SDVOSB Eligibility: Veteran “Controls” Company Despite Living 900 Miles From Headquarters

A service-disabled veteran “controlled” his company within the meaning of the SBA’s service-disabled veteran-owned small business regulations, despite living more than 900 miles from the company’s headquarters, according to a SDVOSB appeal decision of the SBA’s Office of Hearings and Appeals.

In SDVOSB Appeal of Command Languages, Inc., SBA No. VET-149 (2009), the SDVOSB performed contracts around the world, leading SBA OHA to conclude that the service-disabled veteran’s physical location was largely irrelevant to his ability to control his company.

The Command Languages SDVOSB appeal grew out of a U.S. Department of State solicitation for translation and other language services, to be performed in Iraq.  The solicitation was a total set- aside for SDVOSBs.  Three awards were made, one to FEDSYS, Inc.

Another offeror, Command Languages, Inc., protested FEDSYS’s eligibility.  Command argued, in part, that the individual service-disabled veteran could not possibly control FEDSYS’s day-to-day operations because he lived in Virginia Beach, Virginia, some 913 miles from the corporate headquarters in Florida.

SBA OHA held that the service-disabled veteran did, in fact, control FEDSYS’s day-to-day operations, albeit remotely.  SBA OHA focused on the nature of the contract work FEDSYS performs.  According to SBA OHA, “FEDSYS performs its contracts in geographically diverse locations thousands of miles from its headquarters” in places like Iraq.  Therefore, “the kind of work FEDSYS performs does not require close proximity to the headquarters or the home of the service-disabled veteran.”

SBA OHA distinguished the case from prior decisions involving contracts for construction and janitorial services, which, according to SBA OHA “require personal attention for success to occur.”  SBA OHA affirmed an SBA Area Office ruling deeming FEDSYS eligible for the contract.

From a practical perspective, SBA OHA’s decision in Command Languages is a wise one.  In an age in which telecommuting is increasingly popular and all manner of electronic devices keep us in constant contact, it would make little sense to hold that a service-disabled veteran, per se, cannot control his company from far away, particularly when the company’s contracts are performed around the world.

However, SBA OHA’s focus on the type of work performed by FEDSYS is slightly troubling.  What if, for example, FEDSYS contracted to perform janitorial work around the globe, instead of translation services?  Would SBA OHA reach the same result, or would it be hemmed in by its own prior case law?

For service-disabled veterans, then, the Command Languages SDVOSB appeal decision is a step in the right direction, but should be approached cautiously.  Until future SBA OHA SDVOSB decisions further clarify this area of the law, the best policy for service-disabled veteran small business owners is to avoid arguments over day-to-day control by living near their company’s headquarters.

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