The U.S. Department of Veterans Affairs (VA) has announced that the functions of its Center for Verification and Evaluation (CVE) will be fully transferred to the U.S. Small Business Administration (SBA) on January 1, 2023. The CVE certifies service-disabled veteran-owned small businesses (SDVOSB) and veteran-owned small businesses (VOSB) to compete for set-aside and sole-source contracts under the VA’s Veterans First Contracting Program, which—with some exceptions—currently operates independently of SBA’s SDVOSB program. This transfer will eliminate the VA’s separate SDVOSB and VOSB certification program and eventually eliminate self-certification for non-VA SDVOSB procurements.
The government has for many years run two federal programs for SDVOSBs, one administered by the VA and the other by SBA. This caused redundancies in government spending and confusion for contractors, and steps were taken to consolidate the programs, which included bringing uniformity to the VA and SBA rules governing SDVOSBs in 2018.
As we noted last year here, Section 862 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 provided for the elimination of the VA’s certification program altogether, requiring that all SDVOSBs working with the VA or any other federal agency eventually be certified through SBA. SBA was given two years to consolidate the VA’s database of certified SDVOSBs with its own. Given that the FY 2021 NDAA was signed into law on January 1, 2021, it appears from the VA’s announcement that SBA is on track to meet its deadline of January 1, 2023.
Per the FY 2021 NDAA, once the transfer of the database to SBA has occurred, SDVOSBs and VOSBs that are not currently verified will have a one-year grace period to file an application for certification with SBA. An SDVOSB pursuing contracts outside the VA would be able to continue relying on self-certification until SBA reviews its application and makes a decision (presumably similar to the WOSB requirement that a WOSB either must be certified or have submitted a complete application with no negative determination). Consequently, an SDVOSB operating outside of the VA may rely on its own self-certification for the one-year grace period and for any additional time it may take SBA to review its application and issue a decision. This means that self-certification for many SDVOSBs may continue into 2024.
SDVOSBs and VOSBs that are currently certified by CVE need not worry about transferring their certification documents, since that will be handled jointly by the VA and SBA once the database transfers to SBA. The transfer will also have no impact on any then-ongoing certification issues, such as an SDVOSB status protest.
During a September 1, 2021, Interagency Task Force on Veterans Small Business Development meeting, Mr. Cordell Smith with the VA’s Office of Small & Disadvantaged Business Utilization, clarified that, while the authority for verifying both SDVOSBs and VOSBs will be transferred to SBA effective January 1, 2023, the VA will continue to be the only agency utilizing VOSB set-asides. He also stated that the VA will continue to have authority over determining who qualifies as a “veteran” or “service-disabled veteran” for certification purposes. Also present at the meeting, Mr. Thomas McGrath with SBA’s Office of Government Contracting and Business Development, explained that previously-verified companies will not lose their status as a result of the transfer, but that verified SDVOSBs and VOSBs will need to reverify their status, just as they have always done.
PilieroMazza will continue to monitor the consolidation process of the VA’s and SBA’s SDVOSB programs and provide updates as they become available. While no action is needed at this time, given that the verification process will move to SBA once the transfer goes into effect and that SBA is anticipating upwards of 35,000 applications which will likely lead to lengthy application review times, you should consider seeking CVE verification prior to January 1, 2023, and double-checking to confirm that your business complies with the verification requirements.
If you have any questions regarding the transfer to SBA or your business’ SDVOSB or VOSB certification, please contact Meghan Leemon, the author of this blog, or a member of PilieroMazza’s Government Contracts Group.