Will The Supreme Court Put “Veterans First” In The Kingdomware SDVOSB Case?

Is the Department of Veterans Affairs required to prioritize service-disabled veteran-owned small businesses (“SDVOSBs”) when it buys supplies and services?  That, essentially, will be the question before the Supreme Court when it takes up the case of Kingdomware Technologies, Inc. vs. United States.  On June 22, the Supreme Court agreed to hear the case.

The Supreme Court’s decision in Kingdomware will end a long-running battle between the VA and various SDVOSBs, which have accused the VA of creating loopholes to avoid a statutory contracting preference for veterans.  Hopefully, the Court will get it right.  As a matter of policy and law, the underlying decision of the U.S. Court of Appeals for the Federal Circuit is fundamentally flawed.

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SDVOSB Indictment: Full-Time Postal Carrier Was SDVOSB “Rent-A-Vet”

The government has accused a service-disabled veteran who was employed full-time as a U.S. Postal Service Carrier is accused of being a “rent-a-vet” used to obtain contracts for his brother’s company.

According to a Department of Justice press release, a grand jury has indicted both men, as well as a business partner for SDVOSB fraud–and all three face the potential of significant jail time.

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SDVOSB Fraud: Company Dissolves To Settle “Rent-A-Vet” Allegations

A contractor has agreed to pay the government $1 million–and to dissolve as an ongoing entity–to resolve allegations that it falsely claimed SDVOSB status in order to receive VA SDVOSB set-aside contracts.

According to a government press release, the settlement comes after VA investigators alleged that the company’s non-veteran partner made all important corporate decisions, while the service-disabled veteran partner spent much of his time away from the company.

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VA CVE Verification Does Not Provide Affiliation Shield, Says SBA OHA

Even if the VA Center for Verification and Evaluation has found that a service-disabled veteran “unconditionally” controls a SDVOSB, the SBA may nonetheless determine that other individuals or entities also control the company within the meaning of the SBA’s affiliation rules.

As demonstrated by a recent decision of the SBA’s Office of Hearings and Appeals, VA CVE verification does not shield a SDVOSB from an adverse SBA affiliation determination, even if that determination is based on a finding that non-veterans control the company.

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SBA SDVOSB Determinations Can Be Challenged In Court

The U.S. Court of Federal Claims has jurisdiction to hear challenges to the SBA’s SDVOSB determinations.

In a recent case, the Court held that it had the power to review a decision issued by the SBA Office of Hearings and Appeals, in which OHA deemed a company ineligible to receive a SDVOSB set-side contract.

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SDVOSB Fraud: Large Business Pays $1.1 Million

A large business has agreed to pay $1.1 million to resolve allegations that it created a “front company” to be awarded a SDVOSB set-aside contract–and then served as a “pass through” by performing the work itself.

In addition to the $1.1 million penalty agreed to by the large contractor, the putative SDVOSB has agreed to pay the government $50,000, plus five annual contingency payments equal to one percent of its total annual revenues.

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Limitations on Subcontracting: SBA Proposes Sweeping Changes

The limitations on subcontracting would undergo sweeping changes under a recent SBA proposal.

On December 29, the SBA issued a proposed rule to enact the changes implemented by Congress in the National Defense Authorization Act of 2013–including a thorough re-write of the way that compliance with the subcontracting limits is calculated and enforced.

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