In our February 6, 2013 Client Alert regarding new developments for service-disabled veteran-owned small businesses ("SDVOSBs"), we discussed the U.S. Court of Federal Claims' ("COFC") decision in KWV, Inc. v. United States and the U.S. Government Accountability Office's recent report on the Department of Veterans Affairs' verification process for SDVOSBs. Yesterday, the COFC issued another ruling that impacts the issues discussed in our February 6th Client Alert and that ruling will have important ramifications for veteran ownership in SDVOSBs. This decision involved a firm that had been verified as an SDVOSB by the VA's Center for Veterans Enterprise only to have that decision contradicted a few months later by the VA's Office of Small and Disadvantaged Business Utilization in response to a post-award protest.
This Client Alert details two recent developments for the U.S. Department of Veterans Affairs’ Veterans First Program. Last month, the Government Accountability Office released a report detailing its examination of the VA’s verification process for VOSBs and SDVOSBs. A few weeks later, the U.S. Court of Federal Claims issued its decision in KWV, Inc. v. United States, a case that dealt with a conflict between the VA’s verification process and a post-award VOSB protest determination, as well as a veteran’s ability to control his firm from a remote location.
On January 3, 2012, the U.S. Congress passed the National Defense Authorization Act for Fiscal Year 2013 ("NDAA"). While the NDAA covers many issues relevant to the government contracting community at large, it also includes new, noteworthy amendments to the Small Business Act. The 2013 NDAA provides some significant changes to small business government contracting. Most importantly, the rule governing limitations on subcontracting has been revised. The new rule implements two substantive changes. First, for services contracts, the new limitation is now based on the total amount paid to the small business, not the cost of the contract incurred for personnel. The revised rule has serious implications for small business prime contractors, as they will no longer be able to exclude the cost of materials, supplies, and other non-labor costs from their subcontracting limit calculations. Second, small business prime contractors may now meet their performance requirements by subcontracting to other "similarly situated" small businesses, i.e., those either small under the same standard or participating in the same small business program.