It’s been an eventful November for the Federal Government’s VOSB/SDVOSB programs. First, the Department of Veterans Affairs (“VA”) issued a proposed rule outlining changes that would drastically change the manner in which eligibility requirements are analyzed (you can read about it here). Now, Congress is proposing additional changes to the VOSB and SDVOSB verification process.
On November 5, 2015, Representative Mike Coffman (a member of the House Small Business Committee, frequent critic of the VA and vocal advocate for VOSB/SDVOSBs) and his co-sponsors introduced HR 3945, The Improving Opportunities for Service Disabled Veteran-Owned Small Business Act of 2015. The bill is meant “to improve contracting opportunities for certain veteran-owned small businesses.”
In a press release issued on November 6, 2015, Coffman explained the purpose of the bill, stating that it aims to reform the current VOSB/SDVOSB programs in three key ways:
- First, the bill harmonizes the definitions of VOSB and SDVOSB. This ensures that small variations between the Small Business Act and the Vets First Program are not used to justify additional inconsistencies between the VA and [Small Business Administration (“SBA”)] programs.
- Second, the bill requires the VA to follow SBA regulations when verifying and certifying VOSBs and SDVOSBs. This ensures consistency in the awards process between the VA and SBA. For example, a SDVOSB can qualify at one agency and not another for procurement preferences. This inconsistency often adds cost, confusion, and opens the door to fraud.
- Third, the bill creates an appeals process for SDVOSBs to challenge an agency decision.
This is not the first time that Representative Coffman has introduced a bill aimed at reforming VOSB/SDVOSB contracting programs. Back in 2013, he introduced the Improving Opportunities for Service-Disabled Veteran-Owned Small Business Act of 2013, which sought to transfer control of all VOSB/SDVOSB status-related protests from the VA to the SBA. As we explained back in 2013, Coffman’s 2013 bill would have eliminated the current system and replaced it with a single VOSB/SDVOSB verification process. It would also have unified the definitions of “unconditional ownership” and “unconditional control.” While the VA would have retained authority for determining whether an individual is a “service-disabled veteran,” the SBA would have had the authority to rule on all other eligibility factors including size, ownership, and control.
The 2015 bill differs from the 2013 version, but the underlying motivation appears to be the same: the promotion of greater consistency between the SBA and VA SDVOSB programs, and the streamlining of the VOSB/SDVOSB verification process.
Coffman explained the issues as follows:
Currently, veteran-owned small businesses (VOSB) and service-disabled veteran-owned small businesses (SDVOSB) face incredible challenges getting certified to participate in seeking and securing federal contracts under the program’s rules. The bill I introduced today reforms, streamlines, and simplifies the current process the VA and the SBA use to be certified as eligible…
Increasing SBA’s role in the appellate process will limit confusion in how to appeal and ensure a more predictable pattern in the final decisions…[i]t will also ensure impartiality by not having VA review its own previously denied claims.
This bill will reform an excessive and redundant bureaucracy that’s making business even more complicated for the people it was meant to help. By cutting needless red tape and streamlining the verification process, we can ensure veteran business owners are properly recognized for their service, while reducing fraud and freeing up more resources for veteran support.
This bill comes on the heels of a November 4, 2015 GAO report concerning VOSB/SDVOSBs, which outlines the improvements the VA has made to its VOSB/SDOVSB verification program since 2013. The GAO report emphasizes the advantages of a pilot program, initiated by the VA in September 2015, which made certain changes to the verification process. These changes are summarized in the chart below.
The GAO report indicates that the VA plans to “fully transition to [the] new process by April 2016. It is unclear whether the bill will affect any further changes to the new VA verification program. We willkeep you posted on any new developments.
Edward T. DeLisle is Co-Chair of the Federal Contracting Practice Group. Ed frequently advises contractors on federal contracting matters including bid protests, claims and appeals, procurement issues, small business issues and dispute resolution.
Maria L. Panichelli is an Associate in the firm’s Federal Contracting Practice Group. Her practice includes a wide variety of federal contracting and construction matters, as well as all aspects of small business procurement.