Control Matters: For SDVOSB Companies, Pay Attention to Appearances as Well as Realities

The case of Superior Optical Labs, Inc. (Superior) v. United States focuses on the control of a Service-Disabled Veteran Owned Small Business (SDVOSB) and how that control, or more precisely, lack of control, can disqualify an SDVOSB with 69% service-disabled veteran ownership from a solicitation set aside for SDVOSBs. This particular Solicitation was set aside entirely for an SDVOSB to provide prescription eyeglasses and related services through the Veterans Integrated Services Network (VISN). Superior was awarded the contract, which was then protested by PDS Consultants, Inc. (PDS) challenged the SDVOSB eligibility of Superior. In the end, OHA held that Superior did not qualify as a SDVOSB for purposes of the procurement due to a lack of control as required by SBA rules. PDS then challenged OHA’s decision at the Court of Federal Claims.

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Keep Registrations in SAM Current to Avoid Loss of SDVOSB Verification

The decision in Bravo Federal Consulting, LLC, SBA No. CVE-213 (Dec. 1, 2021) is both an important reminder of the importance of keeping all database information up to date and a cautionary tale of the unfortunate consequences that can happen when you don’t. In that decision, SBA’s Office of Hearings and Appeals (OHA) denied an appeal by Bravo Federal Consulting, LLC (Bravo). Bravo submitted a request to change its name, setting off a chain of events that ended in Bravo losing its verified status as a service-disabled veteran-owned small business (SDVOSB). 

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Franchise Agreement Terms Sink Company’s SDVOSB Application

It’s a refrain that my colleagues and I have often heard: if you’re a franchisee, it can be really, really hard–perhaps almost impossible–to be verified as a service-disabled veteran-owned small business.

A recent case demonstrates the difficulties in obtaining SDVOSB status as a franchisee. In the case, the SBA’s Office of Hearings and Appeals held that the Center for Verification and Eligibility had correctly denied a company’s SDVOSB application because, in the eyes of the CVE and SBA, the terms of the franchise agreement impeded the veteran’s control of the company.

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SBA Updates Veteran Surviving Spouse Rule

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.

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OHA: Provisions in Operating Agreements for SBA Set-Aside Program Participants can Sink Eligibility

The organizational documents for a business seeking certification under a SBA socio-economic program can play an important part in a company demonstrating its eligibility under the SBA’s requirement for control by the company’s owners, such as a service-disabled veteran or disadvantaged owner. Unlike some of the SBA’s requirements for eligibility, the manner in which a program applicant or participant might run afoul of this requirement are not always obvious. Typical provisions in the organizational documents that, under “non-SBA” circumstances may seem innocuous, may unintentionally undermine the disadvantaged owner’s requirement of showing of unconditional ownership and control. 

In a recent OHA decision regarding Service-Disabled Veteran-Owned Small Business (SDVOSB) eligibility, (CVE Protest of: Randy Kinder Excavating, Inc.  d/b/a RKE Contractors, Protester Re: E&L Construction Group, LLC), an unsuccessful bidder filed a protest of a set-aside contract award, alleging that the company was not unconditionally controlled by the disadvantaged owner. After considering a variety of arguments, OHA issued a decision based on a handful of provisions in the respondent’s operating agreement.

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Recent Task Force Meeting Underscores Challenges Facing SDVOSB Transfer from VA to SBA

Sometimes, task force meetings are held just for the sake of having meetings. However, on June 2nd and 3rd the Interagency Task Force on Veterans Small Business Development (IATF) and Advisory Committee on Veterans Business Affairs (ACVBA) met to discuss important issues facing small businesses. This shed much needed light on the issues fast approaching and what steps the SBA needs to take.

The main topic of discussion was the pending CVE transfer. The transfer, as I soon found out, is deceptively complex. In a separate point, SBA noted that the Biden Administration announced it will use the purchase power of the federal government to make more awards to disadvantaged businesses, raising the target from 5% to 10%.

The star of the show, however, was the CVE transfer. So, what does this mean for you?

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Event: SDVOSB Programs Webinar, Hosted by Govology

The federal government spends more than $20 billion annually on contracts with service-disabled veteran-owned small businesses. But the rules governing SDVOSB eligibility can be complex and confusing – starting with the fact that the government runs not one, but two SDVOSB programs.

On January 14, join me for a webinar, hosted by our friends at Govology, covering the ins-and-outs of Uncle Sam’s SDVOSB programs. In this session, I will demystify the key SDVOSB eligibility requirements in plain English and provide an update on some major pending changes to the SDVOSB programs. It’s easy to register: just follow this link. I hope to see you (virtually, anyway) on January 14!