Ever since the VA set up its SDVOSB verification program, critics of SDVOSB self-certification have been pushing for the government to expand SDVOSB verification government-wide. Now, it might finally happen.
Section 831 of the House of Representatives’ version of the Fiscal Year 2021 National Defense Authorization Act would expand SDVOSB verification government-wide, formally rename it “certification,” and transfer certification authority from the VA to the SBA.
Here are some of the most important pieces of Section 831:
- Government-Wide SDVOSB Verification Won’t Happen Overnight. Section 831 calls for the certification requirement to kick in “2 years after the date of enactment of this section.” What’s more, the SBA and VA can jointly extend the enactment date “an unlimited number of times by a period of not more than 6 months.”
- The SBA Will Be in Charge. Under Section 831, the SBA, not the VA, will run the Government-wide SDVOSB certification program. The VA’s Center for Verification will be abolished and its functions transferred to the SBA. This move makes sense, given that the SBA runs all of the other Government-wide socioeconomic programs, and that SBA judges already provide oversight over SDVOSB and VOSB applications. The VA, however, will continue to determine whether an individual qualifies as a veteran or service-disabled veteran.
- Self-Certified SDVOSBs Get a Grace Period. Section 831 says that once the program goes live (an event the bill calls the “transfer date”), a self-certified SDVOSB will have one year to file an application for certification. If the application is filed within the one-year period, the company can continue to rely on its self-certification for non-VA contracts until the SBA makes a decision on the application. Failing to apply within one year, however, will render the self-certification invalid.
After the grace period ends, self-certified SDVOSBs will no longer be eligible for set-aside and sole source contracts, government-wide. Section 831 would add this language to the Small Business Act:
A contracting officer may only award a sole source contract to a small business concern owned and controlled by service-disabled veterans or a contract on the basis of competition restricted to small business concerns owned and controlled by service-disabled veterans if such a concern is certified by the Administrator as a small business concern owned and controlled by service-disabled veterans.
So there you have it–under the House’s FY 2021 NDAA, government-wide SDVOSB certification would become reality. And, in my opinion, it’s overdue: after the adoption of a WOSB certification requirement earlier this year, non-VA SDVOSB is the only remaining major socioeconomic self-certification for government contractors.
I certainly understand the arguments against requiring a formal SDVOSB certification–such as the royal pain sometimes associated with certification applications. But the SDVOSB ownership and control rules are so complex, confusing and sometimes downright counterintuitive that I’ve seen many, many well-meaning self-certified SDVOSBs simply get it wrong, usually because of some flaw (or multiple flaws) in their paperwork.
How many self-certified SDVOSBs get it wrong? Well, in a report earlier this year, the DoD Inspector General examined 29 self-certified SDVOSB awards, and found that 16–more than half!–didn’t meet the regulatory SDVOSB requirements. It’s a small sample size, and doesn’t mean that more than half of all self-certified SDVOSBs are ineligible, but it’s a concerning report nonetheless, and fits with my personal experience.
With self-certification, the first time the government reviews a company’s paperwork and other eligibility information is when the SDVOSB has been named the awardee of a contract and an SDVOSB status protest is filed. By then, it’s too late to fix any problems: lose the protest, and the contract goes away. Far better, in my opinion, to have the government look company’s eligibility on the front end, before a contract hangs in the balance.
But that’s just my two cents. We’ll see what the Senate thinks. The Senate’s version of the FY 2021 NDAA does not include a government-wide SDVOSB verification provision. The House and Senate must now resolve their differences in a conference committee and arrive at a final NDAA to send to the President. According to Representative Mac Thornberry of Texas, the Ranking Member of the House Armed Services Committee, the conference report is likely to come shortly after the November 3 election.
We’ll keep you posted here at SmallGovCon.
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