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Veteran-Owned Small Business and Service-Disabled Veteran-Owned Small Business-Certification rule (2022)

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The Veteran-Owned Small Business and Service-Disabled Veteran-Owned Small Business-Certification rule is a significant rule issued by the U.S. Small Business Administration (SBA) effective January 1, 2023, that established a certification program for Veteran-Owned Small Businesses (VOSB) and Service-Disabled Veteran-Owned Small Businesses (SDVOSB), pursuant to the National Defense Authorization Act of 2021.[1]

HIGHLIGHTS
  • Name: Veteran-Owned Small Business and Service-Disabled Veteran-Owned Small Business-Certification
  • Code of Federal Regulations: 13 CFR 121, 13 CFR 125, 13 CFR 128, 13 CFR 134
  • Action: Final rule
  • Type of significant rule: Other significant rule

    • Timeline

    The following timeline details key rulemaking activity:

    Background

    The U.S. Small Business Administration (SBA) is amending its regulations to establish a certification program for Veteran-Owned Small Businesses (VOSB) and Service-Disabled Veteran-Owned Small Businesses (SDVOSB) in accordance with the National Defense Authorization Act for Fiscal Year 2021. The program transfers the responsibility for certification from the Department of Veterans Affairs (VA) to the SBA and requires SDVOSBs seeking sole source and set-aside contracts across the Federal Government to be certified by the SBA. While self-certification for SDVOSBs at the subcontract level and for goaling credit purposes will continue, the SBA plans to review and potentially sunset these forms of self-certification after five years through a separate rulemaking process.[1]

    Summary of the rule

    The following is a summary of the rule from the rule's entry in the Federal Register:[1]

    “ The Small Business Administration (SBA) amends its regulations to implement a statutory requirement to certify Veteran-Owned Small Business Concerns and Service-Disabled Veteran-Owned Small Business Concerns participating in the Veteran Small Business Certification Program.[2] ”

    Summary of provisions

    The following is a summary of the provisions of the rule:[1]

    Subpart A—Provisions of General Applicability

    • Section 128.100 introduces the purpose of the Veteran Small Business Certification Program, aligning with statutory authority for contractual assistance to VOSBs and SDVOSBs, with no comments received during the proposal stage, leading to its implementation as proposed.
    • Section 128.101 clarifies the types of contractual assistance available under the program, distinguishing between assistance at the VA and across the rest of the Federal Government, with no comments received during the proposal stage, leading to its implementation as proposed.
    • Section 128.102 consolidates and updates important definitions for the program, including definitions for "certification database" and "qualifying veteran," while removing outdated or unnecessary definitions like "principal place of business," "eligible individual," "interested party," "joint venture," "primary industry classification," and "unconditional ownership" based on feedback and programmatic changes

    Subpart B—Eligibility Requirements for the Veteran Small Business Certification Program

    • The certification process allows entities to apply if they meet the size standard corresponding to any NAICS code under which they currently conduct business, as listed in their SAM profile.
    • Certification is only required for VOSB/SDVOSB sole source and set-aside awards, while firms may continue to self-certify for other types of contracts and goaling purposes.
    • The final rule incorporates ownership and control requirements, including revisions to accommodate non-service-disabled veterans and clarify notification procedures for changes in ownership.

    Subpart C—Certification of VOSB or SDVOSB Status

    • Certification as a VOSB or SDVOSB involves removing references to VA and reflecting SBA's certification program, with eligibility based on participation in SBA's 8(a) Business Development and WOSB/EDWOSB programs.
    • Applications must be filed with SBA for certification after the effective date of the rule.

    SBA processes applications based on guidelines outlined in the proposed section, with amendments regarding decertification for failure to inform SBA of changed circumstances.

    • Requirements for applying for VOSB or SDVOSB certification, with amendments to incorporate participants in SBA's 8(a) BD and WOSB/EDWOSB programs.
    • Denied applications have no reconsideration process, but appeals can be made to SBA's Office of Hearings and Appeals (OHA), with a shortened reapplication period.
    • Applicants must wait 90 days after denial before reapplying, with provisions for recertification within 120 days before the end of the eligibility period.
    • Maintaining certification involves a three-year eligibility term, potential extension by the Administrator or designee, and ongoing obligations to inform SBA of any changes.
    • Participants must notify SBA of any change of ownership, and certification generally lasts for three years.
    • Program examinations may be conducted by SBA, with modifications regarding virtual or on-site visits.
    • Participants may exit the program voluntarily or through decertification by SBA, with failure to recertify as a basis for removal.

    Subpart D—Federal Contract Assistance

    • VOSB contracts are exclusive to the VA, while SDVOSB contracts are available for both VA and non-VA procurements.

    To submit an offer on a VOSB or SDVOSB contract, firms must be certified at the time of the offer, subject to a grace period mandated by NDAA 2021.

    • Joint ventures may submit offers for VOSB or SDVOSB contracts, with specific requirements outlined in the regulations.
    • Agencies are prohibited from requiring multiple certifications in addition to VOSB/SDVOSB certification.
    • The SBA Administrator has the authority to appeal a contracting officer's decision regarding the availability of a requirement for SDVOSB sole source or set-aside contracts.

    Subpart E—Protests Concerning VOSBs and SDVOSBs

    • Status protests for VOSBs and SDVOSBs are now handled by SBA's OHA, regardless of the procuring agency, as mandated by NDAA 2021.
    • Provisions clarify separate procedures for size protests and status protests, with specific requirements for challenging the SDVOSB status of joint ventures, including certification status and compliance with joint venture agreement requirements.

    Significant impact

    See also: Significant regulatory action

    Executive Order 12866, issued by President Bill Clinton (D) in 1993, directed the Office of Management and Budget (OMB) to determine which agency rules qualify as significant rules and thus are subject to OMB review.

    Significant rules have had or might have a large impact on the economy, environment, public health, or state or local governments. These actions may also conflict with other rules or presidential priorities. Executive Order 12866 further defined an economically significant rule as a significant rule with an associated economic impact of $100 million or more. Executive Order 14094, issued by President Joe Biden (D) on April 6, 2023, made changes to Executive Order 12866, including referring to economically significant rules as section 3(f)(1) significant rules and raising the monetary threshold for economic significance to $200 million or more.[1]


    The text of the Veteran-Owned Small Business and Service-Disabled Veteran-Owned Small Business-Certification rule states that OMB deemed this rule significant, but not economically significant:

    “ The Office of Management and Budget (OMB) has determined that this final rule is a significant regulatory action for the purposes of Executive Order 12866.[2] ”

    Text of the rule

    The full text of the rule is available below:[1]

    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 Federal Register, "Veteran-Owned Small Business and Service-Disabled Veteran-Owned Small Business-Certification," November 29, 2022
    2. ↑ 2.0 2.1 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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