Mar 2, 2017

VA Reduces Administrative Burden on SDVOSBs and VOSBs | Centre Law & Consulting in Tysons, VA
 
The Department of Veterans Affairs (VA) published an Interim Final Rule in the February 21, 2017, edition of the Federal Register, increasing the period for re-verification examination by VA’s Center for Verification and Evaluation (CVE) of Service-Disabled Veteran-Owned Small Business (SDVOSB) and Veteran-Owned Small Business (VOSB) program participants from two years to three years.

Purpose

The purpose of this change, effective February 21, 2017, is to reduce the administrative burden on SDVOSBs and VOSBs participating in VA acquisition set-aside for these types of firms pursuant to the authorities of Public Law 109-461, the Veterans Benefits, Health Care and Information Technology Act of 2006 (the Act), implemented by the VA as the “Veterans First Contracting Program.”

The Act requires VA to verify ownership and control of SDVOSBs and VOSBs in order for those firms to participate in acquisitions VA sets aside for SDVOSBs and VOSBs. VA has continuously administered the verification program since February 2010, at which time re-verification was required annually. In June 2012, the re-examination period was extended to two years.

In changing from a biennial re-examination eligibility period to three years, VA believes it adequately balances maintaining program integrity while reducing the administrative burden on SDVOSBs and VOSBs. In reaching this determination, VA cited statistical data from Fiscal Year 2016, which showed out of 1,109 reverification applications, only ten were denied, ergo, only 0.9 percent of reverification applications were found to be ineligible after two years.

VA relies very heavily on its initial eligibility examination of firms, which it describes as robust, and as such believes the integrity of the program will not be compromised by extending the period for reverification.

Process

As part of its initial examination, VA CVE reviews personal and company documentation to verify ownership and control by Veterans of the business applying for verification. Documents include personal and company financial statements; Federal personal and business income tax returns; personal history statements; articles of incorporation/organization; corporate by-laws or operating agreements; organizational, annual, and board/member meeting records; stock ledgers and certificates; State-issued certificates of good standing; contract, lease, and loan agreements; payroll records; bank account signature cards; and various licenses.

Additionally, VA conducts random, unannounced site examinations of participants in order to examine or further examine a participant’s eligibility, including upon VA’s receipt of specific or credible information that the participant is no longer eligible. Additionally, VA contracting officers and competing SDVOSBs and VOSBs have the right to raise a SDVOSB/VOSB status protest to VA’s Office of Small and Disadvantaged Business Utilization should either have a reasonable basis upon which to challenge the SDVOSB/VOSB status of a VA CVE-verified firm.

VA regulations mandate program participants maintain eligibility during its tenure, and if ownership or control changes occur, participants are required to notify VA’s CVE of any changes which would adversely affect the participant’s eligibility as a VA CVE-verified SDVOSB/VOSB.

VA maintains the Vendor Information Pages (VIP) Database, a database of firms verified by CVE and eligible to receive awards under the Veterans First Contracting Program. As of February 24, 2017, the VIP Database list 9,287 firms (6,917 SDVOSBs and 2,370 VOSBs).

VA’s current Veteran Small Business Regulations are codified at 38 C.F.R. Part 74.

Comments

Written comments on the Interim Final Rule must be submitted on or before April 24, 2017. Comments may be submitted directly to VA at the address shown in the Federal Register Notice or at www.regulations.gov. Comments should indicate they are submitted in response to “RIN 2900-AP93—VA Veteran-Owned Small Business Verification Guidelines.” Note that all comments received will be available for public inspection at VA’s Central Office in Washington, DC.

About the Author:

Wayne Simpson | Centre Law & Consulting Wayne Simpson
Consultant

Wayne Simpson is a seasoned former Federal executive and acquisition professional who is also a highly-motivated and demonstrative small business advocate, with nearly 38 years of Federal Civilian Service with the U.S. Department of Veterans Affairs (VA), and its predecessor organization, the Veterans Administration.

 

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  • Allen Steiner says:

    When I formed my corporation i put all the stock in the name of my family trust for estate reason. Would I have to change the name of the 1 stockholder the trust to my name?

    • Wayne Simpson says:

      Mr. Steiner, thank you for your service and question. America owes a great debt of gratitude to her Veterans.

      VA has numerous eligibility requirements for inclusion in its Vendor Information Pages (VIP) Database as a verified Service-Disabled Veteran-Owned Small Business (SDVOSB) or Veteran-Owned Small Business (VOSB).

      At least 51 percent of the business must be directly and unconditionally owned by one or more Veteran(s) or Service-disabled Veteran(s). In community property states, special measures may be required to meet the 51 percent ownership requirement as the Veteran’s property is considered to be 50 percent owned by his or her spouse.

      Additionally, the Veteran owner(s) must have full control over the day-to-day management, decision-making, and strategic policy of the business; possess the managerial experience of the extent and complexity needed to manage the business; be the highest-compensated employee (unless the Veteran can explain how taking lower compensation benefits the business); devote full-time to the business; hold the highest officer position in the business; and have the ability to exercise independent business judgment.

      With regard to your issue pertaining to a Trust, we recommend you contact VA’s Center for Verification and Evaluation (CVE) Help Desk for clarification, as we are unable to provide legal services without aa formal attorney-client relationship. VA’s CVE Help Desk may be reached at telephone 1-866-584-2344, or by e-mail at: vip@va.gov.

      Best wishes to you for every continued success!

      -Wayne