01 February 2023
by Emily Theriault(Los Angeles) and David Gallacher(Los Angeles)
Sheppard Mullin Richter & Hampton
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Effective January 1, 2023, certification of veteran-owned smallbusinesses ("VOSBs") and service-disabled veteran-ownedsmall businesses ("SDVOSBs") moved from the Department ofVeterans Affairs' ("VA") Center for Verification andEvaluation ("CVE"), to the Small BusinessAdministration's ("SBA") Veteran Small BusinessCertification Program ("VetCert"). Previously, VOSBs andSDVOSBs only needed to be independently verified for VA sole-sourceand set-aside awards - for procurements by all other federalagencies, SDVOSBs could self-certify without an outside review. Thefinal rule, published November 29, 2022, buteffective January 1, 2023, shifts the venue to SBA while alsoimplementing four key requirements from the National DefenseAuthorization Act for Fiscal Year 2021, as discussed below.
1. VA-Verified VOSBs and SDVOSBs Are Deemed SBA-Certified forthe Remainder of Their Eligibility Term, with an AdditionalOne-Year Extension
Any SDVOSB or VOSB verified by the VA Center for Verificationand Evaluation prior to January 1, 2023 will be deemedSBA-certified for the remainder of the business' three-yeareligibility term (if the business continues to qualify).Additionally, SBA intends to grant a one-time, one-year extensionto current VA-verified VOSBs and SDVOSBs that will be added to theeligibility term of current verified small businesses. But any newVOSBs or SDVOSBs applying for SBA certification will receive only athree-year eligibility term.
2. One-Year Grace Period for Self-Certified SDVOSBs to Applyfor SBA Certification
Self-certified SDVOSBs have a one-year grace period - untilJanuary 1, 2024 - to apply for SBA certification. In the meantime,SDVOSBs can continue to self-certify for non-VA governmentcontracts until SBA makes a final eligibility determination. (ForVA procurements, however, there is no grace period; SDVOSBs must becertified in order to be eligible for VA set-asides). As of January1, 2024, any SDVOSB that does not have a pending certificationapplication at SBA (or that has not been SBA-certified), will beineligible for sole-source or set-aside federal procurements.
3. SBA Applications Open Now Available
SBA has a new certification application portal for VOSBs andSDVOSBs, which is available for use now: https://veterans.certify.sba.gov/. Much likethe previous VA process conducted through the VA's Center forVerification and Evaluation, businesses will have to provide proofof eligibility. In other words, a business will have to demonstratethat it is: (a) a small business per the applicable size standardsat 13 C.F.R. Part 121; and (b) unconditionally ownedand controlled by one or more veterans, includingservice-disabled veterans, as needed.
4. SBA Makes Eligibility Requirements Less Restrictive
To qualify as a VOSB or SDVOSB, the basic parameters remain thesame as they have been in the past: (1) a small business that is(2) at least 51% owned and controlled by one or more veterans orservice-disabled veterans (unless an exception relating to activeduty, disability, or death applies). The requirements for the newSBA-certification are in 13 C.F.R. Part 128, and largely mirrorexisting VA verification requirements, with a few noteworthymodifications making eligibility easier as a practical matter:
- Requirement for the veteran-owner(s) to be of"good character" is eliminated. Whether thequalifying individual is incarcerated, or on parole or probation,will be a responsibility issue determined by the contractingofficer as part of a specific procurement - not an eligibilityissue to be considered in the first place by SBA.
- Non-veteran owners may have a commercially reasonableright of first refusal. Previously, the SBA Office ofHearings and Appeals had determined that a SDVOSB was notunconditionally-owned by a service-disabled veteran where anon-veteran had a right of first refusal to purchase all or part ofthe company's shares. This often made non-veteran investorshesitant to invest because the non-veteran not only did not controlthe company, but the non-veteran also had no guarantee that theinvestment could be adequately protected over the long term. Thisnew change should make it easier for VOSBs and SDVOSBs to partnerwith non-veteran investors who will be better able to protect theirminority investments in the company. 13 C.F.R. 128.202(b)(3).
- Less Restrictive Veteran Control Requirements.To harmonize the new regulations with requirements for women-ownedsmall businesses and 8(a) business development programparticipants, the SBA has revised the non-exhaustive list ofcircumstances that may indicate "control" by anon-veteran, and has loosened requirements regarding outsideemployment and normal business hours. The SBA also has removed thepresumption that a service-disabled veteran does not control thebusiness unless he or she lives within a reasonable commute of thecompany's headquarters and/or job-site locations. The previousregulations specified that the ability to communicate via phone andemail while delegating management responsibility was notan adequate justification to prove day-to-day control. Asbusinesses continue to embrace remote or flexible workingarrangements this should be a welcome - and self-evident -change.
In sum, the new regulations make VOSB and SDVOSB eligibilitymore consistent with other small business programs, centralizingthe certification review with the SBA. Less restrictive regulationsshould enable more veterans and service-disabled veterans with abetter opportunity to enter the government marketplace, imposingrational limits on the business owner while avoiding irrational andsilly requirements that emphasize form over substance when it comesto owning and controlling the small business. And, allowingnon-veteran investors a right of first refusal should allow moreinvestment in veteran-owned small business because investors willbe able to take comfort in being better able to protect theirassets.
The federal government has an annual goal of spending at least3% of contracting dollars on SDVOSBs. As we discussed previously, the government routinelyexceeds this goal, spending approximately $25 billion in FY 2021(4.41%). These new changes should slightly reduce the barrier toentry for VOSBs and SDVOSBs - at least at the VA - whichpotentially is one way to combat the increasing consolidation,rather than proliferation, of small business government contractorswe have been seeing over the past few years. Importantly, the VA,by statute, has to give VOSBs and SDVOSBs contracting priority formost procurements as long as there are at least two qualifyingsmall businesses that can offer the products or services at a fairprice (the "Rule of Two"). 38 U.S.C. § 8127(d). And,assuming self-certified SDVOSBs that were competing for non-VAprocurements actually met the requirements, these rules merelycreate an additional hurdle but do not create any additionalbarrier to entry or eliminate any eligible small businesses fromgovernment contracting. Hopefully the SBA certification processwill be better-positioned to promote and foster VOSB and SDVOSBfederal contracting.
The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.
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What qualifies as Sdvosb? ›
A: A small business concern owned and controlled by a Service-Disabled Veteran or Service-Disabled Veterans, as defined in section 3(q) of the Small Business Act (15 U.S.C. 632(q)) and SBA's implementing SDVOSBC Program Regulations (13 C.F.R. 125)Is Sdvosb the same as Vosb? ›
Although the programs' requirements are largely similar, they're not identical.Is a Sdvosb an 8a? ›
Small Business Administration (SBA) 8a Service Disabled Veteran Owned Small business (SDVOSB). The SBA 8a SDVOSB requires an application process to validate the certified status. For the certified SBA's 8a SDVOSB, only Veterans who are service-connected disabled Veterans can apply. Veteran-Owned Small Business (VOSB).Will the VA help me start my own business? ›
No, VA does not provide loans for businesses. The Small Business Administration (SBA) has a special loan program for Veterans called “Patriot Express.” We recommend that owners work with the Small Business Development Center to ensure they have the documents necessary to apply for the program.Can you start a business while on VA disability? ›
If you receive 100% disability based on your impairment rating, you are not bound by any income limits. You can own a business and earn as much money as you are able.What is the advantage of SDVOSB? ›
Joining the SDVOSB program makes your business eligible to compete for the program's set-aside and sole source contracts. SDVOSBs may self-certify their status through 2023 to compete for set-aside contracts at most federal agencies.
SDVOSB certification is good for 3 years from the date the certification was issued. In order to remain eligible, all program participants must complete a renewal process.
Among other things, a VSO representative can help you gather any evidence needed and submit a Fully Developed Claim on your behalf. A VSO representative can also correspond with VA about your claim on your behalf. VSOs always provide their representation on VA claims free-of-charge.What is the benefit that SDVOSB are to receive under 15 USC 657f? ›
Section 36 of that act (15 U.S.C. 657f), gives agency contracting officers the authority to reserve (set aside) certain procurements for service disabled veterans. This option provides a great benefit to the government when the time frame for awarding a contract to meet customer requirements is extremely shortened.How long does 8a certification take? ›
Once SBA has determined the application is complete, SBA has 90 days to process the application and render a decision.
Are you classified as a small disadvantaged business? ›
The firm must be 51% or more owned and controlled by one or more disadvantaged persons. The disadvantaged person or persons must be socially disadvantaged and economically disadvantaged. The firm must be small, according to SBA's size standards.What is the net worth limit for SBA? ›
Assets cannot exceed $4 million. Personal income cannot exceed $250,000, averaged over 3 years. Adjusted net worth must be less than $250,000.Is it hard to get a VA small business loan? ›
It's not necessarily hard for a veteran to get a small business loan, but you'll still need to meet a number of requirements. You'll find a credit score of at least 685 is required for small business administration (SBA) loans and traditional financing options.What is the maximum VA business loan amount? ›
All active and retired military members and families qualify to apply for business loans for veterans. VA Mortgage Loans up to $417,000 with no down payment. Business loan amounts for veterans up to $350,0000 and 1-5 year terms. Apply for a personal loan for any purpose, up to $40,000 with fixed rates.Does VA disability qualify as income? ›
Disability benefits received from the VA should not be included in your gross income.Can you work if you are totally and permanently disabled VA? ›
Veterans rated with a 100% Permanent and Total VA disability rating do not face any restrictions on work activity, unless the veteran was awarded this rating through Total Disability based on Individual Unemployability (TDIU).Can you have a job and 100% disability from VA? ›
With the 100 percent combined disability rating, you do not have any restrictions on work activity. If you meet the 100 percent rating for your service-connected condition, and you are still able to work, then you may do so.Can the VA take away 100 permanent and total disability? ›
Can the VA reduce a Permanent and Total rating? No, the VA cannot reduce a Permanent and Total VA rating unless the original disability rating was based on fraud. The major benefit of being deemed both “Permanent and Total” or 100% P&T is that your VA rating is protected from a future rating reduction.What are five benefits of being in a VSO? ›
A VSO, along with state, county, and other local Veteran service representatives are trained to help you understand and apply for any VA benefits you may be entitled to including: compensation, education, vocational rehabilitation and employment, home loans, life insurance, pension, health care, and burial benefits.What percentage of federal contracting dollars do federal agencies strive to set aside for SDVOSB? ›
The federal government tries to award at least 3% of annual federal contracting dollars to service-disabled veteran-owned small businesses.
Are VA prime contractors encouraged to assist SDVOSB concerns and VOSB concerns in obtaining subcontractor performance and payment bonds? ›
VA prime contractors are encouraged to assist SDVOSB concerns and VOSB concerns in obtaining subcontractor performance and payment bonds. Mentors are especially encouraged to assist their protégés in obtaining bid, payment, and performance bonds as prime contractors and bonds as subcontractors when bonds are required.Do disabled veterans get free vehicle registration in California? ›
If you're a disabled veteran with a qualifying disability, you may be eligible for DV License Plates. DV License Plates exempt you from paying vehicle registration and license fees.Does veteran status expire? ›
15 years from date of last discharge or release from active duty if you were discharged before Jan. 1, 2013. If you were discharged after that date there is no expiration date.Can I use veteran owned business logo? ›
§ 1072 states that “registration of a mark on the principal register serves as constructive notice that the registrant claims ownership of the mark.” This means only firms who have received an approval determination as a result of their application CVE are legally allowed to use VA's registration of the mark.What are the VA disability rates for 2023? ›
|Dependent Status||30% Disability Rating||40% Disability Rating|
|Veteran with Spouse, 1 Parent and 1 Child||$660.05||$934.86|
|Veteran with Spouse, 2 Parents and 1 Child||$708.05||$998.86|
|Each Additional Child Under 18||$30||$40|
|Each Additional Schoolchild Over Age 18 in School||$97||$129|
If you need help filing a claim or appeal, you may want to work with an accredited attorney, a claims agent, or a Veterans Service Officer (VSO). We trust these professionals because they're trained and certified in the VA claims and appeals processes and can help you with VA-related needs.Should I use a VSO attorney or claims agent? ›
As explained above, a VSO is best used for filing initial claims and handling simple appeals where you already have the evidence you need. Attorneys are best in complex cases that have been denied and are on appeal or have been on appeal for a long time.Do disabled veterans pay sales tax in California? ›
Generally, sales tax applies to a veteran's sales as it would to anyone else. However, there are laws that allow qualified veterans and veteran's organizations to make certain sales which are not subject to tax.What benefits do disabled veterans get in California? ›
California offers special benefits for its military service members and veterans including motor vehicle registration fees waived, veterans license plates, fishing and hunting licenses, state parks and recreation pass, business license, property tax exemptions, disabled veteran business enterprise business license, ...Do disabled veterans pay for permits in Florida? ›
There is no fee for a permanently disabled parking permit. To make application for a disabled parking permit, please complete an Application by Disabled Person Parking Permit (HSMV form 83039) and bring it in to a local motor vehicle service center.
Can you sell an 8a company? ›
However, the notion that an 8(a) contractor cannot be sold is false. Working with advisors with experience selling 8(a) contractors can allow owners of 8(a) contractors to successfully sell their business.Can you protest an 8a award? ›
(a) The eligibility of an 8(a) participant for a sole source or competitive 8(a) requirement may not be challenged by another 8(a) participant or any other party, either to SBA or any administrative forum as part of a bid or other contract protest (see 13 CFR 124.517).When did the 8a program start? ›
(October 24, 1978).What are the 4 types of small business? ›
There are 4 main types of business organization: sole proprietorship, partnership, corporation, and Limited Liability Company, or LLC.What are the 3 types of small business of small business? ›
- Sole proprietorship. A sole proprietorship is easy to form and gives you complete control of your business. ...
- Partnership. Partnerships are the simplest structure for two or more people to own a business together. ...
- Limited liability company (LLC) ...
- Corporation. ...
DBEs are for-profit small business concerns where socially and economically disadvantaged individuals own at least a 51% interest and also control management and daily business operations.What percentage of SBA loans are forgiven? ›
Forgiveness has been requested for 64% of the total loan value of 2021 PPP loans. 68% of 2021 PPP loans have been fully or partially forgiven.Do average citizens benefit from SBA? ›
Yes, the average citizen also gets benefits from small business administration. SBA create jobs for unemployed sectors along with that it also enables ordinary citizens to be an entrepreneur so they can start their own business. SBA also provides commercial facilities which are helpful in building business.What credit score is good for SBA? ›
Generally, the minimum credit score for SBA and term loans is around 680. If you're on the lower end of this spectrum, you'll likely need very strong business credentials to qualify, such as several years in business or significant annual revenue.Is SBA waiving guaranty fee for veterans? ›
For all SBA Express loans made to veteran-owned small businesses, the upfront guaranty fee will be zero in accordance with section 7(a)(31)(G) of the Small Business Act [15 U.S.C. § 636(a)(31)(G)].
What credit score is need for a VA loan? ›
There is no minimum credit score requirement. Instead, VA requires a lender to review the entire loan profile. For more information, see the complete VA credit guidelines at www.benefits.va.gov/warms/pam26_7.asp. How Can You Start the Process?Can you get a VA loan with a credit score of 580? ›
The VA doesn't have a minimum credit score. Instead, lenders can set their own requirements. At Rocket Mortgage, the minimum qualifying credit score is 580. Keep in mind, you can qualify for more favorable terms with a higher score.What qualifies as a small business for DOD? ›
Meet size standards
The SBA assigns a size standard to each NAICS code. Most manufacturing companies with 500 employees or fewer, and most non-manufacturing businesses with average annual receipts under $7.5 million, will qualify as a small business.
- Let's dive in. Open a private security firm. ...
- Become a franchise owner. ...
- Work as a government contractor. ...
- Get into the personal fitness industry. ...
- Work as a tech consultant. ...
- Consider health-care advocacy and emergency services. ...
- Become a workplace trainer. ...
- Why Veterans are Great at Business.
If your 100% VA Disability Rating comes because you qualify for the 100% rating specified for a single (or combination of multiple) service-connected conditions using the Schedule of Ratings, then you have NO limitations on your ability to work.What is Sdvosb CVE? ›
SDVOSB CVE Certification (Service Disabled Veteran Owned Small Business)