SDVOSB Programs: SBA OHA Explains A Critical SBA/VA Difference

Perhaps no single aspect of federal government contracting causes more confusion than the fact that the government currently runs two SDVOSB programs: one under the VA’s rules and the other under the SBA’s.

The current system can lead to inconsistent results, such as a company being a “SDVOSB” for purposes of VA contracts, but not those issued by other agencies (or vice versa).  As SmallGovCon readers know, I am on record as stating that the “two SDVOSB programs” approach is idiotic and ought to be scrapped.  (Okay, maybe I wasn’t on record with the word “idiotic” before.  I guess I am now.)

But while I cross my fingers and hope that Congress will simplify things, SDVOSBs are stuck with the current system.  And, as a recent SBA Office of Hearings and Appeals case demonstrates, SDVOSBs should be aware of the important differences between the two SDVOSB programs.

SBA OHA’s decision in Matter of MJL Enterprises, LLC, SBA No. VET-240 (2013) involved a Defense Logistics Agency solicitation for electrical lighting equipment.  The solicitation was issued as a total SDVOSB set-aside.

After evaluating competitive proposals, the DLA made award to three companies: Gulf Geoexchange & Consulting Services, Inc., Janel’s Industries, Inc., and SDV Recon, Inc.  An unsuccessful competitor filed SDVOSB eligibility protests challenging all three awardees.  However, the protester did not provide any evidence that any of the three awardees were not eligible SDVOSBs.

Because the protester had not provided any evidence, the SBA’s Director of Government Contracting, or D/GC, dismissed the protests as insufficiently specific.  The protester then filed appeals in each case with SBA OHA.  In its appeals, the protester argued, in part, that the D/GC “unreasonably assumed that the awardees’ self-certifications were valid,” and that the D/GC “failed to verify whether the awardees were registered in the VetBiz database.”

SBA OHA quickly shot down these contentions:

These arguments reflect misunderstanding of the SDVO SBC program. SBA’s SDVO SBC program is a self-certification program, so Government officials are expected to rely upon offerors’ representations absent some reason to question them.  Here, as discussed above, Appellant did not advance any basis to question the self-certifications of Gulf, Janel’s, and SRI, and the D/GC therefore properly accepted those representations. The VetBiz database is used to verify eligibility for VA procurements, but for non-VA procurements (such as found here), “[r]egistration on the VetBiz database, or receipt of any VA certification or registration is not an SDVO SBC eligibility requirement.” Accordingly, whether or not a firm is registered in VetBiz is immaterial to determining eligibility for SBA’s SDVO SBC program. 

SBA OHA upheld the D/GC’s dismissal of the protests.

The MJL Enterprises case is a good example of one of the most common misunderstandings arising from the government’s two SDVOSB programs.  Contrary to popular misconception, VetBiz verification is not required for most non-VA SDVOSB contracts.  (The FAA, which operates under unique procurement rules, is an exception).  For most SDVOSB set-asides, such as the DLA’s set-aside in the MJL Enterprises case, the SBA’s SDVOSB rules  apply–and those rules provide for self-certification.

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