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National 8(a) Winter Conference – Changes Coming for SDVOSBs

Hand with megaphoneHello from Nashville, Tennessee! I’m currently at the National 8(a) Association’s Winter Conference and had the privilege of participating in a great panel discussion with some of the leading small business scholars and practitioners in the country. It was truly a great experience. Since I’m here and it’s fresh on my mind, I thought I’d share something that all SDVOSBs should know: Your world is about to change.

Before getting into the changes, let’s consider a little history. Prior to 2010, the Small Business Administration was solely responsible for determining the eligibility of SDVOSBs for set-aside contracts. Following the passage of the Veteran’s Benefits Act of 2006 and its implementation through the Veteran’s First Program in 2007, the Department of Veteran’s Affairs began its own process of verifying the eligibility of SDVOSBs for set aside contracts issued and administered by the VA. The idea was to create more opportunities for service-disabled veterans. This was a great idea, but it had unintended consequences.

So, let’s think about it…since the advent of the VA’s verification program, the federal government has had two SDVOSB programs that have had to co-exist. The VA has jurisdiction over challenges to SDVOSB ownership and control issues relating to VA procurements; the SBA has jurisdiction over challenges to SDVOSB ownership and control issues for all other procurements. (The SBA has SOLE jurisdiction to determine size challenges in ALL cases). Is it any surprise that inconsistencies arose? Well, they did and SDVOSBs have been struggling to understand the different interpretations of ownership and control for the last eight years. An SDVOSB may be eligible under the VA’s regulations, but ineligible under the SBA’s regulations.

In an effort to address this problem, Congress decided to act. As part of the National Defense Authorization Act of 2017 Congress did two things. First, it instructed the VA and the SBA to work together to come up with one consolidated set of regulations governing SDVOSB eligibility. Second, it directed the SBA to accept responsibility for overseeing eligibility challenges once the new regulations are in place. The VA and the SBA have gotten together and things are now rapidly moving forward.

On January 10th, the VA issued proposed regulations to eliminate its provisions relating to SDVOSB ownership and control. This week the SBA issued its proposed, consolidated set of regulations, which, once finalized, will replace the current SDVOSB eligibility regulations. I received a copy of the SBA’s proposed regulations while I was on the plane to Nashville. There’s a lot there to discuss. I’ll be blogging about the issues I see in the coming days, so keep your eyes peeled. Some of these issues were vetted as part of my National 8(a) panel discussion and more were raised in private discussions with the attendees here, many of whom are SDVOSBs. The one good thing is this: There will be one set of rules in the very near future. Stay tuned for more. Cheers from Nashville!

Edward T. DeLisle is Co-Chair of the Federal Contracting Group. Ed frequently advises contractors on federal contracting matters including bid protests, claims and appeals, procurement issues, small business issues, and dispute resolution.

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