Despite a longstanding and very common misconception, the VA’s SDVOSB verification requirement doesn’t apply to non-VA SDVOSB contracts.

As the SBA Office of Hearings and Appeals recently reiterated, it was “simply not correct” to believe that a company was required to be verified in VetBiz to be awarded a non-VA SDVOSB contract.

Confusingly, the federal government currently runs two SDVOSB programs: one under the VA’s rules and the other under the SBA’s.  The SBA’s program (which is the “original” SDVOSB set-aside program) is authorized by the Small Business Act, which is codified in Title 15 of the U.S. Code and implemented by the SBA in its regulations in Title 13 of the Code of Federal Regulations.  The VA’s separate program is codified in Title 38 of the U.S. Code and implemented by the VA in Title 38 of the Code of Federal Regulations.

There are some important differences between the two programs.  For example, the VA requires that the service-disabled veteran holding the highest officer position manage the company on a full-time basis; the SBA’s regulations do not.  Following a 2013 Court of Federal Claims decision, the VA allows certain restrictions of a veteran’s ability to transfer his or her ownership, but that decision doesn’t necessarily apply to the SBA, which has held that “unconditional means unconditional,” as applied to transfer restrictions.

Following a change in the 2017 National Defense Authorization Act, many of the substantive differences between the two programs are going to be resolved.  But one important difference will remain for the indefinite future: the VA’s program, as implemented in VAAR 852.219-11, requires that a company be formally verified to be awarded a VA SDVOSB contract.  The SBA’s program, implemented in FAR 52.219-27, allows for self-certification of SDVOSB status.

That brings us to OHA’s recent decision in XtremeConcepts Systems, SBA No. VET-273 (2018).  The XtremeConcepts case involved a Navy solicitation for program management support services.  The solicitation was issued as a small business set-aside, but provided that certain task order under the resulting IDIQ contract could be restricted to SDVOSBs.

After evaluating competitive proposals, the Navy announced that award would be made to several companies.  XtremeConcepts, a VA-verified SDVOSB, filed a protest against three of the awardees, including Ironclad Technology Services, LLC.  XtremeConcepts contended that Ironclad and the two other companies were not SDVOSBs because they were not verified in the VA’s VetBiz database.

The SBA’s Office of Government Contracting noted that Ironclad had self-certified as an SDVOSB in SAM, and wrote that “a firm is not required to be registered in VetBiz” to pursue a non-VA SDVOSB contract.”  The SBA dismissed the protest, and XtremeConcepts appealed to OHA.

OHA wrote that “only firms competing for VA contracts must be registered in the [VetBiz] database.”  For non-VA procurements, “registration in the database, or receipt of any VA certification, is not required.”

Here, “VA did not conduct the instant procurement, so [XtremeConcept’s] protest in effect offered no reason at all to believe Ironclad is not an eligible [SDVOSB].”  XtremeConcept “simply is not correct” to believe the “false premise Ironclad was required to have obtained VA certification in order to participate in the subject procurement.”

OHA denied the appeal.

For long-time SmallGovCon readers, this post may seem a little familiar.  I wrote about a similar OHA decision way back in 2012, and have been highlighting the “two SDVOSB programs” ever since.  But despite my best efforts, this misunderstanding remains very, very common.  I doubt a week passes when I don’t speak to someone who believes that VA verification is required for non-VA SDVOSB contracts.

As the XtremeConcepts Systems case reiterates, it just isn’t.

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