I’ve long predicted that Congress would eventually adopt a formal, Government-wide SDVOSB certification program (or “verification” program, if you prefer). Maybe my crystal ball is finally right. As my colleague Matt Schoonover wrote last week, a new bill introduced in the House of Representatives would do just that.
The full text of the bill has now been published. Here are some of the key details of the Government-wide SDVOSB certification proposal.
The SBA has released its proposed consolidated rule for SDVOSB eligibility, which was published in the Federal Register today. Once the rule becomes final, it will apply government-wide, to both VA and non-VA SDVOSB contracts.
For SDVOSBs, a uniform set of rules is a very good thing. There has been far too much chaos and confusion under the current system, in which the SBA and VA have different SDVOSB eligibility requirements. But how about the substance of the proposal itself? Well, there are certainly some things to like–and some areas that could use improvement.
The SBA’s strict SDVOSB ownership rules can produce “draconian and perverse” results, but are nonetheless legal, according to a federal judge.
In a recent decision, the U.S. Court of Federal Claims condemned the SBA’s SDVOSB unconditional ownership requirements, while holding that the SBA was within its legal rights to impose those requirements on the company in question.
The Court’s decision emphasizes the important differences between the SBA and VA SDVOSB programs, because the Court held that although the company in question didn’t qualify as an SDVOSB under the SBA’s strict rules, it was eligible for VA SDVOSB verification under the VA’s separate eligibility rules.
In May 2017, SDVOSBs and VOSBs lodged another big win in their battle to enforce the statutory preferences for veteran-owned companies: the Court of Federal Claims held that the VA cannot buy products or services using the AbilityOne list without first applying the “rule of two” and determining whether qualified SDVOSBs or VOSBs are likely to bid.
But the AbilityOne vendor in question isn’t going down without a fight. It’s taking the case to the United States Court of Appeals for the Federal Circuit–and the Court of Federal Claims just issued a ruling staying its May decision pending the results of the appeal.
SDVOSB joint venture agreements will be required to look quite different after August 24, 2016. That’s when a new SBA regulation takes effect–and the new regulation overhauls (and expands upon) the required provisions for SDVOSB joint venture agreements.
The changes made by this proposed rule will affect joint ventures’ eligibility for SDVOSB contracts. It will be imperative that SDVOSBs understand that their old “template” JV agreements will be non-compliant after August 24, and that SDVOSBs and their joint venture partners carefully ensure that their subsequent joint venture agreements comply with all of the new requirements.