OHA Explains Which SDVOSB Eligibility Rules Apply in Its First VA SDVOSB Protest Decision

December 21, 2018

By Julia Di Vito

Starting October 1, 2018, the U.S. Small Business Administration’s (“SBA”) Office of Hearings and Appeals (“OHA”) now has jurisdiction over all service-disabled veteran-owned small business (“SDVOSB”) status protests when the procuring agency is the U.S. Department of Veterans Affairs (“VA”). Previously, SDVOSB status protests on SDVOSB set-aside solicitations issued by VA were decided by VA. Now, OHA hears all SDVOSB status protests on VA procurements and has recently issued its first decision in an SDVOSB status protest in connection with a VA procurement. OHA refers to these SDVOSB status protests as “CVE Protests.” In CVE Protest of Blue Cord Design and Construction, LLC, SBA No. CVE-100-P (2018), OHA denied a protest alleging that an SDVOSB awardee in a VA procurement was not controlled by a service-disabled veteran.

Not only is this decision remarkable in that it is the first decision by OHA in a CVE Protest (or any kind of protest for that matter, as OHA usually hears appeals from protest decisions), but this decision clarifies how OHA will handle the potential discrepancy between VA’s previous regulations on the ownership and control of an SDVOSB and the recent SBA regulations on the ownership and control of an SDVOSB, which now apply to VA and non-VA procurements. OHA’s regulations state that if the CVE Protest pertains to a procurement, then the relevant date(s) for determining eligibility of an SDVOSB are both: (i) as of the date of bid or initial offer, including price; and (ii) as of the date the CVE Protest was filed. See 13 C.F.R. § 134.1003(c). Because OHA will look at an SDVOSB’s eligibility on two different dates, it is possible that two different sets of eligibility rules apply.

The decision in the Blue Cord Design and Construction protest illustrates how these two eligibility determinations will work. In that case, the protested company submitted its initial offer, including price, on June 20, 2018, and the protest was filed on October 4, 2018. As of June 20, 2018, the regulations governing ownership and control of an SDVOSB (for a VA procurement) were set forth in VA’s regulations, 38 C.F.R. Part 74. Starting October 1, 2018, and as of October 4, 2018, the regulations governing ownership and control of an SDVOSB (for any procurement) were set forth in SBA’s regulations, 13 C.F.R. Part 125. Because the proposal at issue in the protest was submitted before October 1, 2018, the protested company had to be compliant with two sets of rules governing ownership and control of an SDVOSB.

Although many of SBA’s rules in the current 13 C.F.R. Part 125 are similar to VA’s previous regulations in 38 C.F.R. Part 74, there were some new rules introduced as of October 1, 2018. For example, at issue in the Blue Cord Design and Construction protest was whether the company complied with 13 C.F.R. § 125.13(i)(6), which creates a rebuttable presumption of non-veteran control when a critical license needed by the company is held by a non-service-disabled individual. Although OHA found the protested company to comply with that regulation, it is notable that the company was required to comply with a regulation that was not in existence at the time it submitted its proposal for the procurement.

If you have any questions about compliance with the new SDVOSB regulations effective October 1, 2018, or CVE Protests, please contact us at (202) 857-1000.

About the Author: Julia Di Vito practices in the areas of government contracts, litigation, and labor and employment. She may be reached at jdivito@pilieromazza.com.
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