightmare for veteran applicants, as a minor error in the drafting of corporate documents—rendering the applicant ineligible, but easily correctable—would cause the applicant to be denied eligibility. Once denied eligibility, the veteran applicant would then need to fix the problem, and then either request reconsideration (which could add another 90 days to the process), or wait six months after the denial and begin the application process over again.

This is a common issue for veteran-owned businesses, as many are not aware of the strict requirements for companies to be eligible for the VA’s Veteran-owned Small Business Program. Where an applicant is owned by both veterans and non-veterans, establishing the business with typical corporate structuring will not work for VA eligibility purposes. For example, a typical corporation’s bylaws often establish that the board of directors has a quorum when the majority of the directors are present. However, where the directors are made up of veterans and non-veterans, this quorum rule could allow the board of directors to make decisions for the company without the presence of the veteran(s). This would violate VA policy, and thus the VA regulations protect against such an occurrence.

A veteran-owned company submitting an application with bylaws containing general corporate language, such as the quorum issue discussed above, would be denied under the current VA regulations. This would result in the veteran company having to endure a delay for either a reconsideration, or reapplication. This is quite unfair to veteran-owned small businesses, especially when in many cases the problem preventing eligibility could be fixed with a very minor edit. For example, with the quorum issue discussed above, all that is needed to meet the VA’s eligibility requirements is a simple change to the company’s bylaws requiring the presence of the veteran director(s) in order to establish a quorum.

 Thankfully, the VA aims to ease the burden on applicants with its new Pre-Determination policy. The Pre-Determination policy remains in the pilot stage, and may be refined prior to its initiation. However, a basic outline of the steps of the new policy appears to be as follows:

• Applicants with easily corrected issues will receive an email notification with Preliminary Findings, identifying the issues with the application.
• The Preliminary Findings email will be followed up by a phone call within 24 hours.
• Upon receiving the Preliminary Findings, the applicant will have 48 hours to inform CVE of its intent to participate in the Pre-Determination process. If the applicant chooses to participate, it has 5 business days from the receipt of the Preliminary Findings email to submit amended documentation and other information.
• Once the applicant informs CVE of its intent to participate in the Pre-Determination process, the 60 day processing period will be put on pause.
• If the applicant does not properly address the issues raised in the Preliminary Findings, or if new issues are discovered, the applicant will be given two days to withdraw its application, or CVE will proceed immediately to determination.
• If the applicant does not provide a response to the Preliminary Findings within the 5 day period, CVE will issue a determination letter on the issues identified in the Preliminary Findings.

This new policy appears to be a positive change to the VA regulations, which should result in a simplified and more reasonable application process. While the new policy would not apply to every potential issue making a veteran-owned company ineligible, it should prevent veteran-owned companies from wasting time in application limbo due to easily correctable issues