Recent Task Force Meeting Underscores Challenges Facing SDVOSB Transfer from VA to SBA

Sometimes, task force meetings are held just for the sake of having meetings. However, on June 2nd and 3rd the Interagency Task Force on Veterans Small Business Development (IATF) and Advisory Committee on Veterans Business Affairs (ACVBA) met to discuss important issues facing small businesses. This shed much needed light on the issues fast approaching and what steps the SBA needs to take.

The main topic of discussion was the pending CVE transfer. The transfer, as I soon found out, is deceptively complex. In a separate point, SBA noted that the Biden Administration announced it will use the purchase power of the federal government to make more awards to disadvantaged businesses, raising the target from 5% to 10%.

The star of the show, however, was the CVE transfer. So, what does this mean for you?

In 2020, we blogged about the plan to transfer CVE from the VA, to SBA. The 2021 National Defense Authorization Act (NDAA), whose Conference Report noted this seismic shift from the VA to the SBA. The change does make sense, as it will have the result of keeping all program certifications under one roof at the SBA. However, unlike the other SBA programs, the VA keeps extensive, confidential, and sensitive information on each of these Veterans.

The NDAA mandated that the transfer occur two years after it was signed. That means the transfer will occur by January 2023. After the transfer is complete, CVE will be abolished. While seemingly a long way off, if the integration of beta.SAM is indication, there will be a lot to iron out between now and then.

The main concern I found throughout both task force calls was figuring out who will be responsible for what. From payment, to oversight, to procedures, to access, task force groups are currently working through how and what responsibility to transfer.

Breathing a sigh of relief for all people who confuse “certification” and “verification” between SBA and CVE, the “verification” term appears to be on the way out. Although the confusion will not be going away any time soon, as veterans will still need to verify their status with the VA until after the transfer. However, it is good to know that, when we are talking about small business programs, certification will be the operative term after transfer is finalized.

The first topic of discussion is how will the SBA gain access to the information it needs to verify a veteran owns a business? What information will the SBA gain access to? Will the SBA have access to all the veterans information, including medical/mental health/service records? Veterans both in–and out of–service hand over countless amounts of sensitive information to the VA on a daily basis. Service, medical, mental health, and financial information is all held by the VA. In order for the SBA to certify a SDVOSB, the SBA needs access to relevant records for its review. The public comment section revealed keen interest in safeguarding veterans information.

How will this be resolved? The VA informed the task force that it has groups running the pros and cons of each potential  avenue right now. It does not appear there is a preferred method at this time. My guess is we will have direction by the end of the calendar year as to which way it intends to go. I am in the camp that the less information that is transferred, the better. That would mean allowing the SBA to request access to a specific veterans information, and then have the VA make that information available to the SBA through a login. This would limit blanket access or the risk of having veterans’ information contained on multiple servers.

With all things, how the money flows is front-of-mind for those making decisions. Currently, CVE operates out of the Supply Fund authorized by 38 U.S. Code § 8121(a). Because verification is required for SDVOSB and VOSB participation in VA contracts, utilizing the supply fund is considered necessary. Once this shifts to the SBA, it is unclear whether the supply fund could still be utilized. I suspect that either a re-work of this statute, or a more expansive interpretation, including certification as a necessity, will be found. While this is a a small piece of the overall picture, it is unlikely the SBA will take on the cost without a source for the funds. The transfer specifically will not include transferring any employees, which makes funding even more critical for staff, training, and costs of certification.

Suffice it to say, there are still major logistical gaps in the proposed change. Throw in a new administration and new leadership, and the project has only recently left the starting gates. We will stay tuned for additional updates and keep readers apprised. We appreciate the transparency of these agencies and SBA Administrator Guzman for taking the time to shed light on these issues. We look forward to future discussions, and will bring these to you when we receive additional details.

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