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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Happy Anniversary, SDVOSBs: The Supreme Court’s Kingdomware Decision Was Five Years Ago Today

For SDVOSBs and VOSBs, June 16, 2016 was a monumental day. That morning, the U.S. Supreme Court issued its unanimous decision in Kingdomware Technologies, Inc. v. United States, holding that the VA must follow the law by putting “veterans first” in VA contracting.

Koprince Law LLC was honored to submit an amicus brief to the Supreme Court supporting Kingdomware, and my colleagues and I were thrilled with the Court’s 8-0 decision. Click here to check out my post from June 16, 2016 proclaiming “Victory!” for SDVOSBs and VOSBs in this watershed case.

The Kingdomware decision didn’t (and couldn’t) solve every problem that some SDVOSBs and VOSBs have had with VA’s contracting practices, but five years later there is no doubt in my mind that the Court’s decision has been the driving force behind a large increase in VA’s SDVOSB and VOSB contracting. Happy anniversary!

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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VA SDVOSB “Rule of Two”: Contracting Officer’s Price Reasonableness Determination Need Not Defer to FSS

The VA’s “rule of two” for service-disabled veteran-owned small businesses provides a powerful contracting preference. Thanks to the rule of two, the VA awarded 23.39% of prime contracting dollars to SDVOSBs in Fiscal Year 2019, compared to 4.39% governmentwide.

But the rule of two has its limits. Importantly, before issuing an SDVOSB set-aside, the Contracting Officer must have a reasonable belief that “the award can be made at a fair and reasonable price that offers best value to the United States.” And, as a powerful federal court recently held, the fact that an SDVOSB’s prices have been accepted by the GSA under the Federal Supply Schedule program does not require the VA to accept those prices as fair and reasonable in a rule of two analysis.

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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!

Congress Approves Government-wide SDVOSB Certification Requirement; Transfers CVE to SBA

The House and Senate have agreed to eliminate service-disabled veteran-owned small business self-certification and adopt a government-wide SDVOSB certification requirement, while transferring control of the certification process from the VA to the SBA.

The Conference Report on the 2021 National Defense Authorization Act would require government-wide SDVOSB certification (eventually) and transfer control of the the Center for Verification and Evaluation from the VA to the SBA. Assuming the President signs the bill into law (which, unlike the typical NDAA, remains to seen), SDVOSB self-certification–which is still the law for non-VA contracts–is on its way out.

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VA CVE Applications: Average Processing Time is 34 Days

In some circles, the VA CVE application process for SDVOSB/VOSB certification has a reputation as being very cumbersome and time-consuming. But while applying for verification isn’t exactly fun, it doesn’t take an extraordinarily long time for most new applicants to be verified. In fact, according to the VA’s Office of Small and Disadvantaged Business Utilization, the average processing time is a mere 34 days.

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