Last week, the U.S. House of Representatives passed the 2015 defense authorization bill.  The House-passed version of the 2015 National Defense Authorization Act would transfer VetBiz SDVOSB verification from the VA to the SBA.

If the Senate agrees, and the President signs the bill into law, the process of transferring SDVOSB verification from the VA CVE to the SBA could begin later this year.

Under the House version of the 2015 NDAA, the VA would be directed to use the SBA’s definition of a SDVOSB, beginning immediately.  Requiring the VA to use the SBA’s definition could resolve a major problem: under current law, the requirements to qualify as a SDVOSB vary (sometimes significantly) depending on whether an acquisition falls under the VA’s or SBA’s SDVOSB rules.

But under the House version of the 2015 NDAA, the VA might not use the SBA’s definition for long.  The bill requires the VA to enter into a Memorandum of Understanding with the SBA within 180 days, under which the VA will transfer control and administration of the SDVOSB verification program to the SBA.

Within 270 days after the execution of the Memorandum of Understanding, the SBA is to establish rules to carry out the verification program.  Although the VA and SBA may extend these deadlines, they must report back to Congress on their progress every 180 days.

The House version of the 2015 NDAA specifies that the SBA Office of Hearings and Appeals will hear all appeals regarding denied verifications or appeals from SDVOSB status protests under VA set-aside contracts.  The bill does not specify whether initial SDVOSB status protests would be decided by the SBA, or continue to be decided by the VA.

The provisions of the House-passed bill are substantively similar to those of the the Improving Opportunities for Service-Disabled Veterans Act of 2013.  This bill, introduced last year by Congressman Mike Coffman, has garnered a great deal of support from those in the SDVOSB community–including many who have simply become fed up with the VA CVE’s shortcomings.

Although the House’s stamp of approval significantly increases the likelihood that the SBA will take over the SDVOSB verification process, it is by no means a done deal.  As I reported last week, Senators Angus King and Richard Burr have introduced a bill that would (like the House-passed NDAA) require the VA to use the SBA’s definition of a SDVOSB.  The King-Burr bill, however, does not call for SDVOSB verification to be transferred to the SBA.  Instead, the King-Burr bill directs the GAO to study the feasibility of a government-wide SDVOSB verification system, to be operated either by the VA or the SBA.

It is possible that the Senate may respond to the House-passed bill with something that looks like King-Burr.  If so, the issue would not be resolved until a House-Senate conference committee reached an agreement.

For SDVOSBs, it is clear that important legal changes are coming but it remains to be seen what those changes will be.  I will keep you posted.