By Government Contracts & Construction

NEW RULES ISSUED REVAMPING VETERAN-OWNED AND SERVICE-DISABLED VETERAN-OWNED SMALL BUSINESS ELIGIBILITY

Effective October 1, 2018, the Department of Veterans Affairs (VA) and the Small Business Administration (SBA) amended their regulations governing Veteran-Owned Small Business (VOSB) and Service-Disabled Veteran-Owned Small Business (SDVOSB) eligibility.

The VAs new Rule (83 Fed. Reg. 48221) amends 38 C.F.R. Part 74 and defers to the Small Business Administration (SBA) in promulgating guidance on ownership and control of VOSBs and SDVOSBs. The amended section refers directly to the SBA Regulations defining terms such as eligible individual, surviving spouse, veteran, VOSB, service-disabled veteran and SDVOSB. Most importantly, rules governing ownership and control are now solely the SBAs responsibility. The VA will continue to maintain the Center for Verification and Evaluation (CVE), and its rules governing application and verification for the Vets First Contracting Program remain mostly unchanged. However, if an application is denied, the applicant will now file an appeal with the SBAs Office of Hearings and Appeals (OHA) in accordance with the SBAs Regulations governing appeals. The rule is the result of direction from the 2017 National Defense Authorization Act (NDAA) and a recent U.S. Court of Federal Claims case resulting in a SDVOSB losing its status due to differing definitions of ownership and control by the VA and SBA.

SBA also finalized and published its Rule (83 Fed. Reg. 48908) defining SDVOSB ownership and control. The new SBA Rule amends its existing SDVOSB regulations by adding new changes as well as adopting some of the old VA language. One notable change is that while the service-disabled veteran must generally own 51% of the concern and control the management and daily business operations, the Rule lists certain extraordinary circumstances in which a non-veteran may exercise some control and the concern not lose its status. The new SBA and VA Rules hopefully will bring more clarity and consistency for VOSB and SDVOSB government contractors.

This Client Alert has been provided by Terence Murphy, Chair of the Government Contracts & Construction Practice Group who can be reached at (757) 624-3139 or tmurphy@kaufcan.com.

The contents of this publication are intended for general information only and should not be construed as legal advice or a legal opinion on specific facts and circumstances. Copyright 2024.