SBA Updates Veteran Surviving Spouse Rule

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A proposed rule from SBA will make changes to the SDVOSB rules. SBA has modified its rules allowing surviving spouses to continue owning Service-Disabled Veteran-Owned Small Businesses after the veteran owner has passed away. This should provide some help to spouses of disabled veterans. SBA has updated a few dollar thresholds as well.

SDVOSB Surviving Spouse Rule

The existing surviving spouse rule had provided some leeway for a surviving spouse to continue to own and operate the SDVOSB business for up to 10 years, but only if the veteran owner had a disability “rated as 100 percent disabling . . . or such veteran died as a result of a service-connected disability.” But those limitations made the rule applicable only in limited situations.

The new rule adopts changes to the treatment of service-disabled veteran surviving spouses made by the National Defense Authorization Act of 2020. The main change is to now provide a three-year window for a surviving spouse to run the SDVOSB business where the veteran owner had “a service-connected disability rated as less than 100 percent disabling” and “who does not die as a result of a service-connected disability.”

This is good news because it will apply to many more service-disabled veterans than the old rule, as many veterans do not have a 100% rated disability. This will allow the spouse of an SDVOSB owner to have a transition period to keep running the company as an SDVOSB for limited period of time.

Threshold Changes

The rule also updates a few dollar thresholds in SBA rules.

  • Increases dollar thresholds for which a justification and approval is needed for 8(a) sole-source procurements to $25 million for civilian procurements and $100 million for DoD procurements. Note that this change doesn’t increase the sole-source maximum for 8(a) procurements for non-tribal, non-ANC 8(a) companies, as discussed here. Generally speaking, contracting officers can award a contract to an 8(a) business on a sole source basis if the estimated cost is $4.5 million or less ($7 million for manufacturing).
  • Adjusts the 8(a) Program threshold above which procurements must be competed to $4.5 million in 13 CFR § 124.506.

The rule will be effective on February 7, 2022, without further action, unless significant adverse comment is received by December 8, 2021, so be sure to comment if you have a concern with the proposed rule.

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