On September 30, 2013, the Department of Veterans’ Affairs (VA) issued an interim final rule, announcing that it would maintain authority over VOSB/SDVOSB status protests made in connection with the agency’s “Vets First” contracting program (the “Program”). Back in 2009, when the Program was created, the VA and the Small Business Administration (SBA) were tasked with forming an interagency agreement concerning the scope of each agency’s authority over Vets First protests. Since then, the VA has addressed all protests relating to the ownership and control of VOSBs and SDVOSBs, while the SBA has addressed all protests relating to size. The September 30, 2013 rule did not disturb this division of responsibilities.
However, this rule may soon be superseded by the passage of a new law. On July 31, 2013, Representative Mike Coffman (R-CO), a member of the House Small Business Committee and a frequent critic of the VA, introduced a bill referred to as the Improving Opportunities for Service-Disabled Veteran-Owned Small Business Act of 2013. If it passes, the bill will transfer control and administration of virtually all protests relating to the Vets First Program to the SBA.
As many contractors know, the SBA has its own VOSB/SDVOSB program. That program allows concerns to self-certify as VOSBs or SDVOSBs; once a concern has self-certified, it is eligible to compete for VOSB/SDVOSB set-aside procurements advertised by any agency other than the VA. However, if a concern also wants to compete for VA VOSB/SDVOSB set-aside contracts, it must first be verified by the VA.
Not surprisingly, this dual system has led to much confusion and uncertainty. Identically worded, or nearly identically worded, regulations have been interpreted differently by the agencies and by the Courts, providing contractors with inconsistent direction on how to establish “unconditional ownership” and “unconditional control”. Moreover, because of the different interpretations of these important terms, under the current system, a concern may be eligible for purposes of the SBA program, but denied verification under the VA program, or vice versa. For these reasons, most businesses find the current system frustrating and inefficient.
Coffman’s bill would eliminate the current system and replace it with a single VOSB/SDVOSB verification process. It would also unify the definitions of “unconditional ownership” and “unconditional control,” providing contractors with a clearer idea of what qualifies as a VOSB or SDVOSB concern. While the VA would retain authority for determining whether an individual is a “service-disabled veteran,” the SBA would have the authority to rule on all other eligibility factors including size, ownership, and control. Proponents of the bill believe that it will simplify things for the SBA and VA and, most importantly, the veteran business community.
Combining the systems would also save money. The VA is currently spending approximately $33 million a year on a verification program that, in effect, is duplicating the SBA’s efforts. A merger of the VOSB/SDVOSB verification systems could also, eventually, lead to the creation of a single, consolidated verification process covering all of the SBA’s small business programs. In other words, a concern would be able to submit one package to the SBA and become simultaneously verified for all of the small business programs for which the concern qualifies. This would constitute a major improvement over the current system.
So what does this mean for you? If the bill passes, VOSB/SDVOSB verification might get a lot simpler. It also means that it will be increasingly important to get your applications right, the first time around. We will keep you posted on the progress of the bill.
Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group. Maria L. Panichelli is an Associate in the firm’s Federal Practice Group.