Amended Bylaws Can’t Rescue Ineligible SDVOSB

The regulations governing the SBA’s service-disabled veteran-owned small business program are clear: to qualify as an SDVOSB, a business must ensure that a service-disabled veteran serves as its highest officer.

The SBA will examine a SDVOSB’s bylaws to see whether the provision is met.  If not, belatedly amending the bylaws won’t save the business’s eligibility for a contract it bid upon before the amendment, as demonstrated by a SDVOSB appeal decision of the SBA Office of Hearings and Appeals.

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Quorum Provision Defeats SDVOSB Status

If someone asked me to play a word association game with the phrase “quorum provision,” one of my first responses might be “boring.”  After all, who really cares about some arcane paragraph tucked away in a company’s governing documents, describing how many people must attend company meetings?

Well, SDVOSBs should care.  If your small business is pursuing service-disabled veteran-owned small business set-aside opportunities, you better make sure your governing documents are airtight.  As demonstrated in one recent SBA Office of Hearings and Appeals decision, even something as mundane and boring as a quorum provision can defeat SDVOSB status, if the provision does not allow service-disabled veterans to unconditionally control the company.

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