On Nov. 29, 2022, the Small Business Administration (SBA) issued a final rule implementing Section 862 of the National Defense Authorization Act for Fiscal Year 2021, which transferred the responsibility for the certification of Veteran-Owned Small Businesses (VOSB) and Service-Disabled Veteran-Owned Small Businesses (SDVOSB) to SBA.
The final rule establishes a government-wide certification program for VOSBs and SDVOSBs. Previously, VOSBs and SDVOSBs were required to be formally verified through the Department of Veterans Affairs' (VA) Center for Verification and Evaluation certification process to be eligible to compete for VA sole source or set-aside contracts. Firms seeking sole source or set-aside contracts with agencies other than the VA were only required to self-certify their status as a VOSB or SDVOSB.
In a Taft law bulletin issued on Aug. 22, 2022, the Government Contracts team explained the proposed rule and how it would ultimately supersede the VA rule and end self-certification for non-VA contracts. The final rule made several changes to the proposed rule. For example, it changed the proposed language which expanded program eligibility to firms that qualify as small in any NAICS code in which the firm "currently conducts business" so a firm would continue to qualify as a VOSB or SDVOSB as long as it was small under the size standard corresponding to at least one NAICS code listed in its SAM profile. The final rule also removed the requirement that a firm show it has good character from the eligibility determination. And, it amended language from the proposed rule regarding size standards to make them consistent between both VOSBs and SDVOSBs. This change allows VOSBs and SDVOSBs to determine size as of the date the concern submits a written self-certification that it is small to the procuring activity as part of its initial offer or response which includes price.
Starting in 2023, VOSBs and SDVOSBs will need to be formally verified by the SBA pursuant to its Veteran Small Business Certification Program if they want to be eligible for any VOSB or SDVOSB sole source or set-aside contracts. The SBA's certification is good for three years before it must be renewed. Those VOSBs and SDVOSBs who are already certified under the VA's Center for Verification and Evaluation certification process receive an expedited review, keep their existing three-year certification, and may even be eligible for an additional one-year extension. There will be a one-year transition for self-certified VOSBs and SDVOSBs firms to apply for verification by the SBA.
The final rule was published on Nov. 29, 2022, and will become effective on Jan. 1, 2023.
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