Diana Plue, Esq. Sheats & Bailey, PLLC
The United States government has promoted veteran owned businesses as essential for the U.S. economy. Each year the federal government and NYS awards a portion of contracting dollars on federal projects to certified veteran and service-disabled veteran owned small businesses.
The federal government had two programs that provided federal agencies authority to set aside government contracts for exclusive competition among veteran owned small businesses. Those programs were 1) A self-certification program under the Federal System for Award Management (SAM.gov) that gave access to non-VA government contracts set aside exclusively for SDVOSBs and VOSBs; and 2) the Veterans First Contracting Program, which required VOSBs and SDVOSBs, who wanted to bid on VA government contracts set aside for veteran owned businesses, to be certified by the VA’s Center for Verification and Evaluation (“CVE”).
As of January 1, 2023, there will no longer be two separate programs. There will no longer be a self-certification program under the Federal System for Award Management and the CVE will no longer be certifying businesses as VOSB or SDVOSB. Instead, starting January 1, 2023, all veteran owned small businesses will be required to apply for and be certified as a VOSB or SDVOSB by the Small Business Administration (“SBA”).
What does this mean for businesses currently certified by the CVE and for businesses currently self-certified? For businesses currently certified by the CVE they can continue to bid on VA and other government veteran set aside contracts until the end of their three-year approval term, at which time they would then need to recertify with the SBA.
A self-certified VOSB or SDVOSB must apply for certification with the SBA by December 31, 2023. A self-certified SDVOSB that applies for certification with the SBA within this period may continue to compete for non-VA veteran set-aside contracts until the SBA has acted upon the application for certification.
To be certified by SBA as a SDVOSB or VOSB the following criteria must be met:
- At least 51% ownership by one or more veterans or service-disabled veterans.
- The service-disabled veteran owners must have a service-connected disability.
- Veteran or service-disabled veteran ownership must be real, substantial, and continuous. The Veteran or Service-disabled veteran owners must have the authority to independently control the day-to-day operations of the business and make long-term decisions for the business and must run the business.
- Must be a small business according to SBA’s size standards.
- The veteran or service-disabled veteran owners must share in the profits equal to their ownership interest.
- The veteran or service-disabled veteran owner must hold the highest officer position in the company.
In addition to Federal SDVOSB certification a business can also apply for New York State SDVOSB certification. NYS has its own SDVOSB program ran by the Office of General Services. NYS has legislated that 6% of state contracts be directed to NYS certified SDVOSB companies. The requirements for certification under the NYS SDVOSB program are similar to the Federal Program requirements but there are some differences as follows: 1) NYS defines small business as having 300 or less employees; 2) NYS requires the SDVOSB be located within NYS or have significant business presence in NYS; and 3) NYS requires the business to be operating for one year prior to application.
Before certifying as a VOSB and SDVOSB it is imperative that a business understands the control and ownership requirements of VOSB and SDVOSB certification. The business must be unconditionally owned and controlled by a veteran or service-disabled veteran. This unconditional control must be reflected in the business’ controlling documents and everyday operation of the business.
Procuring contracts that are set aside for VOSB or SDVOSB when the business is not unconditionally owned and controlled by a veteran is a violation of the False Claims Act and can have dire consequences such as prison time, large civil fines up to triple the profit earned on improperly gained contracts as well as debarment for five years from future federal contracting opportunities.
The process for VOSB and SDVOSB certification has many nuances. The attorneys at Sheats & Bailey, PLLC are experienced with these processes, and always ready to lend a hand to applicants filing for certification or businesses facing False Claim Act charges and debarment. For more information or assistance contact Diana Plue, Esq. Sheats & Bailey, PLLC, Tel: (315) 676-7314, www.TheConstructionLaw.com.
The information provided in this article is not intended to serve as specific legal advice for any particular situation. Competent legal and experienced counsel should be consulted.