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.
A SDVOSB’s Employee Stock Ownership Plan caused the company to be ineligible under the SBA’s SDVOSB rules because the service-disabled veteran did not own 51% of the ESOP class of stock.
A recent SBA Office of Hearings and Appeals decision should serve as a cautionary tale to any SDVOSB contemplating establishing an ESOP–or any other ownership structure consisting of multiple classes of stock.
The VA is not required to prioritize SDVOSB set-asides when it obtains prosthetic appliances and related services, according to the GAO.
In a recent bid protest decision, the GAO held that a specific statutory exemption allows the VA to procure prosthetic appliances and related services in whatever manner the VA deems best, without regard to the ordinary requirement that the VA prioritize SDVOSB acquisitions.
A New Jersey woman has been arrested and charged with procurement fraud for allegedly falsely certifying that her company was a SDVOSB.
According to a Department of Justice press release, Miriam Friedman falsely claimed that her father-in-law, a retired veteran, owned and operated the business. According to the DOJ, Friedman’s father-in-law not only had minimal involvement in the business, but is not service-disabled.
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.
The U.S. Court of Federal Claims has ordered the VA to pay attorneys’ fees to Miles Construction, LLC stemming from the Court’s February decision that the company’s “right of first refusal” provision did not render it ineligible for the VA’s SDVOSB program.
In ordering the VA to pay attorneys’ fees, the Court held that the VA’s defense of its broad interpretation of “unconditional ownership” was not substantially justified–but also suggested that the Court might not reach the same result under the SBA’s SDVOSB rules.
A service-disabled veteran, who owned 80% of this business and served as its highest officer, “controlled” the company within the meaning of the SBA’s SDVOSB regulations, according to a recent decision of the SBA Office of Hearings and Appeals.
SBA OHA’s commonsense decision overturned an earlier SBA determination that the veteran’s majority ownership and officer position did not amount to “control.”