New Consolidated SDVOSB Eligibility Requirements: the Good, the Bad, and the Downright Ugly

New, consolidated SDVOSB eligibility regulations kicked in on October 1.  The new regulations replace the old VA and SBA rules, which provided separate eligibility standards for SDVOSBs.

Veterans have long been confused by the fact that the Government operated two separate SDVOSB programs, each with its own standards.  The consolidated rule will eliminate that confusion, and that’s a very good thing.  There are also several other pieces of the new SDVOSB eligibility rule that veterans should like–but also some that aren’t so great, or that require further clarification as to how they’ll be applied.

My colleague Matt Schoonover provided a broader overview of the new regulations earlier last week.  Now it’s time for me to get on my soapbox.  Without further ado, here’s my list of the good, bad, and the downright ugly from the new SDVOSB regulations.

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SBA OHA Confirms Strict SDVOSB “Unconditional Ownership” Requirements

Provisions in a company’s Shareholders Agreement, requiring the service-disabled veteran to sell his shares back to the company in the event of the veteran’s death or incapacity, were contrary to the SBA’s SDVOSB regulations.

According to a recent SBA Office of Hearings and Appeals decision, these provisions prevented the veteran from having unconditional ownership over the company, because he could not dispose of his shares as he chose.  In reaching its conclusion, SBA OHA wrote that Court of Federal Claims decisions allowing such provisions under the VA’s SDVOSB program didn’t apply to SBA–meaning that SDVOSBs verified by the VA might be ineligible for non-VA SDVOSB contracts.

What a mess.

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