Disabled Veteran- Small Business

In 1999, the US Congress passed the Veterans Entrepreneurship and Small Business Development Act.  According to SBA, this significant piece of legislation established an annual government-wide goal of not less than 3% of the total value of all prime contract and subcontract awards for participation by small business concerns owned and controlled by service-disabled veterans.”  Recently, the SBA established the SDVOSBC or Service-Disabled Veteran-Owned Small Business Concerns Program.

The SDVOSBC loan program established the federally-based criterion that is currently being used to determine the following:

  • business control and ownership requirements
  • guidelines for establishing sole source
  • service-disabled veteran status

Additionally, the program sets aside procurement opportunities and allows a business to protest and appeal SDVOSBC procurement procedures.

The program’s purpose is to give certain procurement agencies with the authority to designate specific acquisitions solely for those small businesses that are classified as service-disabled, veteran-owned.  It also gives these agencies the authority to make sole source awards to those businesses, provide they meet certain conditions (See Code of Federal Regulations (CFR) 13 C.F.R. § 125.8-125.10).

Eligibility

In order to be eligible for the SDVOSBC program, an individual must have a military service-related disability as classified by the DOD (Department of Defense) or the DVA (Department of Veteran Affairs).  The business and the individual must meet the following requirements:

51% of the business must be unconditionally owned by the service-disabled veteran.
The business must be classified as a “small” business according to the NAICS or North American Industry Classification System and has been assigned to the procurement.
The daily business operations and management must be controlled by the service-disabled veteran

The service-disabled veteran must hold the company’s highest officer position

Public Law 106-50 of the Veterans Entrepreneurship and Small Business Development Act of 1999 established a government goal of a minimum of 3% per year of all prime and sub-contract awards’ values if SDVOSBC’s wish to participate in the program.

Public Law 108-183 of the Veterans Benefits Act was passed on December 16, 2003 by the US Congress.  Section 308 of this law established an SDVOSBC-based procurement program which states that “federal contracting officers may restrict competition to SDVOSBCs and award a sole source or set-aside contract where certain criteria are met.”

SDVO Business Control

The SDVOSBC must meet the following requirements to be eligible for this program:

  • One or more service-disabled veterans must control the daily business and management operations of the business.  (From this point forward, “Control” is defined as the daily administration and management of business operations and the long-term decision making being conducted by one or more service-disabled veterans while “service-disabled veteran” is defined as a veteran that has a service-related disability.)
  • If a company owned directly by one or more service-disabled veterans purchases and takes ownership of another business, that business is not eligible for the SDVOSBC program.
  • One or more service-disabled veterans (or the permanent caregiver or spouse of a permanently or severely disabled veteran) must control the daily business and management operations of the company.
  • Ownership of the SDVOSBC must be direct ownership.
  • This section applies to and provides information for contracting officers who represent an SDVOSBC, as well as the SDVOSBC itself, when bidding on government contracts.

Requirements can be set aside by a CO (Contracting Officer) if:

1)    Requirements are not exempted from service-disabled veteran contracting or the CO considers setting them aside for participating in an SDVOSBC, HUBZone, or an 8(a) business development program or before they consider setting the requirements aside as a small business set aside.

2)    The award is made at fair market value

3)    There are reasonable expectations that a minimum of two service-disabled veterans will submit offers.

Requirements cannot be exempted and made available by a contracting activity to a service-disabled veteran-owned contract if:

1)    Federal Prison Industries, Inc. or Javits-Wagner-O’Day Act, non-profit agencies for the blind and disabled, can make awards in order to fulfill the requirements.

2)    A participant in an 8(a) program is currently performing the requirements or the SBA has accepted the performance of the requirements under the Section 8(a) program’s authority.

Sole source contracts can be awarded to a CO if:

1)    The anticipated contract’s award price, including options, cannot exceed $5 million for manufacturing requirements and $3 million for all others.

2)    The award can be made at fair market value.

3)    The requirement cannot be set aside and is not exempted service-disabled veteran-owned contracting.

4)    There is no reasonable expectation on behalf of the CO that any offers will be submitted by a minimum of two responsible service-disabled veterans.

Simplified Acquisition Threshold

Requirements can be set aside by the CO for consideration among SDVOSBC’s that use a simplified acquisition procedure whenever said requirements are at or below simplified acquisition threshold criteria.  Additionally, the CO is allowed to award sole source contracts to SDVOSBC’s.  Sole source awards are only allowed when only one service-disabled veteran performs the contract according to section 19.406 (a) (3) of the Federal Acquisition Regulations.

Additional Contract Requirements

SDVOSB Prime or Sub-contractors are subjected to certain subcontracting limitations that they are allowed to subcontract for.  These include:

  • Construction by special trades:  25% of the SDVOSBC personnel’s contract performance
  • General construction:  15% of the SDVOSBC personnel’s contract performance
  • Services contracts (except construction):  50% of the SDVOSB personnel’s contract performance
  • Supply contracts:  50% of supply manufacturing costs
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